Cameron's isolation due to defective thinking about impact of EU FTT on City.

Cameron's idiosyncratic decision to place being sent to Coventry at the heart of his European policy has two main motives, both based on party politics.

He had to appease his right wingers, but also he was obliged to obey the wishes of the City of London, which has bankrolled the Conservative Party to the tune of £42million  (more than 50% of its income) since Dave has been leader.

Central to rationalisiation of his decision was the argument that the EU intended to bring in a Financial Transaction Tax (FTT, aka Robin Hood Tax, Tobin tax), and this would penalise the UK because of its realtively higher relaince on finance.  The City provides 11% of the UK tax take, and is the biggest single contributer.

Camerons hypothesis is that this tiny tax on transactions would cause traders to use stock exchanges which do not have such a tax, which would harm the City, the UK economy, and above all, harm the Conservative Party. 

The next few weeks will be an experiment that will test this hypothesis.

If there is no significant shift away from EU stock markets following introduction of the FTT, his hypothesis falls.
If loads of financial transactions come our way from Europe because they are cheaper here, then he will claim he was right.

But even if he was right, he was still wrong.
Wrong, because he may lose - wait for it - the custom of the multinationals as a result of his little flaunt.
Wrong, because he should have agreed to the FTT, on condition that the EU immediately took the lead in securing a Global Agreement on Taxation in the June 2012 Mexico G20 summit.

Admittedly, hhat would give the traders a few months to shop around, which may cost the EU stock markets a billion or two. Or not, as the case may be.

This would still be a good price to pay for a deal that could make the difference between global chaos and global stability.

The crucial point is that by putting the City on the line, he automatically becomes properly motivated to set up an effective a global reaction to the global economic crisis, a proper global tax framework to match the globalisation of trade.

If PM David Cameron had taken this course, he would have bestrode, or possibly bestridden,  the financial world like a mighty David Colossus, leading the world into a sunny future where the financial services, the multinationals and the super rich make a fair contribution to the society they depend on.

Instead, he is sitting in the corner of a little party at Chequers, complete with paper hats and hooters, sucking his thumb and basking in a rare flutter of approval from the Eurosceptic wing of the Conservative Party (prop. CityOfLondon).

If that's a good call, I'm a banana.