What caused the housing industry to become one of the great bubbles of all time? The answer is that there really was no way to short the housing industry until really in the last several years when development of synthetic CDOs and other structures allowed people like Paulson to make big bets against housing. Had there been a mechanism to short housing earlier, there probably wouldn't have been a bubble. If you didn't have shorts, if you couldn't short stocks, the probability of stock market bubbles would be much greater.
~William Ackman, managing partner, Pershing Square Capital Management, CNBC's Squawk Box, April 27th, 2010
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