Greenspan, whose voice and views carry tremendous weight still on Wall Street, argued that it is not in the best interests of either financial industry or that of the economy to have the government getting involved in the short-selling in the financial institutions until the situation stabilised.
"If you had pressed me the last time I was here, I would say very unlikely," Greenspan told ABC News when asked on the prospect of the United States escaping recession next year.
"The remarkable thing is now the non-financial part of the economy is done...we've gone through a period of long-term interest rates being very low, and that enabled corporate sector and business generally to take its short-term liabilities and fund them into longer-term liabilities at low interest rates," he said.
Asked if the chances of escaping a recession now is greater than 50 percent, Greenspan said, "No, I think it's less than 50 percent. I can't believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring."
Greenspan was asked that against a backdrop of failure of the mortgage giants, in the folding of Bear Stearns and now with the crisis at Lehman Brothers, whether America is going to witness to more financial institutions failing.
"I suspect we will. But in and of it that does not need to be a problem. It depends on how it is handled and how the liquidations take place. And indeed we shouldn't try to protect every single institution," he said.
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