A vicious cycle of deleveraging occurs when sales of assets to cover losses produce positive balance sheet effects on other firms,causing creditors to call and extend further loans,which forces further sales of assets and further decreases in prices.

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A vicious cycle of deleveraging occurs when sales of assets to cover losses produce negative balance sheet effects on other firms, causing creditors to call in loans, which forces further sales of assets and further decreases in prices.

A Vicious Cycle of Deleveraging Occurs When Sales of Assets