The term confederacy or confederation does not necessarily refer to a "loose" alliance of states. It is simply a union of states or persons bound by law, charter, agreement, etc. The term derives from the Roman era, and its usage in the early days of the United States had no political or sectional overtones. It was used interchangeably with the terms "union" and "united", and was used as often in the North as in the South. Although the term is not used as much today, you can still hear it occasionally used today, with lower-case "c", in the context of its original meaning, e.g., "Mr. Smith, and his confederate, Mr. Jones......."

When capitalized, of course, the term "Confederacy" takes on the post-1861 meaning of the voluntary association of Southern states, with all the political and sectional overtones that we have come to associate with the Confederate States of America.