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IMF advisor: We face a Worldwide Banking Meltdown

Bear Nectar

IMF advisor says we face a Worldwide Banking Meltdown

Zerohedge features a discussion about a BBC interview with IMF advisor Robert Shapiro, the bailout expert.

Here’s what Shapiro said:

“If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected.
All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serious than the crisis in 2008….”

I’d feel better if we survive this quarter without an economic catastrophe. My sense is that there is much going on behind the scene, that we’re not seeing the whole picture. On this I would love to be wrong, but this guy talks to the heavies. No doubt about that.

note: Dr. Shapiro holds a Ph.D. and M.A. from Harvard, a M.Sc. from the London School of Economics, and an A.B. from the University of Chicago. In 2008, he advised the campaign and transition of Barack Obama. Dr. Shapiro also was as Legislative Director for Senator Daniel P. Moynihan and Associate Editor of U.S. News & World Report. He has been a Fellow of Harvard University, the Brookings Institution, and the National Bureau of Economic Research. He is widely published, and his most recent book is Futurecast: How Superpowers, Populations and Demographics Will Change the Way You Live and Work (St Martins’ Press, 2008).

Billionaire investor George Soros says, “People don’t realize that the system has actually collapsed”

Soros, in an interview on Bloomberg Television, said that the disruption to the global financial markets since 2008…remind him of the final years of the Soviet Union. “Something similar is happening in the West (meaning in the United States and Europe), Soros said. “ “You had a financial crisis where the market did actually collapse, but it was kept alive by the authorities.”

Soros goes on to say: “The biggest mistake governments made in responding to 2008 credit freeze was failing to approve rules that would regulate banks and other financial firms across the globe. While markets have become integrated, individual nations continue to set their own rules, which has allowed “deregulation to spread like a virus.” “Regulation is very difficult and we haven’t solved it at all,” he said. “We are very early in the process and we are not making much progress.”

David Rosenberg: “This is a modern-day depression…”

An economic depression occurs only once it becomes painfully obvious that the markets and the economy are failing to respond to repeated bouts of policy stimulus,” said David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto, writing in a special analysis.

While economists have made no secret of their fears that another recession is about to strike, the real danger could be far worse. The country could be headed for a 21st century version of a depression, an economic term that…conjures images of soup lines, 25 percent unemployment and a devastated economy. “Here we are today, with a severe recession (2007-09) followed by the weakest recovery on record and now on the precipice of another economic downturn,”

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