And he thinks we're in a heap of trouble:
Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This is still a possible outcome but no longer the preponderant probability.Wake up to the dangers of a deepening crisis (Lawrence Summers, Financial Times, 25 November 2007)
Even if necessary changes in policy are implemented, the odds now favour a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond.
Read on for Dr. Summers' diagnosis and policy prescriptions.