Its Better To Die On Your Feet Than Live On Your Knees

After the UK's decision to step out of the Euro crisis and risk political isolation, the immediate reaction of many market participants has been to consider this a negative move. I am not sure this is the correct perception. It must be not be forgotten that UK's GDP is driven predominately by services, most of which stem from finance. This fact means the greatest risk the UK face from all the proposals of Europe on the table is the financial transaction tax. In fact it was JFK's decision to have a tax regarding Eurobonds that original aided London to become the financial centre in Europe in modern times. It would have been a risk to trust that Germany and France would not have used the new proposed treaty changes to try to take some of this lucrative business away from London to Paris and Frankfurt. In fact the French's Napoleon-like president's reaction was all too clear in showing his disappointment in what might have been his saving political move to win himself another term. France under his leadership is definitely not to be trusted. As for Germany this is rather more of a complex analysis. I fortunately have worked closely with a German bank  and so maybe have a little bit more of an insight into their motives. However a quick review of recent history can be an interesting guide. When German reunification was first proposed, both UK represented by Thatcher and France by Mitterrand opposed the move as they believed this nation would become too powerful within Europe. At present their fears seem to have some validity. Germany now controls Italy and Greece via technocratic governments, as well as France. Germany seems to be making the fatal mistake of ignoring the public feeling of other nations in favor of austerity at all costs. Is this similar to their previous mistakes of dominating Europe? Unfortunately yes. But this is only true of German leaders and politicians. The average German on the street does not want to be in the spotlight. They fear accusations of similarity between them and Nazi Germany. They want their country to do well, be the great industrial power which they are, but not to invade Europe. Unfortunately this rational and sensible view is lost at the political and high ranking German level. Here you find characters who have the fatal cocktail of arrogance and resentment. I never thought Merkel fell in to this category but unfortunately I think I was wrong. For Sarkozy the analysis was straight forward. His ego is  his biggest hindrance combined with his inability to control his feelings. The French must be totally embarrassed at voting such an individual into power? Remember his first speech on US soil after his election win: he told the Americans to get their finances in order! The French have a chance to rectify this situation at the April elections. It will be interesting for me to see just what the French people decide and certainly for an onlooker the result will tell us a lot about the French public. They may also feel that they do not want to be Germany's puppet...will we see. So given this background, the UK's decision may not be perceived that negatively. What I find the most disturbing is that the European Union was set up to prevent war and a dictatorship in Europe by friendly nations sharing defense and trade. It was never about the loss of individual nation's sovereignty.   The UK demands last week were not that unreasonable. Germany and France response was worrying. For me as trader I think the probability of all outcomes, including the most negative for the UK, Cameron's decision was a good trade. I bet many Greeks and Italians must feel they wish their governments have made similar decisions. For surely it is better to die on your feet than live on your knees?