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The Nasdaq bubble and crash were followed by the real estate bubble then subprime crash, which led to the unprecedented printing of trillions of dollars in an attempt to prevent a global depression.

I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.

Financial crises are like fireworks: they illuminate the sky even as they go pop.

This crisis exposed very significant problems in the financial systems of the United States and some other major economies. Innovation got too far out in front of the knowledge of risk.

The economics profession advances by one confusing financial disaster at a time.

Viewed from a distance, or through the eye of the All-Knowing CEO of the Universe, the crash of 2008 followed the usual pattern. A long-lived boom driven by cheap credit, going back as far as 1982 (though subject to interruptions in the mid-1980s and 1990s, and in 2001), came to grief because of a rise in the cost of borrowing money.

Given the extent of the exposures of major banks around the world to A.I.G., and in light of the extreme fragility of the system, there was a significant risk that A.I.G.'s failure could have sparked a global banking panic.

And, unlike the earlier bombing on the World Trade Center, a major landmark and symbol of the strength of the financial world was, not just damaged but, totally destroyed.

Between the Community Redevelopment Act, requiring banks to make what I would call very weak loans, and specific quotas that the Congress imposed on Fannie Mae and Freddie Mac, that created the market demand that really led to the subprime phenomenon.