Despite the move hitting a snag over potential player exchange deals offered to the Reds, the 24-year-old striker is still expected to leave Anfield before the start of the season.
While Carragher would sorely miss Owen's presence both on and off the pitch, he has urged the Anfield faithful to understand the tough decision being faced by the England man.
Carragher said: It's difficult for the fans because they see Liverpool as the greatest club in the world.
"I don't think it's that Michael particularly wants to leave, it's more to do with the club which has come in for him. Madrid are the biggest club in the world and probably always will be.
"He's a good friend of mine and of course I hope he stays. We've spoken about the situation and about his feelings but I won't tell you what he said!
"If he does go then everyone should wish him well. He's been at the club a long time and has done many good things here. I've played in the same team as him since we won the FA Youth Cup together back in 1996. He virtually won that competition single-handedly for us. Then he did the same in the 2001 FA Cup final.
"We'll all wish him well if he leaves. We all want him to stay because you never want to lose your best players, but big players have left this club before and its survived."
