Where did all the money go?

The Royal Bank of Scotland (RBS) announced today that it lost £5.2 billion last year. Firstly, from the point of view of the bank, this is terrible news. £5.2 billion is more money than I can even comprehend, let alone have. It is enough to give everyone in Asia a pound. To lose that amount of money something has to go seriously wrong, and it did. I won't bore you with the details, because what I want to know is, where did all the money go?

Traditionally banks are places where businesses and members of the public can go to store their money in a secure place. The banks then 'invest' your money and (hopefully) make a profit, sometimes passing a small chunk of the profit onto you, the customer. Now it would seem that no RBS customers have lost their savings, otherwise I'm pretty sure people would be more angry than usual. Equally nobody seems deliriously happy because RBS have given loans amounting to £5.2 billion away without any obligation to pay them back. Also RBS is 81% owned by the taxpayer. So are 81% of RBS' losses going to be passed on to taxpayers? Of course not, but taxpayers won't be getting any share of profits should RBS actually make any. So if the taxpayers (and therefore the government) don't have the money, none of RBS' customers have the money and the bank certainly don't have the money, where did £5.2 billion go? Now some of the money is clearly accounted for, but most of that is RBS' own fault and it is only really paying back what is has dishonestly earned. Even with explanations as to where the money has gone, surely there is something wrong with the whole system of banking in the United Kingdom if a business which is owned by the taxpayer and used by the taxpayer is allowed to lose money like a cash-catapult. In fact, surely it isn't just the United Kingdom's banking system and indeed economic system that has failed like a concrete parachute? The whole of Europe is in debt as well as the USA and other nations. Which really begs the question, who are well all in debt too? It isn't taxpayers because everyone is poorer. It isn't the banks because they won't lend. It isn't business because they've all gone bust. So does that mean that all European countries are all in debt to each other? Surely then we can just write off large chunks of debt then? As of now, that doesn't appear to be happening. Why not? Unfortunately we can only answer that once we answer this question:

Where did all the money go?