Current Affairs - Vocabulary - SPLessons

Current Affairs Vocabulary Day 6

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Current Affairs Vocabulary Day 6

shape Introduction

A Newspaper is a printed or online publication that provides readers with news and articles i.e. the current affairs of a country and the world. Current Affairs play a prominent role in several government related recruitment exams in India. To better understand the current state of affairs, a candidate should acquire rich vocabulary primarily used by editors and publications of newspaper articles and editorials. SPLessons has made an effort to provide a comprehensive list of commonly used words in newspaper articles and editorials. Current Affairs Vocabulary Day 6 provides the readers with a collection of useful vocabulary for newspapers.

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Where might the next crisis come from?

TEN years ago, BNP Paribas, a French bank, temporarily suspended dealings in three funds, citing “the complete evaporation of liquidity in certain market segments of the US securitisation market”. Many people treat this as the start of the credit crunch but one can trace it back to the need for Bear Stearns to rescue hedge funds that invested in mortgage-backed securities in June, or the signs of home loan defaults and failing mortgage lenders that emerged in late 2006. The subsequent tightening of credit and loss of confidence in the banking system eventually led to the collapse of Lehman Brothers, when the crisis reached its height in the autumn of 2008.

The inevitable question on the occasion of such anniversaries is: could it happen again? Total debt has risen, rather than fallen, over the last decade, reaching $217trn or 327% of GDP, according to the Institute for International Finance. But the debt is differently distributed from 2007; more of it is owed by governments and more of it is owned by central banks. Since these banks have no incentive to hassle countries for repayment, the air of crisis has dissipated. Banks have more capital, making them more secure. And low interest rates have made servicing debt more affordable for both consumers and companies.

Nevertheless, we are nowhere near “normal” conditions; although America’s economy has been recovering for a long while and unemployment is low, the Federal Reserve is proceeding very cautiously with tighter rates. And the ECB, Bank of England and Bank of Japan have not even started on the process.

Given all this, where might the next crisis come from? Clearly, the two obvious possibilities are a sharp rise in defaults (causing lenders to lose confidence) or a significant increase in interest rates (which would trigger the same process). Defaults can occur without a rate rise if the economy goes into recession. That could result from war with North Korea (apparently God has authorised President Trump to do this) or a less frightening but still significant trade dispute with China. It could result from internal Chinese debt problems since that is where recent debt growth has been concentrated. Or perhaps it will happen in the corporate bond markets, which are less liquid than they used to be, and could suffer a panic sell-off by investors in bond funds. Other possibilities include student debt or car-loan debt, where consumers may have become overstretched again.

The more likely possibility is a monetary policy mistake. When the Fed started to use quantitative easing, many people cited the “ketchup principle” for the inflation risk (“shake and shake the ketchup bottle, first a little, then a lot’ll”). The inflation never occurred but there is the risk that in the unwinding of policy, all will seem calm until the market suddenly breaks. Something similar happened in 1994 when the bond market was badly affected by an earlier round of Fed tightening. And the Fed is the most likely culprit, not just because it is first to tighten but because America’s monetary policy has ripple effects through the world, via the dollar and the American economy’s huge weight in global GDP. The next crisis may come from Washington.

shape Vocabulary

Word Definition Synonyms Usage
Crunch (Noun) A crucial point or situation,
typically one at which a decision
with important consequences must be made.
  • Moment of truth
  • Critical point
  • Crux
  • Crisis
  • Decision time
When the crunch comes, she’ll be forced to choose
Hedge (Noun) A way of protecting oneself against
financial loss or other adverse circumstances.
  • Safeguard
  • Protection
  • Shield
  • Screen
  • Buffer
  • Guard
He sees the new fund as
an excellent hedge
against a fall in sterling.
Eventually (Adverb) In the end, especially after a long delay, dispute,
or series of problems
  • In the end
  • In due
  • By and By
  • In time
  • After some time
Eventually, after midnight,
I arrived at the hotel.
Inevitable (Adj) Certain to happen; unavoidable
  • Unavoidable
  • Inescapable
  • Bound to happen
  • Sure to happen
His resignation was inevitable.
Owe(Verb) Have an obligation to pay or repay (something, especially money)
in return for something received.
  • be in debt (to)
  • be indebted (to)
  • be in arrears (to)
  • be under an obligation (to)
They have denied
they owe
money to the company.

Word Definition Synonyms Usage
Hassle (Noun) Irritating inconvenience.
  • Inconvenience
  • Bother
  • Nuisance
  • Problem
  • Difficulty
  • Annoyance
  • Struggle
Parking in the city centre is a hassle.
Dissipated (Adj) (Of a person or way of life)
Overindulging in sensual pleasures.
  • Dissolute
  • Debauched
  • Decadent
  • Intemperate
  • Immoderate
The new heir was a dissipated youth.
Nevertheless (Adverb) In spite of that; notwithstanding; all the same
  • In spite of that/everything
  • Nonetheless
  • Even so
  • However
  • Still
Statements which, although
literally true, are nevertheless misleading.
Recession (Noun) A period of temporary economic decline during which trade and
industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
  • Economic decline
  • Downturn
  • Depression
  • Slump
  • Slowdown
The country is in the
depths of a recession.
Ease (Verb) Make (something unpleasant or intense) less serious or severe
  • Relieve
  • Alleviate
  • Mitigate
  • Soothe
He hoped the alcohol
would ease his pain