Glossary

Josh Giersch has a wonderful financial devil’s dictionary up today. Here are some of my favorites:

Correction

What stock analysts issue after slapping a "buy" recommendation on a stock that subsequently goes to zero.

Credit default swap

A financial instrument where one party pays a fixed stream of semiannual payments, and in return for the payments receives a massive counterparty risk headache.

Currency peg

What you wear on your nose when going out to buy Icelandic kroner.

Deflation

The look on a trader’s face on bonus day.

Preference shares

A way for banks to borrow money from the government at 9%, then deposit the money with the Fed and earn 0.5%.

Sub-prime mortgages

Any mortgage granted by Wachovia or WaMu.

To see the final entry, on "yield spread", I’m afraid you’ll just need to check it out for yourself.