Former IMF Official Sees New Bank Crisis Sparked By Write-Downs of European Debt

A new banking crisis is on the way, sparked by write-downs of public and private debt in Europe that will slam major European banks and have even wider effects around the globe, a former International Monetary Fund (IMF) official predicted March 29.

Desmond Lachman, a fellow at the American Enterprise Institute (AEI), said Greece, Portugal, Ireland, and other nations owe roughly $2 trillion in sovereign debt and about $1.5 trillion in private loans to banks in Germany, France, and the United Kingdom.

Greece, Ireland, and Portugal all have compromised fiscal positions and unsustainable deficits, with citizens he said are likely ...