The Catastrophic Words
Special Correspondent
Dec. 20, 2008

People doublespeak. They all indulge in obscuring the facts, thinking it is not a big deal. They use the power of ambiguous words to make their case. Employees use it to impress the employers. Priests use the same to convince their followers. Brokers use it to sell financial instruments. Politicians use it to win elections. However, the current financial crisis, and the resulting global depression are the real benchmarks of how far the power of words can go in creating chaos in the world. The current worldwide depression manifests how deeply the effects of powerful deceptive words can penetrate the lives of common people all around the world.

The current financial crisis has its roots in the power of words of former Federal Reserve Chairman, Mr. Alan Greenspan, a close financial advisor to former US President Richard Nixon. In 1987, he inherited the legacy of the country’s top banking position from Mr. Paul Volker, a current financial advisor to President-elect, Barack Obama. Within a week of his appointment, Mr. Greenspan announced his fight against ‘measured risk of unnecessary pressures from price increases.’ Within six weeks of his famous proclamation of the battle against inflation, the stock market crashed. Mr. Greenspan panicked, and created the flood of money in the economy that made it easy to borrow, spend, and never care about the mounting debt. Later, Mr. Greenspan apologized to the country for his initial comments on inflation. There was no inflation then. There is no inflation now. Inflation never showed up in the radar of the Federal Reserve in the last twenty-six years. It was a classic case of doublespeak to make his presence felt. In his article “The World of Doublespeak,” William Lutz describes:
Doublespeak is not a matter of subjects and verbs agreeing; it is a matter of words and facts agreeing. Basic to doublespeak is incongruity, the incongruity between what is said or left unsaid, and what really is. It is the incongruity between the word and the referent, between seem and be, between the essential functions of language -- communication -- and what doublespeak does -- mislead, distort, deceive, inflate, circumvent, obfuscate. (346)

Mr. Greenspan was able to demonstrate his ability in using doublespeak to circumvent the reality from the truth on the state of inflation creating a chilling scare in the stock market. The long-term effects of that doublespeak mingled with well-orchestrated jargon, and the subsequent temporary fixes from the Federal Reserves for decades, are now sending seismic shocks waves through the backbone of the worldwide financial infrastructure.

After the 1987 stock market crash, the panicked Federal Reserve opened the floodgate of easy money. The lower interest rate, diluted guidelines on bank loans, and the lowered standard for mortgage underwriting, were soon responsible for the first financial crisis in the late eighties -- the savings and loan debacle. Politicians from the right and the left called it “misfortunes of some.” The Federal Government bailed out the small banks in the middle of a mini real estate collapse, increasing the budget deficit by a staggering amount. The power of words, the doublespeak from the politicians obscured what really happened -- a banking and financial meltdown. Soon everyone forgot about the crisis.

What could have been a good lesson became a matter of historical insignificance. Mr. Greenspan became the vanguard of a new financial culture -- the Wall Street investment banking community. New words started pouring into the financial infrastructure -- ‘financial swaps,’ ‘collateral debt obligations,’ ‘hedge funds,’ and so on. The jargon was real, effective, and scary for the common people. The underlying premises of all the obscured terms were simple – take risks and expect the Federal Government to provide a bailout mechanism in case of a catastrophe.

Then came the Clinton era. The newly elected President was famous for his power of words. President Bill Clinton and his Vice President Al Gore soon convinced all in the right, left, and the center about a new word -- ‘globalization.’ It really means trade and manufacturing is global, and therefore, the most efficient producing country should produce, and the country with maximum demand should consume. It was doublespeak. In reality, it meant a means for the cheap labor for American businesses through ‘outsourcing’ from countries like China, Mexico, and India. When Ross Perot, a business tycoon from Texas, and a former contender for the oval office challenged the Clinton-Gore team on the terms ‘globalization’ and ‘outsourcing,’ and their long-term devastating effects on the US economy, the Democratic administration opted for making the discussion of ideas to be a ritual fight. They manifested the power of words through verbal opposition instead of logical reasoning. In her article, “But What Do You Mean?” Deborah Tannen describes the mechanism of verbal fighting:
Those who expect their own ideas to be challenged will respond to another’s ideas by trying to poke holes and find weak links -- as a way to helping. The logic is that when you are challenged you will rise to the occasion: Adrenaline makes your mind sharper; you get ideas and insights you would not have thought of without the spur of the battle. (328)

The Clinton administration showed their mastery in verbal fighting. Soon North Atlantic Free Trade Agreement (NAFTA) dominated the continent sucking out the jobs from the US into Mexico and Canada. The words ‘globalization’ and ‘outsourcing’ became the signatures of pseudo successes in the late nineties creating the biggest ‘black hole’ for the US economy. The power of words again created the biggest loophole in the trade policies that would haunt America for decades to come.

