Guardian UK: Economic with actuality

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Economic with actuality
'Credit crunch' is just a euphemism for financial crisis. And please, don't mention the R-word



Anne Karpf
The Guardian, Wednesday July 30 2008



Struggling with mortgage repayments? Job insecure? Dreading winter fuel costs? In the financial gloom one piece of news is good: we're not, repeat not, in recession. No, all we're suffering from is a credit crunch. You feel better now, don't you? For recessions are serious, but credit crunch sounds like a cheery breakfast cereal - a helping of financial reality that will do us all good. In fact it's just the latest economic euphemism of choice, one of the ways in which politicians try to obscure the mess they and the banking system have produced.

Technically, there's a difference between a recession and a credit crunch. A recession is usually taken to mean two successive quarters of negative growth, and it's true that we haven't quite got there yet. A credit crunch is a liquidity crisis: the banks don't want to lend money to us or each other. In some ways, therefore, a credit crunch can be worse than a recession, and certainly part of it.

But most people don't use credit crunch, or indeed recession, in this literal sense - nor do even seasoned commentators such as the National Bureau of Economic Research in the US. So why do politicians and the media prefer to talk about a credit crunch rather than a recession? First, a term is more likely to catch on if it's alliterative. But though alliteration may be necessary it isn't sufficient - "crisis of capitalism", for instance, doesn't have quite the same appeal. Then, there's the onomatopoeia factor. "Crunch" sounds decisive, punchy and, crucially, short: it's an event, rather than a decade.

For George Bush, however, it's still too explicit. He favours "slow economic downturn" and "period of uncertainty", or the more folksy ("rough times") or demotic ("Wall Street got drunk"). In his avoidance of the R-word, Bush is only following presidential precedent. History shows that yesterday's economic euphemism becomes today's profanity. In 1929 Herbert Hoover used the word "depression" to avoid saying slump. As the US economy plummeted again in 1937 Roosevelt's administration, in order to avoid calling it depression, called it a recession.

Kennedy lampooned Eisenhower's circumlocutions when, in 1958, he quipped: "We're now at the end of the beginning of the upturn of the downturn." Alfred Kahn, an economic adviser to President Carter, was told by the White House to avoid using the word "recession" and so substituted "banana". In 1978 he declared that: "We're now in danger of having the worst banana in 45 years." The words "credit crunch" first entered the economic lexicon in 1967; this month they made it into the Concise Oxford English Dictionary, along with "sub-prime". .....(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/2008/jul/30/economicgrowth.creditcrunch