Goldman’s Blankfein Was Not Exactly Surprised the Economy Collapsed

Lloyd Blankfein, the CEO of Goldman Sachs was recently interviewed by Fareed Zakaria on CNN.   Goldman has recently been implicated in fraud for short selling investments that were made to look like they were a good investment, but in reality were a “shitty deal”  according to internal Goldman emails.  Investment firms such as Goldman were instrumental to inflating the housing bubble which led to an irrational exuberance and hence, the collapse of credit markets and economic growth.  Here are the statements made by Blankfien,

Zakaria:  When Lehman Brothers was teetering on the brink, did you think this was a seismic moment?

Blankfein:  I think, um, no one could have contemplated the consequences of the Lehman event itself but also the events leading up to it, in terms of the intensity and the duration.

Z:  So you were surprised?

B:  I, in… in hindsight, as i look back, I could say I could not have thought it would have gone this far.  Yes.

Notice that while he says yes,  he also says that he “could not have though it would have gone this far.”  He does not say that he was surprised outright, or that he had no idea what was going on.  One can assume he knew what was going on, only that it “would not have gone this far.”  As the CEO of the most trusted firms on Wall Street, how could he not have known that speculation was leading to a bubble poised for collapse?  Going further, what does it say about Goldman Sachs as a company when they were massively hedged against the housing market; that they stood to gain from the collapse of the housing market in a move that has been termed “the big short”?

This sort of behavior illustrates the insider aspect that Wall Street elites have over the average investor, and that failures to asses risk can lead to unwanted repercussions such as the Great Recession.

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About spacemonkey086

I have descended upon this earth to smack chumps on the head with knowledge sticks.
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