An awful lot of the money has gone to pay sky high salaries to bankers, hedge fund managers and big dividends to bank shareholders.
The reason the banks made all these risky loans, is because they could charge high levels of interest for them. They saw it as risk free because in a rising housing market even if they had to reposess they were likely to be able to sell the house for more than the loan value.
Of course, it was pretty much risk free - because even though it went pearshaped, we the tax payers have bailed them out.
There's a great book called "This time is different" all about the history of financial crises, well worth a read.
On a slightly more cheerful note, the reason the Greeks are utterly shafted is that no-one has confidence in their economy for very good reason. IIRC they have been technically in default on their debts for something like 84 out of the last 100 years (can't remember exactly, but you get the point).
Whereas to look at the last time the UK substantially defaulted on its debts you have to go back a very, very long time (lets put it this way, Henry VIII confiscating the monasteries is one of the more recent occasions that England's rulers took the money & ran).
On a less cheerful note, its hard to ignore the issue of oil prices - as said up thread, oil is only going to get more expensive, and energy, ie oil, is at the centre of almost everything we consume from food on upwards. The rise in food prices over the last year almost exactly mirrors the rise in oil prices.