Financial buzzwords of 2010 came from crisis situations

Every crisis need not necessarily have a silver lining. However, according to the trend witnessed in 2010, it is clear such situations are the most likely to create buzzwords out of the otherwise unheard financial jargons.

2010 will be remembered for the various scams and crisis situations that thrust little-known words and phrases like ‘sweat equity’, ‘overlays’ and ‘2G spectrum’ into the limelight, forcing people to look up their meanings.

The controversy surrounding the Indian Premier League pushed the term ‘sweat equity’ into newspaper headlines, which cost the Minister of State for External Affairs Shashi Tharoor his job after it was alleged that Sunanda Pushkar, now his wife, was given ‘sweat equity’ in a team.

 

‘Sweat equity’ refers to the stake given to a company executive in return for his/her services and the value added to the company’s operations.

Similarly, ‘overlays’ came to the limelight in the wake of an alleged scam perpetrated by the organisers of the Commonwealth Games (CWG), hosted by the country in October.

It was alleged that a scam worth hundreds of crore was essayed by the CWG organisers by hiking the cost of various ‘overlays’ or temporary infrastructure facilities, such as treadmills, chairs and refrigerators, to be used by the visiting athletes.

The biggest of all the scams, the alleged irregularities in the allocation of ‘2G spectrum’, left many pondering over the meaning of both the alpha-numeric acronym as well as the word straight out of a physics book.

While there are millions of mobile users in the country, not many know that their handsets use ‘2G’ or the second-generation mobile technology for calls to get connected using ‘spectrum’ – a technical term used to describe a band of radio frequencies.

Not long ago, financial jargons such as MTM (mark-to-market), CDS (credit default swap), credit crunch and recession became household names after the global financial crisis in 2008.

Taking the trend forward in 2010, economists and financial market experts churned out terms like ‘green shoots’, ‘yellow weeds’ and even ‘brown manure’ — all three to define the state of world economies recovering from the worst financial crisis in many decades.

However, there was a discernible change in the methodology of coining terms in 2010, when keeping it simple emerged as the way to go. Most of the exotic-sounding, but complex, theories were shot down in the world of business.

Further, the new financial jargons that made their way into the public vocabulary were far and few between in 2010, compared to the period till mid-2008 and, to some extent, 2009 as well.

As the year began, economists termed the state of the world economy in the post-recession era as ‘new normal’. However, as the year drew to an end, it became clear that there was nothing like ‘a new normal’ and economies across the world were either still in bad condition or had become ‘normal.’

There were also not many takers for new acronyms such as ‘PIIGS’ and ‘BASIC’, both of which referred to two different sets of countries, although ‘BRIC’ continued to remain in vogue.

In 2001, BRIC was coined for a grouping of four high-growth, emerging economies, namely Brazil, Russia, India and China. On the other hand, PIIGS is an acronym for four European countries — Portugal, Italy, Ireland, Greece and Spain —said to be the worst-hit by the global financial crisis.

Similarly, BASIC was coined for the four large developing economies — Brazil, South Africa, India and China — after they decided to take a united stance at the Copenhagen climate summit.