Categories: BusinessFinance and budgeting

Definitions of common financial terms

American dream	To borrow prosperity from the next generation Something for nothin’ and sex for free
Bank	Casino housed in a ponderous architecture
Black swan	A mythical bird from the age of tulips. Quite startling and destructive when she lands in your punchbowl. Attracted to large banks and trailer parks.
Board of Directors	Friends of the CEO who depend on him for a small but cushy income and whose only critical job is to fire that same CEO at the appropriate time.
Capital gains	Fodder for inflation and taxes
CEO	A corporate dictator who rarely sees or hears the truth. The most senior migrant worker in the company.
Copyright	What I own on this work. Please respect it. Thank you, Lance Glasser
Credit card	An instrument for committing financial seppuku A bank product exempted from usury laws so that everyone can participate in the American dream
Credit defaut swap	Looks like insurance, smells like toxic waste.
Credit rating	A commodity of high worth subject to market forces. That is, something that can be both bought and sold.
Debt	Something to externalize What the American dream has metamorphosed into
Depression	When the recession happens to you and your neighbors. What happens when you look at your 401K
Derivative	An abstraction composed of abstractions, but with real consequences.
Dividends	Income that is unearned and thus taxed at a lower rate than earned income.
Hedge fund	Geniuses taking risks with your money. Heads you both win. Tails you lose. (After all, you picked them because they are smarter than you.)
Human capital	Foreigners that we educate at our finest universities and then send home to compete with us so that they won’t create the embarrassing blight of competing with us here. A faceless and fungible resource for producing work.
Inflation	Like potage, should be neither too hot nor too cold. When too cold it is a wolf; when too hot it is a thief.
Leverage	is to bankers with your assets as tequila is to teenage boys with your Porsche.
Moral hazard	Economics teaches that enormous profits are possible through externalizing risk. To update Balzac, behind every great fortune is a great moral hazard.
Ponzi scheme	Borrowing from Peter to pay Paul, but not dying soon enough. Also called a pyramid scheme, it is glorified on the back of every one-dollar bill.
Recession	Business is bad. Prospects are bleak. You might lose your job. Please spend money for the greater good.
Retirement	Long term unemployment A time in life when you finally have the time to do those things that you no longer can
Risk	A probability parameter that can be precisely modeled with sophisticated mathematics except for a small term, epsilon, which tends to zero but is always greater than delta.
Social security	A program for assuring senior citizen voter turnout. Also the world’s largest Ponzi scheme.
Steep yield curve	An elixir for bank profitability that can be administered by the central bank, whose job it is to manipulate the market.
Taxes	Protection money that we pay lest we be incarcerated.
Tragedy of the commons	A three act play where everyone steals a little from everyone else resulting in the impoverishment of all.
Under-employment	Your present status if you have time to read this far.
Unemployment	A vacation from labor but not from worry. If you are unemployed for long enough, the government wisely counts you as retired.