CNBC EXCLUSIVE: CNBC INTERVIEW: FORMER FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN SITS DOWN WITH CNBC’S “SQUAWK BOX” TODAY

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When: Today, Friday, December 3rd at 7am ET

Where: CNBC’s “Squawk Box”

Following are excerpts from the unofficial transcript of a CNBC Exclusive interview with former Federal Reserve Chairman Alan Greenspan today, Friday, December 3rd on CNBC’s “Squawk Box” at 7am ET.

All references must be sourced to CNBC.

GREENSPAN ON THE 10 YEAR NOTE:

"I KNOW WHAT LIBOR IS BECAUSE IT VERY RARELY CHANGES, THE 10 YEAR NOTE IS WHAT IT IS ALL ABOUT"

GREENSPAN ON LEVERAGING:

"IF YOU WEIGHT THE WHOLE GDP WHAT YOU ARE FINDING, WHICH IS EXACTLY WHAT YOU ARE LOOKING AT, IN THE OTHER DIRECTION IS THAT THE AVERAGE AGE OF ASSETS WE ARE PRODUCING OR ALL THE GOODS AND SERVICES WE ARE PRODUCING IS COMING DOWN AND INDEED THAT GAP IS DESCRIBING THE WHOLE DEGREE OF LEVERAGING."

GREENSPAN ON THE FEAR THAT THE ECONOMY IS GOING NOWHERE:

"COMING OUT OF A RECESSION AS DEEP AS THE ONE WE HAVE BEEN THROUGH WE HAVE NOT HAD EXCEPT FOR THE BIG INVENTORY SWING ESSENTIALLY WHAT WE NEED TO GET BACK TO A BALANCED ECONOMY AND UNLESS WE GET THAT RISK SENSE DOWN UNTIL WE GET A SENSE OF MORE NORMALITY RATHER THAN THIS DEEP SEEDED FEAR THIS ECONOMY IS GOING NOWHERE."

GREENSPAN ON B-CORPORATES:

"THIS IS NOT THE SAME THING AS MEASURING TRIPLE B CORPORATES, BBB CORPORATES WITH A 10 YEAR YIELD, I AM SORRY WITH A 10 YEAR MATURITY, IS IN A LIQUID MARKET REALLY A VERY SHORT TERM INVESTMENT BECAUSE THE MATURITY IS HOW LONG IT WILL TAKE YOU TO SELL IT, SO IT IS A SHORT TERM INVESTMENT WITH A VERY HIGH INTEREST RATE AND CREDIT RISK VARIATIONS BUT IT IS NOT LIKE A LIQUID RISK"

GREENSPAN ON INTERMEDIATION:

"IF YOU LISTEN TO THE BUSINESS COMMUNITY ITS THE AFTERSHOCK OF THE CRISIS THE REGULATORY PROBLEMS IN FINANCE BASICALL BECAUSE REMEMBER WITHOUT FINANCIAL INTERMIEDIATION OUR SYSTEM DOES NOT WORK"

GREENSPAN ON BORROWERS:

"APPROXIMATELY 1/3 OF THE DECLINE IN CAPITAL INVESTMENT AS A SHARE OF CASH FLOW IS DEIRECTLY ATTRIBUTABLE TO THE CROWDING OUT THE FINANCIAL, CROWDING OUT BY U.S. TREASURY BORROWING THE SAVINGS OF THE COMMUNITY AHEAD OF ALL OTHER BORROWERS"

GREENSPAN ON 50 YEAR HIGHS:

"IF WE DIDNT HAVE FOR EXAMPLE THE WHOLE DEBT PROBLEM OR INCREASINGLY THE EUROPEAN PROBLEM THE OUTLOOK FOR THE MARKET WOULD BE TERRIFIC, AND THE REASON IT WOULD BE TERRIFIC IS EQUITY PREMIUMS ARE AT 50 YEAR HIGHS."

GREENSPAN ON ASSET PRICES:

"I THINK WE ARE UNDERESTIMATING AND CONTINUE TO UNDERESTIMATE HOW IMPORTANT ASSET PROCES, VERY SPECIFICALLY EQUITY VALUES ARE NOT ONLY FOR SHAREHOLDERS AND THE LIKE BUT FOR THE ECONOMY AS A WHOLE."

GREENPSAN ON AGGREGATE BUDGETS:

"WE CAN CUT THIS BUDGET BUT ONLY IF EVERYBODY IS TREATED EQUALLY AND I SHOULD THINK THAT WE CANNOT DO IT IN THE REGULAR APPROPRIATION PROCESS YOU CANNOT DO IT PEACE MEALED EVERYBODY YOU PUT UP A TAX INCREASE EVERYBODY ON ONE SIDE IS AGAINST IT AND VICA VERSA SO WHAT WE HAVE GOT TO DO IS CREATE AGGREGATE COMPROMISED BUDGETS VERY SIMILAR TO WHAT THE COMMISION AND LEADERSHIP HAS PUT TOGETHER."

