adverse feedback loop

This type of so-called adverse feedback loop – in which a deterioration in the housing market and in the wider economy impinges on banks’ balance sheets and their ability to lend, which then in turn feeds back on to economic activity – already appears to be operating to some extent.”As banks made credit harder to get, people are forced to reduce spending, Mr Dale said. He warned house prices probably had further to fall, bringing painful adjustments for many households and businesses.
Mr Dale’s remarks came as the Council of Mortgage Lenders on Thursday unveiled gross mortgage lending figures for August of £21.8bn, down from £34bn a year ago as the credit crisis began.