Greenspan doesn't expect more market "bubbles"

MONTREAL (Reuters) - Former U.S. Federal Reserve Chairman Alan Greenspan said on Friday that he does not expect another "bubble" in world markets for a long time, and that central banks at any rate do not control the long-term interest rates that can be related to bubbles.

He conceded that stagflation -- a combination of weak growth and high inflation -- was a real concern.

"Oh certainly," he said when asked if stagflation was a possible.

Speaking to an audience of 2,000 in Montreal, Greenspan said asset bubbles do not form when inflation pressures begin to emerge.

As inflation pressures emerge around the world, he said the critical issue was a political one. Central bankers will no doubt act to keep inflation under control, but Greenspan mused about whether politicians were "wise enough" to realize that low inflation is a major factor in economic growth, citing political pressures on the Fed back in the 1990s when central bankers were perceived to be more hawkish than the government.

He also said past experience at the Fed has showed that central banks can do little to pre-emptively act to prevent bubbles in financial markets, referring to interest rate hikes in the early 1990s failing to prevent excessive confidence in stock markets.

(Reporting by Louise Egan; editing by Rob Wilson)