Millions of pounds of council tax and profits from property sales have been squirrelled away in Icelandic slush funds, despite the warning bells. Now, so-called cash-strapped councils and police authorities, are crying foul after Iceland refused to cough up their cash. Greedy councils have kept mum while shopping at Iceland.
The Icelandic connection has revealed the extent to which councils, police and other public bodies like Transport for London, have huge deposits in Icelandic banks.
BBC News revealed that local authorities along with police authorities and Transport for London hold deposits worth around £1 billion.
That's £1 billion of public money that could have been spent on rubbish collection, coppers, libraries, jobs and a decent wage for council workers.
Ordinary savers in bankrupt Icelandic banks who have set up shop here are safe because of government guarantees. And that will cost us a fortune.
Not so the public bodies, who are classed as "informed investors". Informed means they should have realised what was going on. They are supposed to be, er, informed.
Instead greed took hold, as million of pounds of our cash was stashed away for a quick profit.
After years of farming and fishing, Iceland woke up to the fact that rich pickings were to be made in the UK and they gobbled it up.
It was party time. But everyone knew the volcano would erupt and after the party would come the almighty hangover.
Many saw this coming. Credit ratings agencies were warning public authorities of the risks back in the spring. This afternoon, a LibDem treasury spokesman, Lord Oakeshott, revealed he warned the treasury back in July but they were "blind and deaf" and all he got back was waffle.
As for Brown's diplomacy - using anti-terror laws to freeze the UK assets of Icelandic bank, Landsbanki. That went down a bomb in Reykjavik.
The government reckons local authorities have not been "reckless" in investing with Icelandic banks. Well someone has been.
The questions remain. How come councils and police authorities have got so much cash swilling around to invest? If they've got so much cash, why does our council tax keep going up? What checks were made by government on council investment?
And how come this tiny rock in the middle of the north Atlantic was allowed to set up and operate so freely in the UK with little or no checks?
As the economic mess unravels each day as the devil in the detail of Brown's doomed £500 billion bank bail-out is exposed and stock markets crash, the greed and exploitation of a flawed economic model is becoming more and more apparent.
Brown was quick to point the finger of blame at poor little rich Iceland. Too quick. "They have failed not only the people of Iceland; they have failed people in Britain," he said.
Methinks the man doth protest too much.