May I have a word about… economists who terrify us with talk of doom loops | Jonathan Bouquet

They might think twice before using such language in front of the general public

Truly, we live in parlous economic times. For proof, consider the warning from the International Monetary Fund last week: The sovereign bank nexus could lead to a self-reinforcing adverse feedback loop that could force the government into default", calling the process a doom loop". Bewildering or what?

I know economists are a rarefied breed, but they're not doing themselves any favours when they dish up warnings like this. Mind you, doom loop" is sensible shorthand. After all, consider its full meaning: The doom loop is the circle of vulnerability where a country's banking system can be severely hurt by volatility in the price of the sovereign bonds they hold for reserves resulting in a contraction in lending provided by the banks."

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