192 definitions by abu yahya

(FINANCE) for a financial instrument, the person/institution who takes the opposite position. For example, in a credit default swap (CDS), the buyer is someone who needs insurance against the possibility that a borrower will default on a loan. In that case, the counterparty is whoever receives the CDS premiums, and pays out in the event of default.
The purpose of financial options is to minimize risk to the buyer; therefore, it creates potentially lucrative opportunities for the counterparty, because the counterparty takes on so much risk.
by Abu Yahya April 05, 2010
Breathless and/or mendacious "Globalization" pieces from neoliberal commentators. A lot of pop economics insists that increased trade in services, intellectual property, and equities will solve every significant problem.
The American Enterprise Institute (AEI) is always good for a large steaming helping of globollocks.
by Abu Yahya August 03, 2008
a graph correlating inflation against unemployment rates. Using a horizontal axis to represent unemployment, and a vertical axis to represent inflation, A.W. Phillips found the rate of inflation and unemployment in Great Britain for every year between 1861 and 1957. When he had plotted the 97 dots on the chart, he had a rather neat hyperbola convex to the origin of the graph.

In other words, if the rate of unemployment was low, the rate of inflation was high, and vice versa. At the time, economists concluded that this was a logical outcome of both being influenced by the rate of interest: if interest rates were low, then unemployment would be low and prices would rise, but if interest rates were high then there would be lots of unemployment and workers would not have much money to spend... so prices would go down.

Unfortunately, when economists tried to design policy around this concept they disrupted the smooth relationship. In the years since the 1960's, there has not been a straightforward relationship, and Keynesian economics has had to be drastically revised to a post-Phillips Curve regime.

There is some correlation between inflation and unemployment, but the correlation is much more complicated than originally thought. It is quite possible to have high unemployment and high inflation (i.e., a high "misery index").
The Phillips Curve implies a trade-off between unemployment and inflation. Unfortunately, this trade-off may sometimes represent more of a Faustian bargain.
by Abu Yahya February 14, 2009
(US GOVERNMENT) Federal Open Market Committee; a committee whose members include the 7 governors of the Federal Reserve Board plus five presidents of the Federal Reverse Banks (there are 12 district banks). The FOMC is responsible for open market operations of the Federal Reserve System.
The FOMC manages purchases and sales of Treasury securities.
by Abu Yahya June 16, 2010
(ECONOMICS) An emergency in which a financial or government institution cannot meet its current obligations in an acceptable form of payment. Different from insolvency, which is where that same institution cannot be realistically expected to EVER meet its obligations.

A good example of the difference is a run on a bank, especially in the days before deposit insurance. A perfectly honest, well-run bank could have all of its books in order, and be paying its depositors in legal tender, when suddenly a panic strikes and everyone wants their deposits all at once. This is necessarily impossible, and forces the bank's officers to default on their debts.

Often, the bank could resume operation later when it was established that it held performing assets greater than deposits. More recently, liquidity crises have been a problem suffered by countries facing capital flight
In 1997, several countries in East Asia were stricken with a liquidity crisis. In many cases, such as Malaysia, the panicked response had nothing whatever to do with fundamentals; it was sheer herd mentality.
by Abu Yahya May 04, 2010
(FINANCE) Used either as a noun: a situation in which a trader controls the supply of a traded item, such as shares of stock, supplies of a commodity, etc.

Or else, used as a verb: to obtain control over the supply of a thing, so that one can drive the price up to extremely high levels.

Cornering the market for anything (or getting a corner) is extremely difficult and requires not only immense amounts of money (usually borrowed for the purpose), but also timing and the ability to bluff opponents.

A corner is ultimately a long position in the sense that it is a direct attack on investors taking a short position.
The corner must be timed very precisely, because it cannot last for more than a very short time. Even when the the price of the thing (like, say, silver) goes up to very, very high levels, more supplies cannot come onto the market or the corner will be lost.

At the same time, there has to be a target of the corner--some group of people who have to buy the cornered item no matter how high the price goes (otherwise, the quantity demanded will just go to zero). For this reason, corners are nearly always part of an attempt to squeeze the shorts.
by Abu Yahya April 05, 2010
(FINANCE) hilarious term used for over a century in the trading of stocks, commodities, etc. A way in which someone who controls much of the outstanding shares of stock can make a lot of money while ruining those who are betting against the stock.

A "short" is traditionally someone with expertise in shorting a stock, i.e., managing to borrow shares and sell them in anticipation of a decline in value. Obviously, if there are many people shorting a particular stock at any given time, and if they are wrong about the future, then a steep rise in value if the share price will not only cause them to lose money, it will force panic purchases of stock as the traders attempt to cover their shorts. If the instigator of the squeeze is successful, he will have a corner, and drive the price of the stock up to absurd levels.

An unsuccessful squeeze of shorts in a copper trust triggered the Crisis of 1907. That, in turn, triggered the Aldrich–Vreeland Act (May 1908).
The brokers, after awhile, commenced to borrow large amounts of the stock. This convinced the insiders that there was a big short interest somewhere, and they got together in order to squeeze the shorts... They never awakened to the fact that the {president of the company} had sold out on them... {and were totally ruined}

Henry Clews, Victor Niederhoffer, *Fifty Years in Wall Street*, p.149
by Abu Yahya April 05, 2010

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