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KAI RYSSDAL: Economic tea leaves are hard enough to read even in the best of times — those oil prices Jill was talking about are just one example. After tickling an all-time high, crude slipped at the close to finish down a $1.22 at just over $81.50 a barrel.
Two other things happened today that seen to contradict themselves: The network equipment maker 3Com sold itself to a private equity buyer for a not-insignificant $2.2 billion — a hefty sum in these days of tighter credit. And that guy named Greenspan popped his head up again, and said some not-so-nice things about the U.S. economy.
Marketplace’s Stephen Beard reports from the European Desk in London.
STEPHEN BEARD: The days when he made opaque, impenetrable comments are long gone. When he spoke here on BBC radio this morning, Greenspan made it perfectly clear: He’s now more pessimistic about the American economy.
ALAN GREENSPAN: The danger of a recession has obviously risen. But in my judgment, and looking at the forecasts of most American economists, is that it’s still less than 50-50.
Many European economists share his view that the likelihood of a recession in the U.S. is increasing, and that the main reason is falling house prices. Andrew Hilton of the CSFI think tank:
ANDREW HILTON: It’s quite clear that the housing bubble has burst. An awful lot of people had debt that was collateralized by their houses, and whether they will spend money in September, and October and November is quite problematic.
Today’s buyout of 3Com seems to belie that pessimism. U.S. private equity firm Bain Capital Partners raised more than $2 billion to do the deal. So plenty of money out there, the boom goes on… Don’t kid yourself, says London fund manager Justin Urquart-Stewart.
URQUART-STEWART: There’s a huge credit squeeze going on around the world, and that’s going to put a big stop on new mergers and acquisitions. Those that are still in the pipeline and have the financing can go ahead.
And, he says, it’s worth noting that a good chunk of the money to pay for the buyout of 3Com came from a place where no-one is forecasting recession: China.
In London, this is Stephen Beard for Marketplace.
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