"The critical question is the price level of homes in the United States, which are almost certainly going to fall," Greenspan said, as the hefty inventory of unsold homes continues to drive down prices. "What we don't know at this stage is whether, in fact, the decline in home prices will be a large one or a modest one," he said.

Given the current climate, the odds that the United States will skirt a recession now look better than 50/50, Greenspan said. In March, he put the odds of a recession over the next six to nine months at one-third, but that could be offset by stock market prices if they continue to rise, he said.

Greenspan also addressed the credit crisis that roiled markets this summer, noting that credit market adjustments were "an accident waiting to happen" given the low level of credit spreads for such a long period of time.

"History always suggests that that does not last," Greenspan said. "If it wasn't subprime, it would have been something else."

The United States came into the credit crisis amid a "fairly strong" global economic upswing, and talking about the U.S. economy without the worldwide context is "no longer relevant," he said.

Turning to China, Greenspan said growth there has been "quite remarkable," adding that "nobody is fully cognizant or understands why they have done so well for so long." China has moved dramatically toward capitalism, he said, and even though its economy appears to be "overheating," the country continues to progress.

Greenspan also said rising Chinese inflation was of little significance, noting that much of the increase was due to rising food prices.

But, he added, "at some point, they've got to slow down" and other areas of eastern Asia could begin to successfully compete with the country. At least through the Olympics, however, China "should do very well," he said.