The impact of the subprime crisis will persist for two to three years, after which the US economy will recover, the Nobel laureate US economist Joseph E. Stiglitz said in Beijing on Friday.

"The Federal Reserve and Bush administration did too little, too late, and did not do the right things to redress the problem," Stiglitz told an audience at Renmin University.

The former World Bank chief economist said he believed that former Fed chairman Alan Greenspan "encouraged or contributed" to the problem by conducting an interest rate policy that had encouraged mortgage lending to US families from which "the government couldn't bail them out".

He also blamed the Iraq war for dragging down the US economy. "It has been proven to be an enormous error," he said. The war was closely related to the economic problems and "a disaster in every way", he said.

In his speech, titled "China and Globalization", Stiglitz said that many people hoped China would save the world from an economic slow-down. "The fact is that China is a major engine of the world economy and it can make up for deficiencies of the United States, but we should also see that China is trying to prevent economic overheating and inflation."

Stiglitz, an economic adviser during the Clinton administration, is now a professor at Columbia University in New York and chair of the school's Committee on Global Thought.

He recently unveiled a new book titled "The Three Trillion War", which he wrote with Linda Bilmes from Harvard University's Kennedy School of Government. The book says the war will cost at least 3 trillion US dollars, assuming that US troops won't withdraw completely before 2017.

(Xinhua News Agency March 24, 2008)