Oh, how we in London laughed a few months back when President Obama upped the rhetoric and started banker-bashing.

How we smiled as we saw US lawmakers engage in Stalin-like 'show trials' of Wall Street titans, as they pulled out all the stops in an attempt to convince their electorates that they were worthy (at last) of another term in office.

How we couldn't believe our good fortune when we heard that a few mindless idiots, encouraged by US government-sponsored bailout outrage, had hired buses to go on a tour of the homes of AIG executives in order to harass them.

How we saw such opportunity when US-based AIG staff were advised not to wear name badges, or anything that could identify where they worked, as there was a danger that they would be stopped in the streets and attacked.

London, we knew, would benefit from all this. Bankers wouldn't want to work where they were not appreciated, and banks would not operate where they were not wanted. Our position as a leading financial center, we thought, would only benefit from all this nonsense from over the Atlantic. Let the Americans indulge in political posturing if they wanted, as we would see the benefit in terms of more business for our City, and additional tax revenues for our nation. And, indeed, the World Economic Forum acknowledged this in a recent report, which placed the UK top of the heap in terms of leading financial centers (the US limped in third behind Australia).

But fast-forward a few months, and the situation is rapidly changing. Obama and the US lawmakers who started this banker-bashing trend, have clearly learned a bit about political and economic realities since February. America's political elite appear not to be as stupid as we thought they were. They seem to have recognised the link, after all, between Wall Street and Main Street, and how interconnected everything is. They have realised that demonizing bankers will eventually adversely impact tax revenues, and that encouraging bailed-out banks to cut back on bonuses will make matters worse, not better, for the little people.

Take New York state, for instance, which is already looking at a $3.1bn revenue shortfall, and may soon run out of cash. The politicians know that, unless you get the tax revenues and spare cash from bankers flowing through the New York system, it will be the little people who will lose out, as local and state government is forced to cut back on essential services.

And so Obama and the rest over there have toned down the rhetoric on banker bonuses. Oh yes, they have pay czar Kenneth Feinberg imposing pay cuts on 75 Wall Street executives at the three financial institutions that bagged 'exceptional' government aid (AIG, Bank of America, Citi), but these guys won't starve and are hardly motivated by money in the first place (former AIG CEO Gordon Liddy did the job for $1, and Citi boss Vikram Pandit is currently working for nothing). So US politicians have got themselves out of the hole that they dug themselves in. Face has been saved by the pay czar's meaningless gesture. Over in the UK, however, politicians of both parties look intent on committing commercial and fiscal suicide.

'What happened with Goldman Sachs last week (presumably having the audacity to earn money and allocating some of it to the bankers who helped it do so) sends the wrong signals', says UK Chancellor Alistair Darling. 'We are willing to take action if necessary (on big bonuses)', City Minister Lord Myners threatened this week. And even Tory shadow Chancellor George Osborne has not ruled out a super tax on banks or bankers (or maybe both).

So, as the Americans appease their public by making token gestures, UK politicians continue to pursue populist policies that may win votes, but won't help any of us out of our economic malaise. Make no mistake, banks and bankers are picking up on your signals, Mr Darling. They know they are no longer welcome in the UK, and they may take their business elsewhere. And if they do, UK plc is screwed, as we have no quick means of replacing those tax receipts, and can certainly do without tens of thousands more bankers, recruitment consultants, estate agents, sandwich shop owners, management consultants, lawyers, and God know who else, on the dole.

This article was penned and edited by Vic Daniels

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