Robert Shiller is the Arthur M. Okun professor of economics. His most recent book, “The Subprime Solution,” focuses on the impact of the subprime mortgage crisis on world economies. Today, Congress is set to vote on a bill proposing a $700 billion bailout for the United States’ financial sector.

Q: What do you see as the root causes of our nation’s economic downturn?

A: In [“The Subprime Solution”], I describe the root cause as a speculative bubble in the real estate market. The U.S. has had many real estate bubbles, but they’ve never been on such a huge scale before. I think there’s a change in our thinking that has led to this speculative bubble in housing. It’s partly a reaction to the stock market bubble of the 1990s. Somehow the view developed that real estate was this fantastic investment that could only go up in value. That view became so widespread and so conventional that people threw caution to the wind. They did not protect themselves from declining home values. That applies to corporations, as well. I think it’s like a hangover from the gold-rush mentality.

Q: Could you say what stage of the economic crisis we have currently reached?

A: I think we’re in a worrisome stage. We have huge threats to confidence. That has a possibility of slowing the economy substantially. This bailout plan looks like it’s going to be finalized. That will help. But we don’t know for sure whether that’s enough. Quite likely it isn’t. Because home prices have fallen so massively … even a $700 billion bailout doesn’t necessarily set things right.

Q: What is your current assessment of the bailout plan? What are its strengths and weaknesses? Do you think the plan recognizes its own limitations?

A: Any bailout plan is gong to be unfair to someone. The initial plan that [Treasury Secretary Henry] Paulson and [Federal Reserve Chairman] Ben Bernanke offered would have created even more uneven results. Congress has modified it notably. Even so, it’s not all clear that there aren’t going to be huge distributions caused by this. I think we have to do it.

Q: What would be the consequences if a bailout did not go through?

A: If you read what Paulson, Bernacke and our president say: They could be dire. We could have something like a depression. If we have the collapse of our banking system, that will stop the economy for quite a while. We will get a bailout, though. I feel confident.

Q: Do you think both presidential candidates have focused enough on the current economic crisis?

A: Historically, this will be looked upon as a time of great transition. All five of our top investment banks have been shut down or changed in a fundamental way. We saw the biggest bank failure with Washington Mutual on Friday. We saw AIG come very close to failure. These are events that could continue.

Q: What are the similarities and differences between the current economic crisis and the Great Depression?

A: One similarity is that they both had a housing boom preceding them. The Great Depression had a smaller housing boom that peaked three years before the stock market peaked. This time we had a much larger housing boom. In both cases there were speculative bubbles that burst, and they were big ones. We’ve come a long way in our general economic policy.

Q: On Sept. 26, federal regulators took over Washington Mutual — representing the largest bank failure in our nation’s history. Could you assess the gravity of this milestone?

A: Fortunately the failure has been handled well by the Federal Deposit Insurance Corporation. The depositors in Washington Mutual hardly noticed any problems. The FDIC immediately found a buyer for the bank. Depositors didn’t have to suffer any inconvenience at all; the people who suffered were the stock holders.

Q: Many Yalies are preparing to enter into finance-related jobs. Do you think it will be difficult for these students to find work in the coming years?

A: I think it will be difficult in the short run. A financial crisis like this is not good news for job hunters. In the long run, finance is a secure occupational choice because it represents an important technology that’s very useful and will continue to be useful. It could turn out to be like nuclear engineering: That was a useful profession.After Chernobyl, regulators made it very difficult for nuclear engineering to be applied. I’m hoping that doesn’t happen with finance. It’s possible that there will be a backlash against financial structures. I think we need advanced financial structures. I’m hopeful that finance professions will continue to expand their role in our society.

Q: What are the most important lessons to take away from this entire crisis?

A: We’ve put too much of our trust in big institutions. Yale students have often spoken in great awe of these giant investment banks. They were impressive, I suppose, but they’re gone now. There was some mistaken sense of power and permanency there. Our knowledge and our technology and is our real strength — not our existing institutions.