In 2001, when George Bush became the President, the US economy was already in recession because of the decades of financial mismanagement by the Federal Reserve, and the Reagan, Bush senior, and Clinton administrations. By the end of 2000, the growth sector of the economy had crashed, unemployment was rising, and consumer confidence was falling. It was known as ‘burst of the dot com bubble.’ President Bush looked at the Federal Reserve Chairman Alan Greenspan and opted to doublespeak. He brought the notion of ‘spending for national security’ to the forefront. It really meant uncontrolled waste of money in the name of conservatism. Federal Reserve lowered the interest rate to 1%, made access to money easier than ever before in the history of the United States, and the Government deregulated all banking and financial rules and regulations. The result was a series of financial and economic bubbles never seen before. The stock market doubled, price of gold tripled, residential real estate prices went through the roof, and the essential commodities like food, oil, and gas, all moved up in price. At that time, Alan Greenspan showed his mastery in doublespeak. In 2005, when the US Senate Banking and Finance Committee asked him about the bubbles in the economy, especially in the real estate, he said, “some regional froths exists that are clearly manageable and signal least cause of concern.” Convinced with the power of words of the Federal Reserve Chairman, the Senate decided to sit and watch -- the biggest mistake ever made by the political stalwarts. Not all were so sure but in the subsequent testimonies, Mr. Greenspan convinced everyone about the safe and sound state of the economy. In the meantime, the hedge funds, the private equity funds, and the investment banks continued their quest for wealth through the creation of ‘ subprime mortgages.’ The jargon really means mortgages for those who really cannot afford the same in the long term. The greedy financial institutions converted the mortgage instruments into globally marketable securities. The financial cancer in the economy never got the radiation treatment, painkillers in the form of economic stimulus, uncontrolled spending, and total reckless mismanagement of budget deficit dominated the main streets and Wall Street of America. In 2006, Dr. Ben Bernanke, a Princeton academician economist replaced Mr. Greenspan as the chairman of the Federal Reserve. He increased the doublespeak intensity calling the state of the economy ‘safe and sound with least possible risks.’ Interestingly, as time passed by, and as the economy slumped like a heavy rock, Dr. Bernanke, in early 2007 changed his doublespeak terms to ‘measured, calculated risk in the economy.’ Eventually the markets collapsed, the subprime mortgages became delinquent, banks and financial institutions became broke, economy took a severe plunge into depression, and the Wall Street investment banking community was wiped out. Today, the scare has finally replaced greed. Now, Dr. Bernanke seldom speaks after the total meltdown of the financial system worldwide including the banking system, and the stock markets. All eyes are on Federal Government begging for the same bailout schemes that started in the late eighties at the cost of staggering budget deficits, and exploding future tax consequences. Federal Government has spent more than one trillion dollars without any real assuring effects on the economy. The trillion dollars have come from the US Treasury in the form of additional budget deficits to be paid in the form of higher taxes by the future generations of America.

Power of deceptive words through doublespeak, and the strong verbal opposition are the root causes of the current financial meltdown and the global depression. The long-term effects are devastating. What started in 1987, and still continues today, is devastating the worldwide economies. Millions of common people have lost their jobs, hundreds of thousands of families have lost their homes through foreclosures, and millions of investors have lost their stock portfolios and pension funds. The ripple effects of the financial meltdown are felt from New York to Shanghai. The depth of agony and pain cannot be described in words. It is the power of deceptive words that caused the global financial catastrophe -- the misleading, distorting, deceiving, inflating, and circumventing words.

Work Cited
Lutz, William. “The World of Doublespeak.” The Brief Bedford Reader. Ed. X. J. Kennedy, Dorothy M. Kennedy, and Jane E. Aaron. 10th ed. New York: Bedford/St. Martin’s, 2009. 345-351.
Tannen, Deborah. “But What Do You Mean?” The Brief Bedford Reader. Ed. X. J. Kennedy, Dorothy M. Kennedy, and Jane E. Aaron. 10th ed. New York: Bedford/St. Martin’s, 2009. 325-331.

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