Former U.S. Federal Reserve Chairman Alan Greenspan said on Tuesday that the global recession will "surely be the longest and deepest" since the 1930s, adding that the Obama administration's Troubled Asset Relief Program will be insufficient to plug the yawning financial gap.
"Since the collapse of Lehman Brothers in September, we have been exposed to the most rapid and unremitting set of gloomy statistics that I have ever seen," the former Fed chairman said a meeting of the Economic Club of New York, according to Politico.
Greenspan later tagged the current crisis a "once-in-a-century type event."
The move was an about-face for the free-market economist.
While Greenspan steered clear of his role in the market collapse, "he did take a new swipe at the market's self-correcting tendencies and bowed his head to a new period of increased regulation," the Wall Street Journal reported.
"All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms' capital and risk positions," the Fed chairman said. The premise failed in the summer of 2007, he said, leaving him "deeply dismayed."
In other, un-Greenspan-like news, he told the Financial Times that he supported the nationalization of banks.
"It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring," he said. "I understand that once in a hundred years this is what you do."
Nationalisations would "allow the government to transfer toxic assets to a bad bank without the problem of how to price them."
For the text of his speech read here: