bric-a-brac english

Crisis!

In VOCABULARY on November 27, 2012 at 9:08 pm

This is a short introduction to the language of crises [krai-seez] plural of crisis [krai-sis]. Crisis is a Greek word (krisis). The same Greek root has given a number of words to English: A critic  is someone who writes reviews and expresses opinions (positive or negative) about the quality of films, books, restaurants, etc. Α critic’s work is called criticism, especially when it’s about works of art. But, more generally, criticism also means expressing a negative judgment or opinion about something. When you do that, you criticise [krit-i-saiz]. A criterion [krai-teer-ee-uhn] is a standard you use to judge or make a decision about something (What are the criteria for selecting the winner?). If a situation is critical, it is very serious or dangerous.

The crisis everybody is concerned about these days is the eurozone crisis (the eurozone is the group of countries that use the Euro). This is a (sovereign) debt crisis, which means that certain countries owe so much money that they find it very difficult to pay it back. When a country cannot repay its debts, we say it defaults on its obligations [di-fawlt, also noun].

  • sovereign (adj.) [sov-(e)rin] = belonging to a state/government
  • owe (pronounced like the letter “o”) = when you have to pay back money someone has given you
  • debt [det] (silent b here) = the money you owe others

A sovereign debt crisis starts with large (budget) deficits [buhj-it def-i-sit]. A country runs a budget deficit when it spends more money than it receives. Then, it needs to borrow [bor-oh] (this is what you do when you ask your bank to give you some money which you then pay back over a period of time; the bank lends you the money). Countries often borrow by issuing bonds (a bond is an official paper which promises that the government will pay you a certain amount of money on a certain future date). Bonds carry interest (the money you will receive is more than the money you paid to buy them). The interest rate is a percentage (2%, 3%, etc.) that tells you exactly how much more money you will receive. In some cases, such as bank loans, interest rates can be variable (the interest rate can increase or decrease while you’re repaying the loan) or fixed.

The IMF (International Monetary Fund) is an organisation that gives loans (lends money) to countries with debt problems. It usually gives this money in tranches [tranche, rhymes with “branch”] (portions or parts of the total amount).

Budget deficits and sovereign debt are measured in relation to a country’s GDP (Gross Domestic Product) – the total of goods and services produced by a nation during one year (a simplified definition). So, if a country has a GDP of 100 billion and a deficit of 1 billion, it’s running a 1% deficit. If its debt (the total amount of money it owes) is 120 billion, its debt is 120% (of GDP).

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