Greenspan said Aug. 7 on NBC's "Meet the Press" that the chance of a return to recession "depends on Europe, not the United States. The United States was actually doing relatively well, sluggish, but going forward until Italy ran into trouble. That destabilized the European system and the crisis reemerged."
Asset Purchases
Concern about the government debt of Italy and Spain prompted the European Central Bank on Aug. 8 to begin buying Italian and Spanish assets to lower their borrowing costs, as Europe's sovereign-debt crisis nears its third year.
A four-week global equity rout has wiped about $8 trillion from companies' market value as Europe's sovereign debt-crisis and worsening economic reports in the U.S. raised concern the global economic recovery is faltering. The S&P 500 fell 16 percent from July 22 through the end of last week and its members trade at an average 11.3 times estimated earnings, near the lowest level since March 2009.
The Standard & Poor's 500 Index advanced 0.9 percent to 1,134.34 at 10:23 a.m. in New York today.
"What has been the greatest thrust coming out of the recession has been the extraordinary rise of stock prices in the U.S.," Greenspan, 85, who was chairman of the central bank from 1987 to 2006, said today.
No Gold Bubble
Greenspan also said that he did not think gold, which reached a record above $1,900 an ounce this week, was in a bubble.
"Gold, unlike all other commodities, is a currency," he said. "And the major thrust in the demand for gold is not for jewelry. It's not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating."
After leaving the Fed, Greenspan founded the consulting firm Greenspan Associates and has been a consultant or adviser to Deutsche Bank AG, Pacific Investment Management Co. and hedge fund Paulson & Co.