Ironically, or rather idiotically, traders poured into stocks on Blankfein’s assertion that Goldie is doing well because Goldie is short mortgage-backed securities and CDOs. Blankfein believes the financial situation will worsen: ...many institutions don’t understand what the credit crunch is going to do to earnings and their balance sheets.
So what we have is a huge rally because Goldie will profit from the US economy and financial system going to hell. And people pay fortunes to go to Ivy League schools and B-schools to learn how to play the new economy!?!?! Apparently a critical mass of traders believes that not only what is good for Goldman is good for America but as long as Goldman profits everything else is immaterial...
In other words they were cheering on the fact that Goldman Sachs claimed to have made the right bet - they're short on the shitpile - even though if they win the bet Big Shitpile comes crashing down.