Although blue-chip stocks are hitting all-time high after all-time high, former Fed Chairman Alan Greenspantold CNBC Friday that "irrational exuberance" is the last term he'd use to describe today's market.
Greenspan said in a " Squawk Box " interview that stocks by historical standards are "significantly undervalued" even considering the recent moves higher. He added that the payroll tax increase didn't dent spending because of rising asset prices.
(Read More: Stocks Could Hit New High With US Data on a Roll )
Greenspan coined the phrase "irrational exuberance" in 1996, when he was asked a question about soaring stocks at that time. The year 1996 was coincidentally the last time the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) had its last 10-session winning streak.
Blue-chips will try to make it 11 in a row on Friday. That would be the first such run since late 1991 into 1992. And whether this makes it more or less likely, the Dow has closed higher every Friday so far this year.
(Read More: Wall Street Bulls Struggling to Smash S&P Record)
Meanwhile, the broader market measure S&P 500 Index (^GSPC) is just a couple points away from its all-time closing.
On banks and "too big to fail," he argued it's the most important regulatory issue of our time, adding the problem is getting worse not better. He said he'd prefer to see a higher level of bank capital on an ongoing basis. Greenspan said the Dodd-Frank Wall Street Reform Law was based on a faulty structure.
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