How Did Australian Councils get Sucked into U.S. Subprime Mortgages?

Well, good salesmanship of the subprime-backed collateralized debt obligations (CDOs) helped:

Another gripe was that some of its CDOs, which contained U.S. and European assets, had Australian names, such as Kalgoorlie (a western Australian mining town famous for gold, nickel and brothels).

These labels disguised the true nature of the investments, some say. "I will make the conclusion that they were trying to mislead us, by giving Australian names to U.S. assets; you can draw your own conclusion," said Councillor Andrew Petrie in Woollahra, which owned Kalgoorlie. "If they'd been called 'Detroit,' you'd have said, 'What's this?' "

The Grange spokesman said the securities were denominated in Australian dollars and had other Australian characteristics. Market participants said it wasn't unusual for such securities to have Australian names.