Black Monday: Former US Treasury Secretary Larry Summers says this could be the start of a 'very serious situation'

Summers, a Harvard professor, was Barack Obama's economic adviser for two years

Larry Summers has previously warned about the consequences of a crash in China (Getty)

Former US Secretary of the Treasury Larry Summers has said that the recent 'Black Monday' falls in global markets could represent the "early stage of a very serious situation."

Writing on Twitter, Summers said: "As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation."

He added: "It is far from clear that the next Fed move will be a tightening," referring to the raising of interest rates by the US Federal Reserve, which is typically put in place during times of good economic growth.

Lawrence 'Larry' Summers, who was Treasury Secretary from 1999 to 2001, and an economic adviser to President Barack Obama in 2009 and 2010, has previously warned against the raising of interest rates due to volatility in China, writing in a column for the Washington Post that a raise could "tip some part of the financial system into crisis with unpredictable and dangerous consequences."

Markets in the West have responded with panic to the slump in China. The Shanghai Composite index, China's most important index of shares, has dropped by 8.45 per cent, erasing gains made this year.

Major markets in America and Europe followed suit, as the anxiety over the capacity of the Chinese government to respond to its economic problems continued.