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Virtuous circle and vicious circle

"Vicious circle" redirects here. For other uses, see Vicious Circle (disambiguation).
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(March 2012) ()

The terms virtuous circle and vicious circle, also known respectively as virtuous cycle and vicious cycle, refer to complex chains of events that reinforce themselves through a feedback loop. A virtuous circle has favorable results, while a vicious circle has detrimental results.

Both circles are complex chains of events with no tendency toward equilibrium (social, economic, ecological, etc.)—at least in the short run. Both systems of events have feedback loops in which each iteration of the cycle reinforces the previous one (positive feedback). These cycles will continue in the direction of their momentum until an external factor intervenes and breaks the cycle.

A well-known example of a vicious circle in economics is hyperinflation.

Contents

Vicious circles in the subprime mortgage crisis

Further information: Subprime mortgage crisis
Vicious cycles in the subprime mortgage crisis

The contemporary subprime mortgage crisis is a complex group of vicious circles, both in its genesis and in its manifold outcomes, most notably the late 2000s recession. A specific example is the circle related to housing. As housing prices decline, more homeowners go "underwater", when the market value of a home drops below that of the mortgage on it. This provides an incentive to walk away from the home, increasing defaults and foreclosures. This, in turn, lowers housing values further from over-supply, reinforcing the cycle.

The foreclosures reduce the cash flowing into banks and the value of mortgage-backed securities (MBS) widely held by banks. Banks incur losses and require additional funds, also called “recapitalization”. If banks are not capitalized sufficiently to lend, economic activity slows and unemployment increases, which further increase the number of foreclosures.

Economist Nouriel Roubini described the vicious circles within and across the housing market and financial markets during interviews with Charlie Rose in September and October 2008.

Designing ecological virtuous circles

By involving all stakeholders in managing ecological areas, a virtuous circle can be created where improved ecology encourages the actions that maintain and improve the area.

Other

Other examples include the poverty cycle, sharecropping, and the intensification of drought.

  1. Charles Webel, Johan Galtung (19 March 2012). Handbook of Peace and Conflict Studies. Routledge. ISBN 9780203089163. Retrieved19 March 2012.
  2. Feldstein, Martin (18 November 2008). "How to Help People Whose Home Values Are Underwater". Opinion. The Wall Street Journal. Retrieved2013-09-05.
  3. "Roubini & Panel". Charlie Rose. Retrieved2013-09-05.
  4. "Rose & Roubini Discussion". Charlierose.com. Archived from the original on 2013-04-01. Retrieved2013-09-05.
  5. "Rose & Roubini". Charlierose.com. Retrieved2013-09-05.
  6. Morrison Scott A (March 2016). "Designing virtuous socio-ecological cycles for biodiversity conservation". Biological Conservation. Elsevier. 195: 9–16. doi:10.1016/j.biocon.2015.12.022.
Wikimedia Commons has media related to Vicious circles and Virtuous circles.
Look up vicious circle or virtuous circle in Wiktionary, the free dictionary.

Virtuous circle and vicious circle
Virtuous circle and vicious circle Language Watch Edit 160 160 Redirected from Vicious circle Vicious circle redirects here For other uses see Vicious Circle disambiguation This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Virtuous circle and vicious circle news newspapers books scholar JSTOR March 2012 Learn how and when to remove this template message The terms virtuous circle and vicious circle also known respectively as virtuous cycle and vicious cycle refer to complex chains of events that reinforce themselves through a feedback loop 1 A virtuous circle has favorable results while a vicious circle has detrimental results Vicious Circle by Jacek Malczewski National Museum Poznan Both circles are complex chains of events with no tendency toward equilibrium social economic ecological etc at least in the short run Both systems of events have feedback loops in which each iteration of the cycle reinforces the previous one positive feedback These cycles will continue in the direction of their momentum until an external factor intervenes and breaks the cycle A well known example of a vicious circle in economics is hyperinflation Contents 1 Examples 1 1 Vicious circles in the subprime mortgage crisis 1 2 Designing ecological virtuous circles 1 3 Other 2 See also 3 References 4 External sourcesExamples EditVicious circles in the subprime mortgage crisis Edit Further information Subprime mortgage crisis Vicious cycles in the subprime mortgage crisis The contemporary subprime mortgage crisis is a complex group of vicious circles both in its genesis and in its manifold outcomes most notably the late 2000s recession A specific example is the circle related to housing As housing prices decline more homeowners go underwater when the market value of a home drops below that of the mortgage on it This provides an incentive to walk away from the home increasing defaults and foreclosures This in turn lowers housing values further from over supply reinforcing the cycle 2 The foreclosures reduce the cash flowing into banks and the value of mortgage backed securities MBS widely held by banks Banks incur losses and require additional funds also called recapitalization If banks are not capitalized sufficiently to lend economic activity slows and unemployment increases which further increase the number of foreclosures Economist Nouriel Roubini described the vicious circles within and across the housing market and financial markets during interviews with Charlie Rose in September and October 2008 3 4 5 Designing ecological virtuous circles Edit By involving all stakeholders in managing ecological areas a virtuous circle can be created where improved ecology encourages the actions that maintain and improve the area 6 Other Edit Other examples include the poverty cycle sharecropping and the intensification of drought See also EditCatch 22 logic Causal loop diagram Cycle of poverty Closed timelike curve Endogeneity econometrics Positive feedback Rational addiction Reflexivity sociology Self fulfilling prophecy Spiral of silence Unintended consequencesReferences Edit Charles Webel Johan Galtung 19 March 2012 Handbook of Peace and Conflict Studies Routledge ISBN 9780203089163 Retrieved 19 March 2012 Feldstein Martin 18 November 2008 How to Help People Whose Home Values Are Underwater Opinion The Wall Street Journal Retrieved 2013 09 05 Roubini amp Panel Charlie Rose Retrieved 2013 09 05 Rose amp Roubini Discussion Charlierose com Archived from the original on 2013 04 01 Retrieved 2013 09 05 Rose amp Roubini Charlierose com Retrieved 2013 09 05 Morrison Scott A March 2016 Designing virtuous socio ecological cycles for biodiversity conservation Biological Conservation Elsevier 195 9 16 doi 10 1016 j biocon 2015 12 022 External sources EditWikimedia Commons has media related to wbr Vicious circles and wbr Virtuous circles Look up vicious circle or virtuous circle in Wiktionary the free dictionary Schlesinger L Heskett J 1991 Breaking the cycle of failure in services Sloan Management Review 31 17 28 Rational Choice with Passion Virtue in a Model of Rational Addiction In this link the author uses Aristotelian virtue as a mediator between passion and reason in the construction of utility consumption functions in an esoteric part of consumer behaviour theory related to decision making in addictive situations China A Stabilizing or Deflationary Influence in East Asia The Problem of Conflicted Virtue In this paper the author is using virtue in the sense of a positive outcome balance of payments surplus that conflicts with long term regional growth and stability Retrieved from https en wikipedia org w index php title Virtuous circle and vicious circle amp oldid 1053480412, wikipedia, wiki, book,

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