Former Treasury Secretary: Most dangerous time since 2009 crisis is happening now

Lawrence H. Summers, the former Secretary of the Treasury for President Clinton and the Director of the NEC for President Obama, is now officially sounding the alarm bells for the economy.

"We may well be at the most dangerous financial moment since the 2009 Financial Crisis with current developments between the US and China," Lawrence is warning.

"Markets are now suggesting the highest risk of recession since 2011. Only slightly less than half over the next year. The collapse in medium and long term interest rates is ominous."

That's more technical speak for - we are in major trouble.

The global economy is complicated and long story short, Trump is engaging in a major trade war with China.

The Hong Kong stock market is in free fall - it's worst streak since 1984.

Yesterday, U.S. stocks posted their worst day of the year shortly after China devalued its currency.

The overall assessment is bleak. And, all fingers are pointing to Trump as the main culprit.

"Risks of Trump intervening in foreign exchange markets have increased with China letting the yuan go," wrote Viraj Patel, FX and global macro strategist at Arkera. "If this was an all out currency war - the US would hands down lose. Beijing [is] far more advanced in playing the currency game [and has] bigger firepower."

While stocks rebounded slightly, Nomura strategist Masanari Takada says that the next sell-off could be even more violent, more on par with the crisis-level that triggered the collapse of the Lehman Brothers. Everybody remembers how bad that was.

“At this point, we think it would be a mistake to dismiss the possibility of a Lehman-like shock as a mere tail risk,” Takada said

. “The pattern in US stock market sentiment has come to even more closely resemble the picture of sentiment on the eve of the 2008 Lehman Brothers collapse that marked the onset of the global financial crisis.”

As far as this "market plunge" goes, it might not fully realize until late August, nobody really knows. If the market does rebound, it probably won't be that strong, either, and could prove very temporary until the real fall.

“We would expect any near-term rally to be no more than a head fake, and think that any such rally would be best treated as an opportunity to sell in preparation for the second wave of volatility that we expect will arrive in late August or early September,” Takada said. “We would add here that the second wave may well hit harder than the first, like an aftershock that eclipses the initial earthquake.”