How quickly a cushion can turn to nails...

Norway's sovereign wealth fund was set up in 1990 to capitalize on the country's oil and gas wealth.

In 2008, it reached the apex of its historic capitalization as oil prices skyrocketed towards $200.

Then the fund lost over one-fifth of its value in the past half-year.

Norway's pension woes aren't unique—International Financial Services, a London research firm, puts average global pension system losses at 18% for 2008.

But the Norwegian fund was uniquely meant to be a buffer against fossil fuel price plunges that in the 1970s and 80s slammed Norway's booming oil economy (Norway only discovered its North Sea oil in 1969).

Norway today is #5 in the world in oil exports and #3 in gas.

Originally named more overtly as the Government Petroleum Fund, Government Pension Fund-Global is now the world's #3 state-run investment body.

Yet despite a robust bureaucracy and teams of sharp equity analysts, Norway's national pension system bought into falling knives like Lehman Brothers.

Again, it's not peculiar to Norway, or to funds of the GPFG's size...

In this case and so many others, equity investing was seen—incorrectly—as a high-return savings account.

Those sov-wealth funds, individual accounts, (IRAs) or nifty tax categories (401k) that made it easier for savers to tap stock market profits also made it easier to lose when the tide went out.

So though oil and gas revenue have brought Norway a half-billion dollars in revenue in the past 40 years, Norway's 2008-2009 swings tell the story of not just how energy investments have crashed, but also how non-energy investments funded by energy revenue have also been severely diminished.

Sam Hopkins