'The odds have definitely moved up from a year ago when I was talking of about a third,' Mr Greenspan told a financial audience in the Canadian West Coast city of Vancouver on Thursday. 'I think we are now at a point that we are at the edge or over.'

He added: 'The probability of a recession is 50 per cent, maybe more but we are not there yet.'

Mr Greenspan's comments were similar to those he made earlier in the month, and he acknowledged that it was very difficult to predict exactly when the economy might enter a recession or was actually in one.

The former Fed chairman said a lesson learned from previous downturns in the economy and financial markets - such as after the Sept 11, 2001 attacks - was the need to avoid protectionist trade policies.

'The economy is exceedingly more resilient than in the past,' Mr Greenspan said, when asked if he thought if a recession would be shallow or deep, adding later 'for that reason I would argue for a relatively shallow recession'.

On the issue of the subprime mortgages, which are at the heart of the current economic turmoil, Mr Greenspan said that although the loans were risky, he believed that they were worth the risk as they helped broaden home ownership, especially among minorities.

The 'real big surprise' to him was how the subprime crisis migrated across borders to other parts of the world because of securitisation - where the mortgages were bundled together for sale through complex financial instruments.

Mr Greenspan gave a cautious thumbs up to the recent injections by sovereign wealth funds, or government-controlled funds, of billions of dollars in exchange for stakes in a number of US banks hard-hit by the subprime crisis.

'I must admit I am a little uncomfortable (with sovereign wealth funds)... but I must admit there is very little evidence that they are being used inappropriately,' Mr Greenspan said.

'On balance I think they are desirable,' he added.

China, Kuwait and Singapore are among the foreign governments that have pumped money into US companies in recent weeks.

Citigroup said last month it would get nearly US$7 billion (S$10 billion) from Singapore Investment Corp Pte and US$3 billion from the Kuwait Investment Authority. Merrill Lynch said it received US$6.6 billion from Kuwait, the Korean Investment Corp and Japan's Mizuho Financial Group. -- REUTERS