Like most of the “crises” that captivate Washington’s attention, current economic and financial affiars have produced some interesting new terms, concepts and phrases.

One of my favorites is the term “toxic assets.” (When members of the pro-bailout forces describe these assets, which taxpayers are supposed to buy, they typically use the less caustic phrase “troubled assets“). During my brief venture over to the business school to take an accounting class, I seem to recall something about balance sheets involving “assets” and “liabilities,” but I don’t remember where I am supposed to put toxic assets in my ledger. Dinner might be considered an asset, but if it is poison, it would seem to me to be more of a liability. Toxic assets are nothing more than assets that are overpriced or overvalued — perhaps dramatically so. Yet saying that taxpayers should purchase or otherwise guarantee “overpriced assets”, well, that doesn’t have a very good ring.

Another concept I found amusing was President Bush’s assertion in his Tuesday morning plea to the nation (and its elected representatives) that to do nothing would not return us to the “smooth functioning of the free market“. Funny idea. I could show you a few hundred abandoned factories and warehouses on the drive up I75 from Toledo to Detroit that suggest the free market functions in anything but a smooth way. Capitalism’s “creative destruction” has always involved tremendous dislocation during transition periods.

And then there was Senator McCain’s amusing statement in Friday’s debate that a bailout was necessary to “keep these institutions stable.” Another wonderfully interesting phrase. I thought that, by definition, institutions were stable. If something isn’t stable, well, it’s not much of an institution, is it?

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