Mac,
With regards as to why many public bodies kept so much cash in Iceland, one can only speculate as to the advice they were offered and I haven't made any judgements about them. I have some sympthy though, with those councils who say that they had their hands tied by central g'ment and needed to make as much money as possible because of increasing funding shortfalls. In effect, they were compromised from the outset because they HAD to take needless risks. That need to take risk tainted perspective and I sympathise with them to an extent. I am glad its not me who is having to justify giving that advice though!
Finally, I haven't given out any investment advice on here - just offered general information about planning ahead and diversifying etc which are all bog standard measures and available in any public domain.