The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.

I served seven years as the chair of the Princeton economics department where I had responsibility for major policy decisions, such as whether to serve bagels or doughnuts at the department coffee hour.

Importantly, in the 1930s, in the Great Depression, the Federal Reserve, despite its mandate, was quite passive and, as a result, financial crisis became very severe, lasted essentially from 1929 to 1933.

Weaker currencies abroad mean a strong dollar, and a stronger dollar, together with a weak global environment, is a drag on the U.S. economy. So it's important, as it affects overall levels of production and employment in the U.S. There are many domestic industries doing well in the United States, notwithstanding a strong dollar.

The Federal Reserve is not currently forecasting a recession.

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.

Not all information is beneficial.