Financial terminology intentionally opaque

By Al Portner

Ordinary "Joes" spend prodigious time worrying about the economy. Reporters and analysts speak a foreign language to most of us outside their confined bubbles of influence.

Banks need to strengthen their “balance sheets.” “Price earnings ratios” need to improve. “Hedge funds” lack of significant oversight. “TCE or tangible common equity” recently surfaced in news reports about the solvency of banks. Insider terminologies whizz past the understanding of most of us like a knuckleball hurled by a major leaguer.

A knuckleball (as metaphor) goes relatively slowly, but tends to make unexpected movements on its journey from the pitcher’s hand to the catcher’s mitt. And that describes our financial system.

I admit to a certain level of ignorance on these matters. Patiently explained, none of the concepts seems hard, but asking for explanations is discouraged. Balance sheet ratios and price/earnings standards are judged by industry within acceptable ranges.

Last week, I called a stockbroker friend and asked him for a list of industry sectors and normalized ratio values for those sectors. I hoped to analyze financial positions and make smart buy or sell decisions. He couldn’t access the information, and so far hasn’t found it. Financial folks don’t really want investors to know the definition of normal.

I will look also and bring what I find here in the form of short columns that begin to explain the economy that threatens to collapse around us.

The $50 billion Bernie Madoff fraud case/giant Ponzi scheme makes one wonder if many financial people who act like they know what they are talking about can be completely trusted. Certainly, not all financial executives are crooks. To steal a phrase from Ronald Reagan… “Trust; but verify.”

Al Portner is a former daily newspaper editor and publisher who has operated newspapers in seven states. He is currently the proprietor of The Assignment Desk, LLC, an editorial services consortium.

Portner is also the author the forthcoming non-fiction book “Mark Twain and the Tale of Grant’s Memoir.” He can be reached at alanportner@theassignmentdesk.net. The Assignment Desk URL address is http://www.theassignmentdesk.net/.