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CNBC EXCERPTS: ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN AND PRESIDENT OF GREENSPAN ASSOCIATES, LLC, ON CNBC’S “SQUAWK BOX” TODAY

WHEN: TODAY, FRIDAY, OCTOBER 7TH

WHERE: CNBC’S “SQUAWK BOX

Following are excerpts from the unofficial transcript of a CNBC interview with Alan Greenspan, Former Federal Reserve Chairman and President of Greenspan Associates, LLC, on CNBC’s “Squawk Box” today.

All references must be sourced to CNBC.

Greenspan on Europe's Debt Problems

Greenspan on Trichet's Performance

GREENSPAN ON EUROPE:

"TO ME, WHAT'S DRIVING THE UNITED STATES AT THE MOMENT TO A VERY LARGE EXTENT IS EUROPE, AND I NOTICED FOR EXAMPLE THAT THE ITALIAN BONDS WERE UP 9 BASIS POINTS OR SOMETHING LIKE THAT, THAT'S A VERY DISCONCERTING SIGNAL AS TO WHAT IS IN THE PROCESS OF GOING ON, YOU CAN'T UNDERSTAND THE UNITED STATES AT ALL, I THINK, UNLESS YOU KNOW WHAT'S GOING ON IN EUROPE."

GREENSPAN ON TWO TITANIC FORCES:

"THERE ARE TWO TITANIC FORCES MOVING HERE. ONE IS A SLUGGISH U.S. ECONOMY WHICH IS ITSELF SORT OF -- REALLY TWO ECONOMIES. THE SECOND IS THIS VERY STRONG PRESSURE COMING FROM EUROPE."

GREENSPAN ON EUROPEAN PAPER:

"EVEN THOUGH WE'VE GOT OUR BANK INTEREST WHICH DOESN'T OWN A LOT OF DIRECT EUROPEAN PAPER, IT OWNS A LOT OF THE EUROPEAN BANK PAPER. AND MORE IMPORTANTLY, THE PROFIT TRIGGERS WHICH ARE CRITICAL TO THE U.S. FINANCIAL SYSTEM AND THE ECONOMY BECAUSE OF THE WEALTH EFFECT, ARE VERY HEAVILY AFFECTED BY EUROPEAN AFFILIATES."

GREENSPAN ON FRANCE:

"FRANCE IS BORROWING FROM ITS OTHER EURO-ZONE MEMBERS. ITS CURRENT ACCOUNT DEFICIT FOR THE EURO-ZONE FROM THE EURO-ZONE IS NEGATIVE. IT'S THE ONLY NORTHERN COUNTRY IN WHICH THAT IS TRUE."

GREENSPAN ON THE INTEGRATED SYSTEM:

"THIS IS AN INTEGRATED SYSTEM. AND THE PRESUMPTION THAT SOMEHOW THE HUGE AMERICAN BANKING SYSTEM OR FINANCIAL SYSTEM IS INDEPENDENT OF EUROPE, I THINK IS JUST UTTERLY UNREALISTIC. IT LOOKS INDEPENDENT UNTIL IT ISN'T."

GREENSPAN ON GREECE:

"LET'S FACE IT. AT 2,000 BASIS POINTS OVER THE BUND, THE INTEREST RATES FOR GREECE ARE NOT SUSTAINABLE. AND THERE IS NO CREDIBLE SCENARIO OF WHICH I'M AWARE IN WHICH THEY CAN GET BY WITHOUT VERY SIGNIFICANT CUTS IN THEIR SOVEREIGN DEBT."

GREENSPAN ON TRICHET:

"WHAT HE HAS BEEN DOING IS TO BASICALLY LOOK AT WHAT THE ECB WAS SUPPOSED TO BE IN CHARGE OF. NAMELY, THE VALUE OF THE CURRENCY, RATE OF INFLATION. IT IS NOT A FISCAL AGENT OF THE EUROPEAN UNOR OR THE EURO-ZONE. AND IN THAT REGARD, I THINK WHAT HE HAS DONE IS BEEN IN THE RIGHT THING."

GREENSPAN ON THE ECB:

"YOU CAN'T BLAME THE ECB FOR NOT BLOWING UP THEIR BALANCE SHEET TO TEMPORARILY FINANCE THE REST OF THE SYSTEM. BECAUSE THAT'S NOT WHAT THE MASTRIK TREATY SAID THEY SHOULD BE DOING."

GREENSPAN ON THE US ECONOMY:

"IF WE COULD SOMEHOW EXTRACT THE GOINGS ON IN EUROPE, I THINK WE WOULD SEE WHAT WE ARE SEEING. NAMELY, A SLUGGISH ECONOMY BUT ONE THAT IS CONTINUOUSLY EDGING HIGHER."

GREENSPAN ON THE EUROPE EFFECT:

"THE PROBLEM COMING FROM EUROPE, I DON'T THINK YOU CAN BE OVERESTIMATED. AND FOR ECONOMISTS WHO FEEL COMFORTABLE THEY CAN SPLIT THE EFFECT OF EUROPE FROM THE REST OF THE FORCES THAT ARE GENERATING IMPACTS ON THE UNITED STATES HASN'T BEEN AROUND VERY LONG I'M AFRAID."

GREENSPAN ON INFLATION TARGETING:

"I'VE ALWAYS BEEN A GREAT FAN OF INFLATION TARGETING. BUT NOT OF PUBLISHING THE TARGETS. AND THE REASON ESSENTIALLY IS THAT IF THE MARKETS BELIEVE THAT YOU ARE AN ANTI-INFLATIONARY CENTRAL BANK, YOU DON'T HAVE TO PULL OUT SPECIFIC NUMBERS."

GREENSPAN ON THE BUSH TAX CUTS:

"IF WE DO NOT GET SIMPSON BOWLES AS A FALL BACK POSITION, I STAND WITH ALLOWING THE BUSH TAX CUTS TO EXPIRE, YOU COULD DO IT GRADUALLY, WHATEVER. BUT IF WE THINK WE HAVE THIS LUXURY OF WAITING FOR A COUPLE YEARS WITH A LITTLE STIMULUS NOW AND THEN LATER TIGHTENING UP, I HOPE THE BOND MARKETS ARE LISTENING."

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