American banks had excess funds and created foreign institutional investors to invest in emerging markets, fueling unnatural growth. Decades of outsourcing devastated US manufacturing and made it impossible for US companies to compete with low-cost countries. The bursting of the US housing bubble was caused by high default rates on subprime mortgages. Financial companies lent money to subprime borrowers and packaged mortgages into securities like mortgage-backed securities and collateralized debt obligations. When homeowners defaulted, investments in the US soured, forcing the sale of emerging market investments and causing global markets to decline. Excessive leverage through loans and credit is always risky long-term.