Wall Street waits for the next "tape bomb"

Jittery days are here again, as traders twitch uncontrollably at each new item of bad news from the credit markets

Published August 6, 2007 2:44PM (EDT)

Wall Street traders like to call unexpected news events "tape bombs." The terminology presumably dates back to the days when the physical flow of ticker tape delivered the latest ups and downs of stock price movements. Last week, some market-moving tape bombs included the announcement on Tuesday by the nation's 10th largest mortgage lender, American Home Mortgage, that it could no longer fund home loans and might be forced into bankruptcy, and the acknowledgment on Friday by Bear-Stearns' chief financial officer that current bond market was "as bad as I've seen it in 22 years."

As markets opened in New York on Monday morning, the sense is that everyone is waiting for the next tape bomb. This makes people jittery.

(The etymology of the word jittery is unclear, but some sources link it to the Scots word "chitter" which means tremble or shiver, and which in turn is derived from the Middle English word "chittern" -- to twitter or chatter. Think of a bunch of sparrows twittering nervously every time the shadow of a hawk passes by, and you get a pretty good idea of what Wall Street is like right now.)

The word "jittery" has been indispensable to financial reporters tracking market movements over the past two weeks. Usually paired with the word "investors," its recent popularity might suggest that Wall Street is populated primarily by speed freaks crashing hard. But there's also a sense in which the word is a bit deprecating. The wide employment of "jittery" implies that traders are over-reacting to every bit of bad news. They're so nervous that they can't restrain their twitch impulses. If they'd just calm down and be reasonable, they'd understand that the world isn't going to end every time a mortgage lender goes belly up. Show some backbone, people!

Or not. Try the following thought experiment. Every time you see the word "jittery" substitute the phrase: "fearful that an implosion in hitherto seriously untested credit markets will cascade into the real economy, sending the United States into a recession, and putting a halt to global economic growth."

Makes you kind of twitchy, doesn't it?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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