Oct. 23 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said credit markets are in a ``state of fear,'' instead of a ``state of euphoria'' where investors are buying.

``We're now in a state of fear,'' Greenspan said in Chicago at the Midwest ACG Capital Connection conference, a gathering of investment bankers and private-equity companies. Greenspan was discussing commercial paper and structured investment vehicles.

Fed and U.S. Treasury officials have also said that it will take some time for confidence to return to markets for complex securities. Investors who depended on credit ratings companies to assess the debt now must struggle to come up with their own prices, Fed Chairman Ben S. Bernanke said Oct. 15.

Greenspan said he didn't know enough to comment on an agreement among Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. to increase liquidity in the market for asset-backed commercial paper. Treasury Secretary Henry Paulson brokered the accord, announced on Oct. 15.

``I really don't know what they're doing yet,'' Greenspan said today. ``I really don't know what's involved here.''

That compares with comments reported last week by Emerging Markets, a newspaper that is published during the meetings of the International Monetary Fund, the World Bank and regional development banks. Greenspan said it wasn't clear that the benefits from the proposed fund exceeded the risks, Emerging Markets said Oct. 19.

Recession Odds

Greenspan today also reiterated previous remarks that he sees ``less than 50-50'' odds of a U.S. recession, saying the country will probably avoid such an outcome. Still, he said there's a ``long way to go'' before home prices stabilize.

``Whether we get into an actual recession, I suspect probably not,'' Greenspan said. ``Where the problem lies is in new-home prices. The question is not so much the housing market, but the effect on the economy overall.''

Since retiring from the Fed in January 2006 after leading the central bank for 18 years, Greenspan, 81, has been giving paid talks to audiences around the world, and his book, ``The Age of Turbulence,'' became a bestseller when it was published last month.

On rising oil prices, Greenspan said they're a ``remedy'' for consumption. ``The best remedy is high prices. You will find the addiction becomes less and less,'' he said.

Since mid-September, Greenspan has given numerous talks and interviews to publicize his book in addition to scheduled speeches. He said Oct. 10 that the ``odds are better than 50-50 the U.S. will skirt a recession'' over the next six to nine months. ``If stock prices continue up, whatever losses in equity value of homes we experience can very readily be offset,'' he said at the time.

On Oct. 2, Greenspan said that ``we're not by any means out of the woods'' on credit turmoil; the day before, he said there were signs that the crisis may ``possibly'' be over.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net; Mario Parker in Chicago at mparker22@bloomberg.net.

Last Updated: October 23, 2007 12:51 EDT