On a positive note though he reckons caretaker boss Kenny Dalglish will bring the feelgood factor back to Anfield.
On Hodgson's departure as manager, Hansen said: "I would have said give him give him till the end of the season, give him some money. I don't think six months is a period you can turn things around.
"I think he inherited a poor squad of players by Liverpool standards, but modern-day football you don't have any time, it's all results based and there's no compassion shown whatsoever.
"If you look at the 70s and 80s, they want Liverpool to be up there winning the Premier League, winning the Champions League, but unfortunately for Liverpool you've got to have great players to do that and they just haven't got enough.
"They've got good players but they haven't got great players. Roy knew he had a big job to do and unfortunately the buys he made himself haven't played as well as you would expect them to do."
Speaking on BBC Radio 5 Live's Sportsweek programme, Hansen said: "Kenny is a great choice. Obviously I'm biased because we've been friends for a long time.
"I've played under Kenny at Liverpool and he's Liverpool through and through and if you need a caretaker manager, someone to galvanise the crowd and get the players going, Kenny's an ideal choice to take them to the end of the season.
"If Kenny turns things around and did really well then they will have a situation, because Kenny will want the job and quite rightly so."
The fact that Dalglish last managed the Reds twenty years ago is not seen as a negative by Hansen.
"I know him better than most and he's a football man.
"He knows more players, more teams and how they're doing and more leagues in Europe than anyone I know."