The European debt crisis could inflict more damage to the global financial system than did the Lehman Brothers collapse, says financier George Soros.
Government debt burdens in countries such as Greece could prompt banks to fail and spark a domino effect across the continent, and eventually contagion could shoot through U.S. financial systems, similar in scope after the Lehman Brother collapse in 2008 — or worse.
"This crisis has the potential to be a lot worse than Lehman Brothers," Soros says, according to the New York Times.
The problem in Europe is a lack of any pan-European body to handle a banking crisis of such scope and gravity.
"That is why the problem is so serious. You need a crisis to create the political will for Europe to create such an authority, but there is still no understanding as to what the authority will do."
European financial fears are pummeling stock markets around the world and fueling fears that a global recession is brewing.
Famed New York University economist Nouriel Roubini, who called the U.S. housing bust and ensuing recession well before it happened, has said the world is due for a fresh economic contraction by 2013 but in light of the European crisis, he's upping the due date.
"I thought a few months ago that the perfect storm would be 2013," Roubini says, according to Bloomberg.
"But now, the economic weakness in the U.S., euro zone and the U.K. is front loaded. So we’re going to double dip earlier. The climax of it could be 2013, or it could be already earlier. It depends on what policy tools are available."