GREENSPAN ON THE EURO:

"THERE IS A FUNDAMENTAL FLAW IN ANY CURRENCY ARRANGEMENT IN WHICH YOU ARE POOLING THE CULTURES OF VARIOUS DIFFERENT SOCIETIES WHICH MUST COME TOGETHER"

GREENSPAN ON CORPORATE DECISIONS:

"THERE IS A VERY SIGNIFICANT RESTRAINT ON THE PART OF TAKING LIQUID CASH FLOW AND SINKING IT INTO ALUMINUM ROLLING MILLS OR INTO THINGS WHICH YOU CAN'T UNWIND BECAUSE THE ONLY WAY YOU GET YOUR MONEY BACK IS THROUGH DEPRECIATION AND THAT TO ME IS SORT OF THE CRITICAL MEASURE OF HOW UNCERTAIN OR CERTAIN PEOPLR ARE WHO ARE MAKING CORPORATE DECISIONS IN RESPECT TO NEW PLANT HAVE ABOUT THE FUTURE."

GREENSPAN ON AVERAGE MATURITY:

"YOU CAN'T LOOK AT WHAT IS GOING ON IN THE LIQUID MARKETS, THE LIQUID MARKET IS VERY IMPORTANT, BUT I AM TALKING ABOUT SOMETHING WHICH IS FAR MORE PROFOUNDLY IMPORTANT TO THE CURRENT PERIOD, I THINK IT DESCRIBES THE PERIOD, AND I LOOK AT IT ANOTHER WAY AS WELL, IMPLICIT IN THIS IS THE FACT THAT THE AVERAGE MATURITY OF THE GOODS WE PRODUCE IN THE GDP IS COMING DOWN VERY DRAMATICALLY."

GREENSPAN ON THE FED:

I DON’T LIKE EVERYBODY PICKING ON THE FEDERAL RESERVE, I THINK THEY HAVE DONE A REALLY EXTRAORDINARY JOB UNDER THESE UNBELIEVABLY TRYING CIRCUMSTANCES.

GREENSPAN ON INFLATION:

I DON’T LIKE EVERYBODY PICKING ON THE FEDERAL RESERVE, I THINK THEY HAVE DONE A REALLY EXTRAORDINARY JOB UNDER THESE UNBELIEVABLY TRYING CIRCUMSTANCES.

A NECESSARY CONDITION FOR LONG-TERM LOW UNEMPLOYMENT IS LOW INFLATION.AND SO OUR VIEW BASICALLY WAS THAT IF WE COULD KEEP PRICE INFLATION DOWN AND STABLE, THE REST OF THE SYSTEM WOULD ADJUST TO IT AND, INDEED, I THINK THAT IS TRUE TODAY.IT WAS TRUE BACK THEN. THERE IS LEGALLY A DUAL MANDATE, BUT THEY ARE INTERCONNECTED.SO THAT IF THE FED DOES ITS JOB ADEQUATELY AND STABILIZES THE INFLATION RATE, THAT'S THE MAXIMUM THAT THE CENTRAL BANK CAN DO.

GREENSPAN - THOUGHT I HAD IT BAD:

I WENT THROUGH 18 1/2 YEARS AND I THOUGHT I HAD SOME REALLY STRESSFUL PERIODS. LIKE THE 1987 CRASH AND A WHOLE SERIES OF THINGS. IT WAS NOTHING COMPARED TO WHAT THE BOARD HAS HAD DEAL WITH SINCE THE LEHMAN BANKRUPTCY.

GREENSPAN ON OBSOLETE INDUSTRIES:

THE REASON WE HAVE DONE SO WELL IS WE'VE TAKEN THE SCARCE SAVINGS OF THIS SOCIETY -- WE DON'T HAVE VERY MUCH SAVINGS, BUT BECAUSE WE HAVE A VERY SOPHISTICATED FINANCIAL SYSTEM, WHICH DIRECTS THAT SAVINGS INTO MOST PHYSICALICALLY PRODUCTIVE TYPE OF ASSETS, WHAT YOU GET IS THAT YOU STARVE CASH GOING TO OBSOLESCENT INDUSTRIES. SO TEXTILES, STEEL, MOTOR VEHICLES. ALL 19th CENTURY TECHNOLOGIES ARE ESSENTIALLY PUSHED ASIDE.

GREENSPAN ON MARKETPLACE INDICATIONS:

SO LONG AS YOU HAVE ANY FORM OF INDICATION IN THE MARKETPLACE THAT YOU WON'T BE ALLOWED TO FAIL, THE COST OF YOUR LIABILITIES WILL BE 5,10, 20 BASIS PTS LESS THAN YOUR COMPETITORS AND YOU WILL GROW.?

GREENSPAN ON LARGEST FINANCIAL CRISIS:

YOU HAVE TO SUBSTITUTE SOVEREIGN CREDIT FOR PRIVATE CREDIT ONCE IN A CENTURY, BUT OTHER THAN THAT YOU BETTER NOT BECAUSE YOU GET THE TYPE OF PROBLEMS YOU'RE LOOKING AT. THE TRICK IS TO KNOW WHEN YOU'RE DEALING WITH THE ONCE IN A CENTURY EVENT, AND I THINK THIS IS ONE OF THEM. THIS, TO ME, IS THE LARGEST FINANCIAL CRISIS THE WORLD HAS EVER HAD.

GREENSPAN ON SINGLE MANDATE:

EFFECTIVELY THE FED HAS A SINGLE MANDATE AND IT HAS ALWAYS HAD A SINGLE MANDATE. IT ACHIEVES THE UNEMPLOYMENT GOAL IN THE HUMPHRY-HAWKINS ACT ESSENTIALLY BY ADHERING TO ITS SINGLE MANDATE. I DO THINK IT'S AN INTERESTING DISCUSSION.

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