Stiglitz: U.S. Faces Economic Downturn: Financial News - Yahoo! Finance

Stiglitz: U.S. Faces Economic Downturn: Financial News - Yahoo! Finance: "Rising defaults on U.S. subprime mortgages have increased risks to the economy, with a worsening housing slump, credit problems and turbulence in global financial markets, said Stiglitz, a former World Bank chief economist who is here to attend a conference. 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. 'Mortgage payments are going up, house prices coming down, incomes are stagnating. It's not a pretty picture. So the dynamics could unravel more and where it stops, we can't be sure,' Stiglitz told reporters on the sidelines of the conference. 'We don't know how well the (U.S. Federal Reserve) will respond. The lack of transparency means we don't know how deep the problem is,' he said. 'The most likely outcome is that it will be a rather prolonged slowdown but not a recession.'"