Whilst Britain has as good as declared war on Iceland,little attention is being given to the reasons why the various local authorities invested in Icelandic banks in the first place.

Rupert George over at Three Line Whip writes of one council's policy

Wychavon District Council didn't lose that much money when the Icelandic banks folded, only £1.5 million.
Instead of leaving the bulk of their reserves in cash, they invested £15 million in the towns of Pershore and Droitwich. In Pershore they have built and leased a hospital to the NHS. In Droitwich they have built a superstore, currently leased to Waitrose. The council taxpayers of Wychavon are still receiving a 7% on their investment, as well as benefiting from improved public services and a boast to the local economy.
If the £1 billion of council tax payers money sitting in Icelandic banks had been invested in a similar manner the benefits would have been tremendous.