Monday, April 20, 2009

New Financial Terms

A friend called me to enquire on what tier 2 capital is when there was a local news on that and I realized this is a very topical subject considering that the press world over is writing reams on these new financial terms

My attempt here is to relate to them in our day to day lives and link them for their meaning. If I missed any please do send me your feedback and I will ensure to add them

Liquidity Crunch: When you approach the gas station and realize you do not have cash and they do not accept the credit card and Murphy works at its best and the ATM is down. You surrender your driver’s license to the gas station manager for reprieve

Tier 1 Capital: A difficult mode of accessing funds. You tend to borrow funds from your spouse. Remember the statement your spouse resounds – my money is mine and your money is ours. It is so tough to break it and borrow money from her

Tier 2 Capital: This is the notional wealth you have and this, in almost all the cases is the in-laws wealth which you tend to accrue in your financial calculations. Never met anyone who managed to credit the Tier 2 Capital in his personal account

Toxic Assets: You offer soft loan to your close friend and he suddenly disappears. His mobile switched off and you end up taking the hit

Leveraged: You use up your share of monthly pocket money and borrow from your spouse with higher interest and settle it the following month leaving with no pocket money for that month