Reply #9: Grim warnings send ripples through markets

[ozymandius]

NEW YORK/LONDON (Reuters) - Bleak warnings of more pain to come in the credit sphere snowballed on Tuesday and fears of subprime losses yet to be unearthed rattled money markets.

Bank of England Governor Mervyn King said it would take months for banks to reveal their full losses stemming from risky mortgages and former Federal Reserve chief Alan Greenspan said the housing debacle was a major risk to the U.S. economy.

Red ink flowed as IndyMac Bancorp Inc (IMB.N), one of the largest independent U.S. mortgage lenders, posted a third-quarter net loss of $202.7 million due to mounting delinquencies and a collapse in investor demand to buy its home loans.

The loss was five times larger than it had projected, giving life to investor fears of more skeletons in the financial sector's closet. Emblematic of the market's mood, Goldman Sachs (GS.N) had to deny swirling rumors that it may need to write down mortgage-related losses.

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BALANCE-SHEET SHOCK

As fears rise of more balance-sheet shock, economists worry that the deteriorating value of the mortgage debt and derivatives banks hold will choke off the traditional lending they do to the rest of the economy, dragging down growth.

Giving credence to these fears, billionaire investor George Soros forecast on Monday that the U.S. economy is "on the verge of a very serious economic correction" after decades of overspending.

http://news.yahoo.com/s/nm/20071106/bs_nm/economy_credit_dc

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Channeling CNBC: Good news everyone! Goldman Sachs will not admit to any losses! I smell another rate cut to help those impoverished hedge fund managers.