Former Federal Reserve chairman Alan Greenspan managed to get the attention of market participants and investors alike on Thursday afternoon, suggesting that the economy was still skirting a recession and that housing had much further to fall before a bottom will form. His remarks actually helped fuel a sell-off in stocks that has largely continued into Friday's session, according to various published reports.

The iconic economist, both lauded or loathed by various market participants, suggested that a recession was "inevitable" in an interview airing on CNBC yesterday afternoon -- although he said he didn't yet believe the U.S. economy was in a recessionary state. The economy is holding up better than he expected despite strong financial headwinds, he said.

The housing slump, however, is another issue -- at least in the former chairman's mind.

He characterized the current correction as a "once-in-a-century phenomenon," and said we're "nowhere near" forming a bottom to the current issues in the sector. He also said that a nationalization of both Fannie Mae ($0.00 0%) and Freddie Mac ($0.00 0%) may be inevitable, and suggested that both mortgage finance giants were "accidents waiting to happen."

"I think the ultimate solution is a nationalization of both Fannie and Freddie and I hope a restructuring in that nationalization," he said, according to a story on CNBC's website. "And then split them up into five or ten separate entities and sell them back into the market."

The full television interview is available here.

Disclosure: The author was long FRE when this story was published; other indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.