Crunching the language


It's hard sometimes to find words to make sense of a crisis as serious and complex as the current banking meltdown. But several striking phrases have become common as the global financial crisis has spread

TUMULTUOUS TIMES change language. The terrorist attacks of 9/11 left us with the legacy phrase "Ground Zero". Fast forward and the crisis on world financial markets has thrown up a glossary of new terms to describe events.

The meltdown lexicon is evolving quickly. Last month, toxins were things best eliminated with fruit juice and yoga. Now taxi drivers and dinner party guests talk about "toxic debt" and the $700 billion detox programme needed to cleanse them from the system.

But where do these phrases come from and how do they spread like viruses? Are there other examples from earlier crises that linger in the language long after the dust has settled?

The latest outbreak began with "credit crunch", a punchy bit of alliteration used to describe a combination of factors that make money scarce. At the end of the summer, "credit crunch" was added to the Concise Oxford English Dictionary("a severe shortage of money or credit"), along with its older sibling "subprime".

The New York Timesarchive, dating from the 1850s, shows "credit crunch" was in fact first coined more than 40 years ago (in 1967) to describe a Wall Street crisis. It popped up occasionally in financial pages over the next four decades, but only took off in news headlines in the middle of 2007. The Irish Timesfirst used the term in 1967, but since the middle of last year this newspaper has used it in more than 800 articles.

The phrase may also owe something to that great idiom-master, Winston Churchill, who popularised the use of the word crunch to refer to "the sense of a critical point or crisis" when he first used it in 1939.

"Toxic debt" is thought to have originated in a shareholders' report written by Warren Buffett in 2002, when he called derivatives contracts "financial weapons of mass destruction" and warned of toxicity in the debt pool.

Prof David Singleton, head of Trinity College Dublin's Centre for Language and Communication Studies, explains what makes a good new phrase. "Some of them do hang around long after their original coining has been forgotten and their original situations have disappeared," he says. The phrase "three sheets to the wind", for example, "comes from the time of windmills, when a three-sailed windmill was much less stable than a windmill with four sails". More recent - and uglier - idioms, such as "ethnic cleansing" and "friendly fire" are also likely to remain in the language, he says, "partly because they're striking".

This last point may be what gives the financial phrases their potency. The new terms are simple descriptions in a world of mind- boggling complexity. Alliteration is a factor, Singleton says, "and also the frequency, if the expression is used again and again". They differ from the management-speak of boomtime business, when flabby expressions such as "going forward" and "pushing the envelope" could afford to be utterly meaningless.

"'Credit crunch' to describe extreme difficulty in getting credit is a very transparent description," Singleton says. "It's a very nice, simple description of what's going on, and it's alliterative and it trips off the tongue."

BRITISH ECONOMIST AND author Graham Turner admits he had a list of "much less snappy titles" for his book on housing bubbles and globalisation earlier this year until "luckily" his publishers suggested using the title The Credit Crunch.

"I suppose the phrase really started to get used when the term 'credit squeeze' didn't do it enough justice," Turner says. "What started to happen was a bit more juddering, a bit more severe."

But, speaking in the aftermath of the latest US banking cataclysms, Turner says the term could be in danger of becoming too mild to describe the new landscape. "Bloomberg are calling it the credit quake," he says.

The phrase that sticks with Turner from the Great Depression, which began with a US stock market crash in 1929, was coined by economist Irving Fisher. In 1933, Fisher called what was happening in the wake of the crash "debt deflation". This phrase is already reappearing in news reports as analysts describe the falling value of property portfolios where the value of the asset on which money is owed is in freefall. Fisher's other phrase was "debt trap", which was commonly used in the 1930s - and "that's a phrase that will develop as we move through this crisis", according to Turner.

Turner worked for Japanese banks in the 1990s and saw the debt trap at first hand. "They wrote so many bad debts off and property prices kept falling, creating a vicious downward pressure on prices," he says.

In the past months he has seen language "evolving in response to the risks", and "there is an element here that people are struggling to catch up".

There is no guarantee that "credit crunch" will stay with us as events move rapidly. In recent weeks, Graham Turner says he has fallen back on "just talking in numbers" to communicate the seismic shifts.

He adds: "There are mind-boggling numbers washing through the systems. I think language will evolve quite rapidly, and in six months 'credit crunch' will be seen as passé. It's certainly not strong enough. It's worse than that.

"When you have banks refusing to lend to each other, it's a complete dearth, it's a credit void."

• The Credit Crunch: Housing Bubbles, Globalisation and the Worldwide Economic Crisis, by Graham Turner, is published by Pluto Press, €24.30 paperback

Meltdown lexicon New terms for toxic times

Credit crunch

Meaning a severe shortage of money or credit. This term may soon have to be replaced with a meatier description, "credit quake".


Sounds like a ruckus in Temple Bar with a group of men from Manchester, but describes a situation where stagnant growth is coupled with inflation. First coined in Britain in the 1960s.


Dealers borrow stock they hope will drop in value, then buy it at the lower value once the stock has fallen and sell it back to the fund from which they borrowed it, pocketing the difference.


This describes high-risk bank loans which are usually charged at a higher interest rate to people with poor credit ratings. Primarily refers to the subprime mortgage market in the US.

Toxic debt

This describes seeping bad-debt elements, often in consolidated loan packages that may not be able to be repaid because the value of the asset against which they are secured has fallen dramatically.

Bear market

This is a stock market in which shares have fallen 20 per cent below their previous peak. Thought to originate with bearskin traders who engaged in the risky business of attempting to sell the skin before they caught the bear.

The Nice Decade

A term coined by economists and used by Bank of England governor Mervyn King in May to warn that the good times were over. "Nice" is an acronym of non-inflationary consistent expansion.

Negative equity

The opposite of "nice", this is when a property is worth less than the mortgage owed on it.


This refers to the speed at which an asset can be turned into cash. Your deposit savings account is more liquid than your house.


A Labour Party term coined last week to attack the handling of the economic crisis by the Taoiseach, Brian Cowen.

Moral hazard

This is where an individual or institution does not bear the full consequences of its actions, and acts less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.


This is the process by which financial institutions and investors reduce the relative size of their assets in the financial sector, thus reducing credit and slowing the economy.