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KAI RYSSDAL: The stock market managed some respectable gains today. Really, though, so what? Far be it for us to suggest that you ignore what Wall Street thinks. But maybe it’s more significant to observe that the dollar slumped to its lowest level ever against the Euro today. And that gold is more valuable now than it’s been in almost 28 years. And that oil soared to a new record today, above $97 a barrel. And that IndyMac, one of this country’s biggest independent mortgage lenders, posted a quarterly loss way bigger than anybody expected. And that some people who ought to know, are starting to voice their worries publicly. I’m just sayin’. Here’s Marketplace’s Bob Moon.
BOB MOON: This isn’t the same old gloomy story. It’s a brand new story on how things keep getting worse. More and more investors are dumping their dollars for other currencies, and putting their money into the safe havens of precious metals and bonds. Greg Salvaggio is a senior currency trader at Tempus Consulting. He sums up a growing belief, the worst news may be yet to come.
GREG SALVAGGIO: The large U.S. banking players might have significantly larger exposures to subprime, underperforming assets than they’ve let on.
Indeed, Citigroup’s admission of even bigger subprime losses was followed today by IndyMac’s worse than expected results. And Goldman Sachs was forced again to deny persistent rumors it may need to write down big mortgage-related losses. Ron Goodis of the Equidex Brokerage Group says it’s not as simple as just waiting for another shoe to drop.
RON GOODIS: There are so many shoes that are gonna drop here, I think Imelda Marcos’ closet is going to be dropping at some point.
There were similar bleak warnings from influential financial leaders. Former Federal Reserve chief Alan Greenspan said the housing debacle was a major risk to the U.S. economy. And Britain’s top central banker, Mervyn King, told the BBC there’s more bad news to come.
MERVYN KING: I think that most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, taken measures to finance their obligations that result from that.
Wall Street took heart in the prospect that all this might force yet another interest rate cut by the Federal Reserve. But that might just reflect how bad things have gotten. Just yesterday, the CEOs of several big Wall Street firms voiced worries about a recession, during a conference hosted by Reuters. One CEO who was asked where the economy is headed in the next year or so said simply: “In the toilet.”
In Los Angeles, I’m Bob Moon for Marketplace.
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