Greenspan: Recession chance less than 50-50

NEW YORK (CNNMoney.com) -- Former Federal Reserve Chairman Alan Greenspan said in an interview that there was less than a 50-50 chance that the U.S. economy would slip into a recession.

"The danger of a recession has obviously risen, but in my judgment, and I suspect looking at the forecasts of most American economists, is that it is still at less than 50-50," Greenspan said in a broadcast interview with BBC Radio. "It's less optimistic than one would like."

The former Fed chief also acknowledged that he and other regulators were aware of the risks posed by the complex financial derivatives that helped fuel the recent market turmoil.

Greenspan said that no action was taken because the individuals involved in these risky investments represented a small part of the larger financial markets and typically involved wealthy individuals investing in hedge funds.

"I must admit that I do not have considerable concern about their net worth going from $40 million to $5 million, which in many cases is what has happened," Greenspan told the BBC.

At the same time, Greenspan said that the complex financial instruments, such as those mortgage-backed securities that soured during this summer's credit crisis, serve an important role in society since they generate returns from a nation's savings.

Greenspan also warned that the global economy would not likely be able to sustain the era of "inflation tranquility" that it has experienced for the last 20 years.

"It's not something we can readily hope to readily replicate as we move into the future."