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He also allegedly use the "Distressed Asset/Debt (DAD) shelter in which fallen securities were bought at pennies on the dollar and then written off at their original full value, again generating huge losses.
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That allowed for a "diabolical loop" to develop in which falling confidence in banks reinforced falling confidence in sovereigns which reinforced falling confidence in banks.
That has created a vicious circle, in which falling consumer spending is expected to weigh further on the economy.
The second dynamic is the firesale aspect of busts, in which falling asset prices prompt panicked sales which cause prices to overshoot downwards, worsening the crash.
Some economists fear that cutting government spending could lead to a vicious circle, in which falling demand further depresses employment, leading to greater declines in demand and output.
And it would bring the economy dangerously close to deflation, the destabilizing condition in which falling prices freeze economic activity as people anticipate lower prices.
In other words, today's labour market just doesn't follow the old-fashioned recipe in which falling unemployment rapidly feeds through, via wages, to inflation.
Friday's numbers raised more worries about deflation, a destructive loop in which falling prices slow economic growth, leading to lower wages, lost jobs and more stagnation.
Even the events in which falling is the whole point, like diving or the high jump or the pole vault, highlight the grace of the human form.
Not "depression" but "deflation"–the vicious phenomenon in which falling spending begets wage and price cuts, which beget further spending cuts in a debilitating downward spiral.
The fear has always been of a "debt-deflationary" cycle - a situation in which falling prices lead to reduced profits for businesses and subsequent wage cuts.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com