What’s your favorite crisis euphemism?
In trying to rebrand dodgy financial instruments, treasury secretaries like Paulson and Timothy Geithner are continuing a recent tradition. So much of the finance sector’s innovation in the past 30 years, it turns out, wasn’t developing new stuff, but rather developing new ways of talking about pre-existing stuff. In the 1980s, labeling risky debt offerings as junk bonds was an intentionally ironic feint (pros knew that the instruments possessed real value). But as junk bonds went mainstream in the 1990s, they evolved into “high-yield debt”—their liability became an asset. Frank Partnoy, a reformed derivatives trader who teaches law at the University of San Diego, recalls that at Morgan Stanley in the 1990s, “we were constantly coming up with new acronyms” to describe similar financial instruments. The goal: to present products, some of which had been discredited, in a more favorable light.
I like “distressed assets.” Clearly the poor damsels need to be rescued from those nasty banks. Or is the image rather one of “gently used” furniture?