But greater fiscal and financial risk sharing and breaking the negative feedback loop between sovereigns and their banking systems must be addressed.

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The result is what scientists call a negative feedback loop.

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To put it another way, there is a horrific negative feedback loop between creditors' confidence in the ability of certain eurozone governments, such as Italy, to repay their debts, and confidence in the ability of their respective banks to honour their debts.

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This creates a self-sustaining negative feed back loop as prices fall, produces cut back production, creating more unemployment, reducing demand, which increase deflationary pressures.

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