Correct. Your trust network is assumed to consist of people who are basically reasonable. So if any trusted ratings are negative (which means "this person is probably a scammer, watch out!"), then this should be taken very seriously. That's why a single negative rating can easily cause a loss of 100+ trust points in this new algorithm. And if the most recent rating is negative, then this is a strong indicator that the person may have been running a long con which has turned into a full-blown scam.
If anyone is abusing this by reposting negative trust unnecessarily or giving out negative trust too easily, then you should remove them from your trust network.
@bold: This may lead to an abuse of feedback left by Default Trust members. I can't imagine now how one scammers account will look like with the max limit being 9999.
Is it possible to have a notification when a feedback is left? If not, it would be useful if the feedback system has a time attached to the date. It helps to know when a person was left a feedback if there are many members who have left a feedback on the same day.