Joseph Stiglitz, a Nobel-prize winning economist, said the U.S. economy risks tumbling into recession because of the subprime crisis and a ``mess'' left by former Federal Reserve Chairman Alan Greenspan.
``I'm very pessimistic,'' Stiglitz said in an interview in London today. ``Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable-rate
``The richest country in the world cannot live within its means,'' Stiglitz said. ``It's a real example of macro economic mismanagement. The working out of this global imbalance will cause global problems. The depth of the conviction on free markets in the United States is not very great. We have increased those subsidies, doubled them, under President Bush.''
Lowering interest rates now will help the U.S. economy ``a little bit, not very much,'' Stiglitz said, adding that easing terms on mortgage loans would be like ``kicking the problem further down the road.''
Bush, he said, left ``the standing of America around the world at the lowest it's been'' by refusing to sign up to the Kyoto treaty on global warming and by fighting the war in Iraq.
``It's so important for there to be a global agreement to curtail the use of oil, the use of carbon,'' Stiglitz said. ``The big failure is for the United States not to go along.''
