Northern Rock - positive feedback and reputation loss

The current situation with Northern Rock is an excellent example of postive feedback where every day bring fresh news which amplifies the problems facing the bank. In communication terms (and banking terms) nothing can be more serious and terminal for a bank than TV coverage of people queuing up to take their savings out of a bank, in spite of full government and regulatory support. The reputation and corporate brand of Northern Rock is literally disappearing along with customers deposits.

The reaction by the Sunday papers suggests that the situation has become too serious and has the situation to ripple out and amplify problems elsewhere in UK financial markets (further positive feedback). Note Governors of Central Banks operate on a negative feedback model basis (dampening down feedback by putting up interest rates for example). Take a look at the BBC Businss Editor Robert Peston's blog, some good background and issues for consideration next week. Will Northern Rock still be a standalone organisation on Friday?

If you are interested in reading more about positive and negative feedback in economics, take a look at The Origin of Wealth by Eric Beinhocker.