Tags: Satyiat Das | financial crisis | Greek debt

Das: Major Financial Crisis Lurks Around the Corner

Friday, 26 Aug 2011 12:03 PM

A major financial crisis is lurking just around the corner for the global economy now that the European debt crisis has taken a turn for the worse, says Satyait Das, author of "Extreme Money: Masters of the Universe and the Cult of Risk."

Das tells CNBC.com that demands from Finland and other European countries that Greece put up collateral in exchange for bailout money will create the crisis, because Greece does not have the funds to back up that collateral.

"Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France, entitling them to special treatment," Das says.

"Compounding the problem is Greece's fall in gross domestic production (GDP) was worse than forecast, even before the latest austerity measures become effective," Das says, adding "a disorderly unwind of the Greek debt problem cannot be ruled out."

Furthermore, banks across the world remain vulnerable to European debt problems, which could send a crisis racing to infect financial systems worldwide.

In the U.S., consumers are growing less and less confident of the health of their economy.

The Thomson Reuters/University of Michigan's consumer sentiment index has inched up from mid-August but is still stuck in recession-era lows.

A final August index reading came to 55.7, down from 63.7 the month before but better that the August preliminary reading of 54.9, which had been the lowest level since May 1980.

"Consumers have shifted from being optimistic about the potential impact of monetary and fiscal policies to a sense of despair and pessimism about the role of the government," says survey director Richard Curtin, according to Reuters.

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A major financial crisis is lurking just around the corner for the global economy now that the European debt crisis has taken a turn for the worse, says Satyait Das, author of Extreme Money: Masters of the Universe and the Cult of Risk. Das tells CNBC.com that demands...
Satyiat Das,financial crisis,Greek debt
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2011-03-26
Friday, 26 Aug 2011 12:03 PM
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