A widespread recovery depends on breaking the vicious cycle between banking woes and a weakening economy, but that won't happen until housing stands on firmer groundrnAnother one bites the dust - almost. This time it was struggling giant Citigroup that needed a government rescue as growing worries about the sinking U.S. and global economies fueled angst about the health of financial institutions. Citi's troubles are just the latest illustration of how the U. S. is caught in something economists had feared earlier this year: a "negative feedback loop," as they call it, between banks and the real economy. Simply, it's a vicious cycle in which sharply tighter financialrnconditions weaken the economy, which further erodes the health of financial markets, depressing economic activity even more. If not arrested, it's a recipe for a deflationary spiral much like what happened in the 1930s.
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