Term used by U.S. Federal Reserve chairman Alan Greenspan to describe the mentality that led to corporate meltdowns such as Enron's and WorldCom's. He first used the phrase publicly before the Senate Banking Committee in mid-July, 2002.
The phrase dovetails neatly with the term "irrational exuberance," which was another Greenspan original. Both describe massive intellectual and moral complexes that have had profound impacts on the whole American -- and, by extension, the whole world's -- economy.
Irrational exuberance drove the paper economy to unprecedented heights in the late 1990s. Infectious greed, in Greenspan's view, drove business leaders to try to keep that paper value, no matter what it did to their companies' long-term interests. Books were cooked, revenues inflated, losses understated, illicit loans concealed... And everywhere you looked, employees were getting it in the shorts.
The term captures not only the unprincipled behaviour of the executives who would do just about anything to crank up the prices of their company's stocks so as to get maximum benefit from their stock options, but also those executives' sinister ability to rope in the people and agencies supposedly assigned to watch them.
In Enron's case, for instance, greed appears to have infected the company's auditors, Arthur Andersen, the vector of contamination being the millions of dollars Andersen made by being Enron's accountants, too. That seems to have led the firm to breach its fiduciary responsibility to Enron's many shareholders by simply not reporting all kinds of off-the-books partnerships clearly designed to conceal boneheaded investments that were costing the company billions of dollars.
The result? Two dead companies, one of which should have been striving to fight the infection.