Greenspan: New financial crises are "unavoidable"

The occurrence of new global crises is unavoidable, because human nature is prone to fall into "speculative excesses" in times of sustained prosperity, said the former chairman of the Federal Reserve, Alan Greenspan, in an interview given to the BBC yesterday.

"Each financial crisis is different, but they all have a fundamental source", said Alan Greenspan, one year after the collapse of American investment bank Lehman Brothers. "When confronted with lengthy periods of prosperity, humans tend to assume that they will continue", Greenspan said.

This belief that markets will continue to grow indefinitely pushed people "to speculative excesses with consequences that left their mark on the world"s history in the 18th and 19th century", said Greenspan.

He said the current crisis was triggered by the trade in US sub-prime mortgages - home loans given to people with bad credit histories - but he added that any factor could have been the catalyst.

Were it not for these toxic debts, caused by borrowers" troubles in paying back their mortgages, "something else would have emerged sooner or later", Mr Greenspan said.

"It"s human nature: unless somebody can find a way to change it, we will have another crisis and none of them will resemble each other, because two crises have nothing in common except human nature", added the former chairman of the Federal Reserve.

After 18 years, Greenspan retired from his position in the Federal Reserve in 2006, as the US had the longest period of continued growth in modern history, from 1991 to 2001. However, his performance came under heavy criticism, as some analysts said that under his tenure as chairman of the Fed set up the conditions for the real estate bubble and for the credit bubble, which later led to the financial crisis.