systemic risk or shaping the system?

Goldman Sachs would have you believe that they were reacting to the market. Ever the vigilant bankers they were and are, they covered their tracks, yada, yada, yada, okay, maybe we shorted the exact same cdo's we sold, these things happen... oh sure they happen!! ...especially when you are more than just a major player, Goldman Sachs is a market shaper, Goldman Sachs produces the people that end up running the Federal Reserve, our last two Secretaries of the Treasury have come directly from the ranks of Goldman Sachs. To sit and listen to Mr. Blankfein feign that he doesn't think they knew in 2007 that the new mortgage origination market was going south... bullshit! They not only knew, they were the force that sent it south. Claire McCaskkill said that in fairness to Blankfein there ought to be another four or five CEO's sitting up there with him; wrong Claire!, Goldman was not a bit player in a larger market, the whole point in drawing him out is to make the distinction that Goldman is an engineer of the market... sure, Bank Of America, JPMorgan, Citibank, and Lehman Brothers were also heavy into the same game; but Goldman was the leader. Lehman Brothers, Citibank, and Bank of America suffered major damage from this market crash, but mysteriously, Goldman came through the same market, which they delved into the heaviest, and came out of it unscathed.

Subprime Lenders (banks that table the money at Title) melted down in droves. Why? Because the secondary market closed down the warehouse lines that the Lenders use to close the loans. So, point blank, the large banks shut down the entire industry; they were not innocent bystanders, they ran the market and they shut the market down. When did the subprime Lenders start to disappear? Autumn 2005. By summertime 2006, only the largest of them survived, and the largest (Countrywide) was saved by Bank of America while their stock was dissolving into thin air. So, look at the time frame. The big banks started closing the market down in the Autumn of 2005, but Blankfein tells the Senate, today, that he didn't know in 2007 that the market was headed south. They sent it south, beginning in 2005.

Again, when Clare was trying to nail the guy on the nature of synthetic credit default swaps as purely bets, with no respect to any function on main street, and Blankfein tries to weasel out of that by comparing them to futures on oil, which do act to price oil; completely the point she was making; synthetic credit default swaps do not perform to shape the market, they do not, for instance, act to price homes, so he was lying through his teeth... again. Covering up their real role in those synthetic credit default swaps, which everybody in the room knows was to bet against the cdo's they sold in 2007, which they clearly knew was junk.

What never gets brought to light, is how the whole market works. Goldman Sachs is the lead engineer in a global money market that runs on the dollar... printed by the Federal Reserve; where Goldman Sachs is the lead stockholder... these guys are way more than bystanders, and way more than bit players, they are the team captains, coaches, and booster club. To say they didn't know the game plan is nonsense, they drew up the game plan, they executed the game plan.