It isn’t necessary to assume more than a sliver of positive feedback for confidence to make a significant difference. Once the future looks dim enough, it’s irresistibly rational to cannibalize what’s left of it, and then the term ‘death spiral’ begins to acquire real force. Of course, there are a great many other dynamic tangles at work, and popular sentiment is likely far more of an indicator than a driver. Still:

Ideas arising in a social environment quagmired in radical pessimism (or the opposite) probably require some careful discounting to correct for skew.

(Via Zero Hedge)