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In the bust many borrowers have had to find more collateral to offset falling asset prices.
In the financial markets, falling asset prices were leading to margin calls and more forced selling.
Credit dries up, and the economy can enter a vicious cycle of falling asset prices and job losses.
Some fear that accounting dogma has caused a cycle of falling asset prices and forced sales that endangers financial stability.
Even if some gain from falling asset prices, lenders and insurers have to book losses, which leaves them needing money.
The combination of increased debt, falling asset prices and stagnant incomes does not threaten just imprudent borrowers.
Similar(17)
Debt deflation, according to Fed Chief Ben Bernanke, writing in his book, Essays on the Great Depression, is a "dynamic process in which falling asset and commodity prices created pressure on nominal debtors, forcing them into distress sales of assets, which in turn led to further price declines and financial difficulties".
After the Asian crisis of 1997, when plunging currencies, free-falling asset prices and bankrupt banks had brought regional economies to a standstill, various national leaders most notably Thaksin Shinawatra of Thailand declared that South-East Asia should not look solely to exports to resuscitate its economic fortunes.
A vicious circle of deleveraging, asset collapses, margin calls, cascading falls in asset prices well below falling fundamentals and panic is now underway.
This can unleash a vicious spiral of falling incomes, asset prices and rising real debt.
But, while risk aversion and volatility were falling and asset prices were rising, economic growth remained sluggish throughout the world.
More suggestions(16)
falling property prices
falling gold prices
falling hardware prices
plunging asset prices
tumbling asset prices
collapsing asset prices
falling equity prices
plummeting asset prices
lower asset prices
falling resources prices
falling house prices
falling tablet prices
falling asset markets
falling commodity prices
falling fuel prices
falling asset values
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com