Many European countries lost Billions because we had invested in USA.
And many US pension funds, 401ks, etc. lost billions because it was invested in Europe.
E. g. Norway lost Billions because our huge Government fund had invested in subprime stocks. When wall street collapsed we lost a lot of money.
I'm not sure if you mean subprime as in subprime mortgages or subprime as in just crappy stocks. Either way, European stocks cratered too. You'd have lost a ton, maybe more if you were invested solely in Europe as well.
Norway is actually one of the few countries in the world with a big Government surplus. We're only 5 million people, but the government has more than $600 Billion in plus instead of a debt. The main reason is that we make a lot of money on oil production.
Don't I know it, I work for a Norwegian firm.
Other countries with a healthy economy also lost a lot of money in 2008 due to the wall street collapse.
Who had a healthy economy that was brought down by the US '08 collapse? (And it wasn't just the US the collapsed, let's not forget all the home grown subprime mortgages in Spain, Ireland, Portugal, etc.) The fact is that outside of Germany and perhaps the Nordics, no one in Europe really had a healthy economy in '08. Their economies were fueled by cheap credit as much as the US's was.
We would not have lost the money if wall street hadn't collapsed in 2008. I know we can't just blame wall street. We also have to blame our own investors taking too big risks. Why on earth should we invest in subprime loans?
Again, you make it too simple. Europe had its own subprime collapse, its own problem of spending too much while producing too little fueled by cheap credit driven by the ECB policies as well. You can't separate the two and place the blame all on the US.
As for why to invest in subprime loans? Subprime loans can perform well, provided that you actually understand what they are and where the risks are, and the price reflects that. Mortgage Backed Securities obscured that, both in the US and Europe, due to complex BS valuations that yielded AAA status for them.
I think that the Norwegian investors should be more careful about investing in USA. It's too risky when you lack the control mechanisms in USA that could prevent situations like Enron, dirty subprime stocks etc.
The EU control mechanisms aren't much better (well maybe a bit now, but not prior to '08). Take a look at Carnegie, Norway's largest Investment Bank. Their troubles were 100% home grown and their crash as bad as anything short of Lehman.
I think we should invest our money in the EU instead. They're our neighbours in dire straights. They need our help to create more jobs.
Go for it, but until you fix the underlying problems with you social programs and banking sector, it isn't going to change anything.
I agree that Greece, Spain, Italy and Portugal would have ended up in problems without the finance crisis. They were virtually bankrupt even before. Other European countries would not have ended up in a crisis without the US finance crisis.
That's pure ignorance. France ended up in dire straights, not because of the US financial crisis, but because somehow they became the lender of last resort to the PIIGS. Take a look at who owns the biggest chunk of debt from those countries, its France, the second 'healthiest' economy in Europe.