Stiglitz: U.S. faces economic downturn

Some 1.7 million Americans may lose their homes due to foreclosures and bankruptcy this year, piling further pressure on house prices, he said. Wages have stagnated although the U.S. gross domestic product was some 20 percent higher now from six years ago, he said.

Stiglitz said the credit crunch was a "totally predictable disaster" due to U.S. President George W. Bush's economic policies to cut taxes for the rich even as the Federal Reserve reduced interest rates, which encouraged people to borrow more than they could afford.