This dictionary was created by members of the Economy Working Group of Syntagma Square. Its purpose is to demystify and clarify some economic and financial terms which have dominated our lives recently. It is a form of resistance to the powerful who, invoking various unheard of until yesterday terms and concepts, dump the burden of debt onto the shoulders of people which didn’t create it. On the whole we explain these terms according to their official usage, but sometimes we propose more radical interpretations and connections. The data was sourced from economic journals, the press and the web. We have checked them for accuracy at the time of writing; we regret any residual errors; we
are solely responsible for them. We do hope that we clear up the meanings of these terms, doing our small part to overcome the so convenient divide between experts and laypeople, and to demystify a convoluted technical language that simply tries to hide basic facts. And one of them is that those who created this crisis and have benefited from it are today passing the bill.
Austerity Measures: The economic policies most favoured by neoliberalism. Their basic characteristics are cuts in public spending, and increased taxes on an unequal basis. Implementing an austerity programme exacerbates the crisis, shrinking the state’s income even further. Why? Shrinking economic activity shrinks all tax receipts, and cuts wages and incomes which support domestic demand and economic growth. Austerity is a proven path to sink an economy into recession.
Bond: A means of borrowing used by a borrower to gather funds. Bonds are issued by companies, public organisations, and governments. A typical bond is acquired by investors who pay its nominal value, and periodically receive a coupon – the interest payment. At expiry date, they receive the original amount of money that they had given. Alternatively, bonds can be traded in markets designed for this purpose. When issued every bond has a nominal value (e.g. 100) which represents the amount the borrower received, and an interest rate (e.g. 5%) defining the amount the lender will receive periodically. From the moment it circulates in markets, and before its expiry date, a bond can be liquidated (made into cash, or cash equivalent); as such its price is subject to fluctuations, resulting in its trading value increasing or decreasing. The yield for the investor who buys it after its issuance is variable. Given a fixed rate of interest, the yield may increase or decrease. As the bond price decreases (due to the issuer being downgraded) the yield goes up, and vice versa.
Cessation of Payments: Refusing to repay loans allows the state to protect the people’s incomes and interests, and avert the pillage of wealth-producing resources demanded to repay loans. Cessation of payments (stopping payments to creditors) would offload an unbearable burden from the backs of the people, and free up resources to cover basic needs of the country. For example, debt servicing for 2010 was over €30 bln, whilst interest payments were €12.3 bln, double what was spent on pensions (€6.4 bln). A government that would stop servicing the debt would secure direct and immediate economic benefits, sparing the country almost €80 bln a year paid for the debt. Henry Kissinger stated that the “The first step is to alter the framework of negotiations – we must remove the ‘weapon’ – to the extent that it is possible – of the possibility of debtors ceasing payments. Industrialised democracies need to urgently provide some sort of emergency aid for the needs of threatened credit institutions, as this will reduce the sense of panic, and the possibility of debtors to blackmail.” (Newsweek 24/1/1983).