"The crisis will happen again but it will be different," he told BBC Two’s The Love of Money series. He added that he had predicted the crash would come as a reaction to a long period of prosperity.
"They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
While I agree that the next crisis will be different, the rest of what Greenspan said is nonsense. Crashes do not happen because of prosperity. Crashes happen because the Fed and people like Greenspan do not understand the difference between prosperity and a crack-up boom.
It’s easy to see that Greenspan is attempting to absolve himself of blame for the crisis. That ploy does not work.
The reason the next crisis will be different is everyone from the Fed, to Congress, Obama, the Treasury, and central bankers in general are all acting to prevent the last crisis. It’s too late for that.
Mr Greenspan, who when he ran the US central bank was hailed as a man who could move markets, also warned that the world’s financial institutions should have seen the looming crisis.
"The bankers knew that they were involved in an under-pricing of risk and that at some point a correction would be made," he said.
What a hoot. Greenspan said it was impossible to see a bubble until after it burst, did not see the housing bubble coming at all, and indeed purposely held interest rates too low too long in response to the last recession, now says the financial institutions should have seen this coming.
This is hypocrisy at its finest.
He also warned that Britain, with its globally-focused economy, would be harder hit than the US by the current recession and collapse in world trade.
"Obviously we’ve both suffered very considerably but … Britain is more globally oriented as an economy and the dramatic decline in exports globally and trade generally following the collapse of Lehman Brothers had dramatic effects in the financial system of Britain," Mr Greenspan said.
"It’s going to take a long while for you [Britain] to work your