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Lex maniac

Investigating changes in American English vocabulary over the last 40 years

death spiral

(1980’s | financese (from athletese) | “vicious circle,” “irrevocable decline”)

“Death spiral” is a noun, but as we use it today it is influenced by the verb “to spiral,” as in “spiral out of control.” However auspicious a spiral may be for the quarterback, in most contexts it portends widening disaster, an ever-growing series of calamities, each fed by the one before. I can’t be the only one who hears an echo of Yeats’s “The Second Coming”: “Turning and turning in the widening gyre . . . Things fall apart, the center cannot hold.” But maybe I am the only one that finds a resemblance between “death spiral” and “perfect storm.”

In its classic form, the death spiral denotes a financial situation in which the seller faces declining revenues and responds by raising prices. Thereupon even fewer people buy the product or service, leading to untenable losses. The first industry in which commentators adopted the expression consistently was utilities, especially electricity. Now we’re most accustomed to hearing the phrase with reference to the health insurance marketplace; that usage was common long before the Affordable Care Act. In the eighties it appeared in in non-financial contexts, but even today buying and selling still provide the most fertile ground. By now it has spread; I’ve come across references within the past year in articles about opiate addiction, declining sperm counts, Venezuela, etc.

There’s another, more specific, financial use that denotes a particular type of corporate raiding: an equity firm buys into (or lends money to) a small publicly owned company, agrees to lend or invest more provided the stock price doesn’t go below a certain level, then drives the stock price down by selling large blocks of shares — robbing the company of its assets and forcing it into bankruptcy while walking away with a profit. (Ain’t capitalism grand? This is an example of what I call vulture capitalism, except vultures don’t kill their prey first.)

For all that “death spiral” conjures up disaster and political gamesmanship, the expression comes originally from ice skating, not aviation, as I had guessed, though it describes airborne maneuvers occasionally. (How it made the leap from skating jargon to the business world I don’t know.) It denotes a move in pairs skating, where the woman holds her partner’s hand as she circles him, one leg in the air, bent all the while at the waist so that her upper body is parallel to the ice. When well-executed, it’s breathtaking. The “death” part has to do with sheer riskiness, as far as I know, but anyone who knows anything about ice skating — or high finance — is invited to jump in here.

I am indebted to lovely Liz from Queens for providing another expression for the blog. Inspired, as always.

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