Larry Summers warns that the risks building in the market look similar to the onset of the Great Financial Crisis as volatility in the UK threatens to spread globally

• Former Treasury Secretary Larry Summers sees today's market risks as similar to those seen right before the 2008 Great Financial Crisis.
• A series of inflation, interest rate, and currency shocks have led to increased market volatility around the world.
• "In the same way that people became anxious in August of 2007, I think this is a moment when there should be increased anxiety," Summers told Bloomberg.

Former US Treasury Secretary Lawrence Summers thinks today's market risks are looking eerily similar to those that surfaced just before the Great Financial Crisis.

"We're living through a period of elevated risk," Summers told Bloomberg Television on Thursday, later adding, "In the same way that people became anxious in August of 2007, I think this is a moment when there should be increased anxiety."

The summer of 2007 is when red flags became apparent regarding the stability of the global financial system, as big hedge fund wipeouts and mounting subprime mortgage losses became more and more apparent. That led to a complete freeze of the interbank foreign exchange market in August of that year.

Today, various shocks in inflation, interest rates, and currencies over the past few weeks have rocked both stock and bond markets, leading to a surge in volatility. The most recent shock occurred Wednesday morning when the Bank of England launched an emergency purchase program of long-dated bonds to prevent a UK pension crisis.

Days before that, the British pound plunged to record lows against the US dollar following Prime Minister Liz Truss' plan to cut tax rates at a time when inflation is at multi-decade highs. She doubled down on her plan and resisted calls for scaling back the new fiscal policy in an interview with the BBC on Thursday.

"This is a global financial situation. Currencies are under pressure around the world," Truss said, arguing that her tax plan is not to blame for the recent volatility.

Summers called the ongoing situation in the UK "very complex and uncharted territory," and said the Bank of England's emergency bond purchasing program is unsustainable.

While he admitted there aren't many signs that other markets around the world are acting "disorderly," that can change in the blink of an eye given ongoing geopolitical tensions with Russia and a reduced outlook for global economic growth.

"We know that when you have extreme volatility, that's when these situations are more likely to arise," Summers said. "When a country as major as Britain is going through something like this, that is something that can have consequences that go beyond."