By Marlene Y. Satter
When asked what would happen if European political leaders could not come up with an effective plan to address the eurozone debt crisis, International Monetary Fund advisor Robert Shapiro said Friday that there would be a global financial meltdown within "two to three weeks."
Speaking in a BBC interview posted at ZeroHedge, Shapiro said that the problem was not confined to a relatively small Belgian bank (apparently referring to Dexia, whose fate is currently being determined due to its massive exposure to peripheral eurozone debt).
Instead, he said, "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, in part through sovereign debt problems in Ireland. 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."
Shapiro's comments come just a week after the BBC ran an interview with Alessio Rastani, a trader who said he "prayed for recession" and that millions would lose their savings. Rastani was rumored to be a Yes Man, but ZeroHedge took pains to point out that Shapiro most certainly was not.
Shapiro also said of the meltdown he foresees, "This would be a crisis that would be in my view more serious than the crisis in 2008.... No one knows the state of credit default swaps held by these institutions [U.S. banks] against sovereign debt and against European banks, nor do we know the state of credit default swaps held by British banks, nor are we certain of how serious the exposure of British banks is to the Ireland sovereign debt problems."