More attention has been given Sen. Marco Rubio's need for water than what he said in his recent response to the president's State of the Union address.
I did not have to listen very long to wonder what world he lives in. His assertion that the recent housing bubble, which in turn led to our economic downturn, was "created by reckless government policies" is utter nonsense.
It is well acknowledged in many analyses that the root cause was unscrupulous lenders who discovered that low quality mortgages, and in particular "subprime mortgages," could be packaged and resold in so-called "collateralized debt obligations," that in turn could receive AAA ratings, which made them suitable for investment. Belief in these ratings, which many insiders knew were bogus, created heartache around the world and bankrupted entire countries, such as Iceland, and the institutions left holding them.
The downturn provoked a cascade of problems as many institutions found themselves way over-leveraged to survive the ensuing chaos. AIG, thinking it had struck gold issuing insurance for this junk through "credit default swaps," also went broke. Hank Paulson, preferring a bailed-out banking system to none at all, went that way, and of course, that policy was continued by the Obama administration. Those are the facts .
Capitalism is unquestionably the best economic system, but without controls it can run amok, and it did during the recent downturn. To suggest the opposite, as Rubio did, shows him to be either ignorant, gullible or stupid.