That's what happened during the 5 year housing bubble. Goldman and all the CDO's and CDS's only became part of the equation when they realized all those securities they were selling were eventually gonna fall in value when the 4 year teaser rate adjustable loans starting adjusting to the "real" interest rates.
Lots of people want to overcomplicate what happened. It's really not complicated at all when you look past all the nonsense.
Most of everything else is only a result of what I stated above......people taking out equity line of credits to pay for goods and services....etc etc. This simply moved money around the economy time and time again. It all comes back to the stock analogy above.
The only way we can expedite the coming out of this recession is to tax the very rich as a way to pump more money into the economy and to attempt to provide an incentive(or consequence, if you will) to the rich to not try to pull such ridiculous stuff off on the country again. What's happening right now is an unequal distribution of wealth to the point that not enough money is moving around the economy.
What should be happening is that Congress should be looking into the lax of lending rules that allowed people that otherwise wouldn't have qualified in previous years to be able to purchase a home.
All of this blaming Goldman and other investment companies and even rating agencies is just going after the hen for being duped by the fox. The ratings agencies and investment groups would not have been in a position to sell junk if the junk wasn't there in the first place.