An interesting little event on the stock market:

The Company announces the proposed cancellation of admission to trading on AIM of its ordinary shares of 0.1p each ("Ordinary Shares") (the "Cancellation"), and the adoption of amended and restated memorandum and articles of association (the "Amended Articles") (together, the "Proposals").

It doesn’t actually matter which company (Fulcrum Utility Services as it happens) but what happens next does - the share price drops 70%. Some of that will be the results announced at the same time but this is wholly normal, that a share price collapses on the announcement of its exit from the public markets.

The reason is that liquidity is valuable. Investors being able to buy in if it looks good, leave if it doesn’t, is something investors value. Therefore liquid investments carry higher prices - solely by being liquid - than illiquid. A publicly quoted company therefore carries a higher valuation than a private one.

This then shows why a financial transaction tax is the suggestion of only the very dim. The entire aim there being to tax liquidity so that there is less of it. So, we are to deliberately tax so as to provide investors with less of what they value. That will reduce the amount of investment - because incentives really do matter.

As both we and the European Union pointed out more than a decade ago. An FTT makes the economy smaller by reducing the amount of investment over time. Exactly and precisely because the thing being taxed - liquidity - is something that investors value and more liquidity means higher investment valuations and so more investing.

A FTT makes us poorer. An FTT is a bad idea.

Not a difficult concept no matter how few are able to grasp it.