Well you know all that "repackaging bad loans as if they are tripple-A rated investments instead of high-risk" that the banks did. There's nothing WRONG with high risk investments, many investors seek those out actively, but generally these are not big governments.
The repackaging meant that these investments were sold, under false pretences, to organisations (including governments like Iceland) as highly secure investments to store and grow their money.
How the hell that is not outright fraud and how EVERY bank CEO is NOT in jail is the question of the century. Sorry but when you LIE to people about what your product IS - that's the very DEFINITION of fraud ! Don't tell me "but the government forced them to make those loans" - firstly that's really not as true as you think but more critically NOBODY forced them to then use FRAUD to offset the risk - there are perfectly valid and legal ways they could have done instead.
Now let's imagine for a second that this part never happened. The bubble eventually burst, lots of loans defaulted. The banks end up with a bunch of houses (the security on any mortgage) which they sell and recover a large chunk of their losses - a lot of people who were formerly unable to buy a house gets one on the cheap, the banks perhaps sue the government for making them give loans to easy and maybe win a few bucks back.
What does NOT happen now is that suddenly half of Europe's welfare states who had all be highly profitable welfare states for DECADES are broke because the accounts where they stored all their surplus and emergency funds just fucking disappeared overnight ! They don't suddenly sit with pensions and unemployment and other benefits that their society has PAID for with taxes which they are UNABLE to pay out to the people who have the right to them under their laws.
They don't suddenly find themselves having to make cost-cutting laws that lead to protests in the streets and the rightwing idiots don't get to point to that as proof that "socialist countries always end up broke" - while conveniently forgetting that these countries were, ALL of them, so far in the green on their social spending that they could have covered their benefits for several decades even if they got no tax money in at all - and only had this problem because the place they put all that surplus money turned out to be a fraud committed by American banks.
You don't end up with a Eurozone crisis. You don't have China turning into a mennace 50 times bigger than they were ten years ago.
You probably have a recession but it's a fairly mild one, some job losses followed by rather MORE jobs being regained.
The teabaggers never becomes a significant political force. Michelle Bachman's is allowed to remain an OBSCURE moron. No government shutdown in 2013. No Ted Cruz in Washington. Rick Perry finally manages to get the job he was ACTUALLY destined to do but had twice failed to get due to being overqualified as the village idiot of some small town in South-east Texas. And Obamacare may just have been the single-payer system it SHOULD have been all along.
So why is it, that the thing which made your average run of the mill EVERY congress has one silly economic policy turn into a global motherfucking disaster and which is a very obvious crime under even the bloody mosaic code ... has seen not a single jail sentence, in fact the sole fall-out anybody got was JP Morgan's fine - which we know for a fact was less than HALF what they BUDGETED for fines when they bought Bear Sterns.