I read that it stemmed from a housing bubble in the US, but how did it affect countries like Latvia severely, or Estonia in terms of healthcare? Like, how did it become global?
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In addition to the good previous answers, you might find it helpful to think of its basis as having spread many years prior to 2008, rather than the crisis having spread. The crisis was the wave of dominoes, not the beginning, the setting up of dominoes. The spread happened when the dominoes were set up.
Why it spread? Because one of the foundational impulse-givers of economic activities everywhere are banks by virtue of handing out investment loans. To everyone, because the absolute minimum of people start and operate businesses with their own money. And without businesses, there is no economy. In the buildup of the crisis, these banks started handing out riskier and riskier loans (i.e. they invested in more and more “horseshit” that wasn’t ever gonna work out economically, like people on foodstamps getting 3 mortgages on two houses) that they eventually started to not get back. And everybody was doing it! Now, banks losing all of that money is a problem, because how are they gonna lend new loans? Well, they won’t – and thusly every other person, be it company or private, with an actually economically valuable roadmap won’t be able to realize their actual potential. Beyond that, already active companies in need of regular loans or those who have parked their savings in banks are also gonna be out of luck, i.e. they’ll lose it all and possibly get crushed.
2008 was just a bit special in the sense that everybody invested in everything *internationally* – you had one bank doing the shit trades described above and then sell (transfer) the mortgage contract to another bank, often times overseas and often times by purposely lying about its “quality” (i.e. chances of repayment; i.e. fraud). Which means, another bank would get the lended money from the contract in case of repayment – or would get nothing (and “lose” what they had paid the other bank for getting the contract). That latter bank could be some bigger bank in Latvia or Germany or Spain or Greece or Brazil for what it’s worth. Everybody was in on it.
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Also: Some people talk about “money and savings disappearing” during that time, too, which always confused me a bit. It’s much more accurate and intuitive, to me at least, to describe it as “money spent on dumb shit with next to no value”. It’s like being a millionaire and spending all your fortune on paying people digging holes and filling them with dirt again. Even then, and this is the confusing part, that money never disappears just like that, but it changes owners over a stupid trade. The people digging the holes and filling them up again now have your money. These metaphorical holes being dug and filled during the mortgage crisis were for example, among many other things, houses for people that couldn’t afford them and that nobody else would want either, at least not for any price close to what they cost. A lot of homes were built with more and more investment behind construction, because the investors thought – due to soaring housing prices! – they could sell them later for even more money. But at some point that wasn’t the case (the bubble bursting and prices falling) and a shitload of investors, including directly or indirectly the banks, funnelled an absolute shitton of money into building houses and other stuff for a construction price *far* beyond its (later) actual value. The “lost” or “disappeared” money was, more or less, just a great trade for: construction companies, realtors, … There’s nothing magical about it, it’s “just” a huge kink in the system. The economic system that is supposed to most efficiently, expediently and fairly distribute our social surplus (i.e. everything our labor creates in total) among its members on its own or with very little help did the exact opposite, namely it created a situation where, one way or another, factors of production were combined in one of the most inefficient, inexpedient and unfair ways possible – and that’s what we call a financial crisis in general.
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