'Spailout' Sights & Sounds

Perhaps it was scribbled on a whiteboard hung in an investment bank conference room should Spain score some money from an outside party to save its banking system (sound smart: “bailout”), but it wasn't shared with the public.

Such is the case with the birth of financial jargon, as it's not carried in the heads of financial services peeps (maybe our editor, however) for nine months but worked into the history books at a moment's notice.

What happens is that the word will start to get tossed around the stock trading floors and desks, is then handed off to reporters who are asking for information from the traders, and then it magically appears in print and online resources. Once a single publication begins to penetrate the pages on its website with the recurring word, it's free game to use, and the proliferation zooms ahead.

The general lifespan of financial jargon is very short for after a while, everyone forgets about the term amid new news and new jargon and reverts back to the actual proper terminology of a former buzz worthy event.

Today, the financial jargon word of choice is “Spailout.” Sadly, this term is now one step closer to being relegated to the history books.

“Spailout”

The most important ingredient in developing a new financial jargon word is catchiness. No matter if it borderline makes no sense, it has to be catchy first and then hint at making sense. “Grexit” passed the grade, and means the threat of Greece exiting the Eurozone. “FROB” also passed, even though it's an abbreviation for a Spain bank restructuring plan.

“Spailout” is in the same class as “Grexit”, the quintessential financial jargon word that captures the essence of the financial news with eloquence. A “Spailout” will now go down in word history as money given to “Spanish” banks to “bail them out” dire financial straits.

Fun for us in sifting through the sights and sounds of “Spailout” mania were the rediscovery of two old school finance jargon terms. “Relief Rally” and “Voodoo Economics”, admitted our editor, were two terms he had begun to take for granted as common knowledge. When running a poll of our membership, only 25% had any idea what either meant, more weighted towards an understanding of “Relief Rally.” Obviously a red flag went up following that decoded exercise.

“Relief Rally”

What's your first response to narrowly avoiding a car accident? No doubt it's to breathe a sigh of relief! Now apply this real life event to the zaniness of explaining complicated finance. As investors get worried about a future negative event, sending stocks lower in value today, when that negative event does not transpire a sigh of relief is released…by sending stocks sharply higher. Relief rallies are often short-lived as they are not necessarily based on any good news, just something really bad being averted.

“Voodoo Economics”

To be honest, we are a little unsure as to the precise meaning of this old school fav. We are open to suggestions, so send us a tweet on Twitter @DecodingWallSt with the hashtag #VoodooEconomics. Our stab at decoding the many messages behind two words combined to make jargon goes like this: it's the use of large numbers pertaining to money (rather than the application of larger numbers) to make an economic situation better than it is in actuality.

For example, on Spain, there is no definitive place announced thus far where bailout money will be coming from and when it will arrive, all we know is that a large dollar figure has been tossed to investors seeking relief from two months of stock declines.

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