CUT YOUR LOSSES: WHY LOS­ING MONEY CAN BE SUCH A HAIRY BUSI­NESS

Business Bhutan - - Editoria - JUG SURAIYA The writer is a former as­so­ciate ed­i­tor with the ToI. [Cour­tesy- ToI]

A large num­ber of banks who have made bad loans to wil­ful de­fault­ers are hav­ing to re­sign them­selves to a ‘hair­cut’.

When I first heard the word used in this con­text, I was in­trigued. Would those re­spon­si­ble for hav­ing sanc­tioned the bad loan – the man­agers of the banks, say — have to have their heads shaved as a mark of penance? Should we ex­pect to see a whole lot of bankers who’d overnight be­come bald?

How­ever, I dis­cov­ered that the hair­cuts bankers had to have were not lit­eral but metaphor­i­cal: a ‘hair­cut’ in com­mer­cialese means hav­ing to ac­cept a smaller sum when try­ing to re­cover a loan. If you’d loaned some­one a hun­dred bucks and you man­aged to get back only ninety bucks, you would have taken a ‘hair­cut’. So how did ‘hair­cut’ come to mean mon­e­tary loss?

Touts who sell black­mar­ket tick­ets at in­flated prices for movie shows, sports events, and other forms of en­ter­tain­ment are id­iomat­i­cally re­ferred to as ‘scalpers’, a term pos­si­bly de­rived from the old prac­tice of Na­tive Amer­i­can war­riors of re­mov­ing the scalps of their de­feated ad­ver­saries as a to­ken of vic­tory.

Did the term to take a ‘hair­cut’, de­not­ing fi­nan­cial loss, de­rive from the sharp prac­tice of mod­ern-day scalpers who metaphor­i­cally fleece their cus­tomers?

That seemed a pos­si­bil­ity. But so did the In­dian cus­tom of the mun­dan cer­e­mony that many male chil­dren un­dergo, which in­volves hav­ing one’s hair cut off un­der the aus­pices of a priest, who then charges the par­ents of the child a hefty fee for the ser­vice ren­dered.

So when bankers are com­pelled to take a hair­cut, does the term trace its et­y­mol­ogy to the mun­dan rit­ual?

Then the other day I went to a lo­cal barbershop to have my hair cut. At the end of the ex­er­cise I was pre­sented a bill of Rs 530, plus 10 per cent tip. Al­most 600 bucks for a hair­cut?

I’d not only had my hair cut, but also my wal­let cut. And I’ve fi­nally un­der­stood why a banker’s ‘hair­cut’ is called a hair­cut.

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