Billions and trillions

I received the 2008 Pensions Scheme Update this week from the Trustees appointed by my employer. A covering letter from the Secretary to the Trustee, pointed out that "The recent turbulence in the financial markets has caused concern for many members."

Turbulence. That's an interesting choice of term. It implies that financial stability will be restored in the near future. When one thinks of turbulence, one thinks, perhaps, of the choppy wake from a motorboat, which might make things slightly unpleasant for a short period, but which will ultimately dissipate. More accurate alternatives to 'turbulence' include 'catastrophic shock wave', and 'collapse', but then I guess such phrases fail to reassure the anxious pension contributor...

Within the Pensions Update document was a subsection which explained what the credit crunch is. It was quite a nice summary, but it did contain the following paragraph. See if you can spot the error:

House prices in the US have now fallen by around 20% and may fall further. As the value of the packaged loans began to fall, the banks had to write down the value of these loans on their balance sheets. The International Monetary Fund estimate that banks will suffer losses of around $1 trillion, that's $1,000,000,000. The concern about falling property values has spread worldwide, for example to include mortgages in the UK as well as loans on commercial property.

Nice to know our pensions are in safe hands.

Pensions Credit crunch