The high price of a haircut

by Colin McIntosh​
The credit crunch started to bite in 2008, with a whole lexicon of terms, some new and some previously confined to the vocabulary of economists and bankers, making an appearance in the news. Most of them are still with us, and some brand new ones have joined them in the Cambridge English Dictionary.

Toxic debt (debts that have little chance of being paid back or of being paid back with interest) was one of the main factors that caused the crash, with subprime loans (used to describe the practice of lending money, especially to buy a house, to people who may not be able to pay it back) made by the US institutions Fannie Mae and Freddie Mac. Many home owners were faced with foreclosure (having a property bought with borrowed money taken back because the money was not being paid back).

In order to deal with the crisis, governments introduced quantitative easing  and investors were encouraged to take a haircut (accept that they have lost money because the value of the investment has gone down).

More recent crises, like that of the Greek government potentially defaulting on its debts, have led to a new wave of words in the news. Without significant debt restructuring and a bailout, the government could be faced with a Grexit, a potential exit from the Eurozone and a return of the drachma. The current definition of drachma in the Cambridge English Dictionary is:

the standard unit of money used in Greece before the introduction of the euro

Will this now have to be rewritten?

Another currency, but one that belongs to no government, bitcoin, has experienced market volatility. Bitcoin is a cryptocurrency, a digital currency produced by a public network, rather than any government, that uses cryptography to make sure payments are sent and received safely. It can sometimes be used as a form of payment for products and services bought online.

Many of these words come from the technical language of finance and economics, and were previously rarely found outside these domains. With media and public interest in the Great Recession (as it has been dubbed) understandably high, many economic terms have made the jump from jargon to everyday language. This is just one example of how words pass from one group of users to another, enriching the language as they do so.