UKC

there's lots already, i know

but i haven't seen this answered (sorry if i've missed it)

the preferred position of 'yes' is for a currency union with the rUK, or so i believe

why?

again, this is my understanding, so it could be wrong, but...

if scotland (popln 5.3m) is in a currency union with a neighbouring country of 58m people, how much say will it have over key aspects of macroeconomic policy such as interest rates in the Bank of England?

currently, i thought one of the criticisms of the UK is that the BoE sets interest rates at a level that benefits the City and financial services, to the detriment of the regions, including Scotland (not a region, i know).

but how will independence improve this situation? currently interest rates are set by the monetary policy committee. if that was to stay the same, how many seats would scottish representatives have on it? surely, not many

if it were to change, and revert to a political decision, i cant see how it would be any better. rUK politicians would have no incentive to set rates at a level that was disadvantageous for their electorate, so considerations of what was best for scotland wouldnt even figure; and scotland would be too small to have a significant influence on the decision

so however it was set up, a currency union looks like de facto surrendering key facets of economic policy making to a foreign country. if the interest rate is not under scotland's control, that removes a key level to deal with economic crisis should it occur, and if chronically set at the 'wrong' level must hamper scotland's development

how is that compatible with independence?

cheers
gregor

In reply to no_more_scotch_eggs:

Its not.

In reply to icnoble:

not what?

In reply to no_more_scotch_eggs:

Ah, so you've also spotted the slight flaw in Salmond's plan? You're entirely right. Independence only makes sense with an independent currency (Canada, Norway, New Zealand all do fine that way, with similar sized economies).

I've always thought that the Euro was a bad idea for exactly this sort of reason, and the same applies to iScotland using an rUK currency on a "client state" basis.

There is a theory that Salmond never wanted independence anyway, what he wanted was devo-max. But Cameron vetoed putting that option on the ballot because everyone knew that devo-max would win if put on the ballot, and Cameron didn't want that. Thus Cameron went for a yes/no vote, presuming it would be no, thus enabling Westminster to dictate any further devolution on Westminster's terms -- whereas a vote for devo-max would have forced Westminster's hand.

It may thus be that both Cameron and Salmond have screwed up, since I think the option that would be most popular of all would be devo-max.

In reply to Coel Hellier:



yes, 'sterlingisation' seems to be just bonkers. the fact that 'yes' seem to even entertain it as a possibility would be a serious barrier to me voting for independence

the euro- yes, same problem, and even smaller voice in an even bigger playing field, but at least the process would involve a range of other countries, not just two, one of which was ten times the size of the other

why is it 'yes' are so reluctant to adopt an independent currency for iScotland if the vote goes in their favour? what are the downsides to this? yes, currency exchange costs, but would they not be outweighed by the ability to have proper control over economic policy, rather than having it dictated by the country that we voted to secede from?

not trying to score points, incidentally; i really just dont understand the reasoning for keeping the pound,

cheers
gregor

In reply to no_more_scotch_eggs: "not trying to score points, incidentally; i really just dont understand the reasoning for keeping the pound"

It's quite simple, the electorate will only vote for independence if they think their money is secure, the only way YES can pretend to guarantee that is if as little changes as possible
http://whatscotlandthinks.org/questions/which-monetary-option-would-be-in-s...

In reply to no_more_scotch_eggs:

Its an incredibly short term view…

Even for the UK the £ is limited, unless we leave the EU.. the euro isn't going anywhere.. if Scotland wants an EU future, then they should go the euro route.

By taking control of the £ they are just destabilising and restructuring the rUK's monetary policy for a short term intermediary step… quite a big ask..

All this, it's better for the UK nonsense.. no it's not.. as sooner or later we'll have separate currencies anyway… may as well just bite the bullet now, take the shocks and ride it out once, rather than twice..

In reply to no_more_scotch_eggs:

Hi Gregor

Your analysis is correct. The Bank of England governor agrees with you!

However soverignty in a globalised world has taken a kicking. Clintons economic adviser summarised it brilliantly
"when i die i want to come back to life as the bond markets"

For Scotland and the rest of the UK. A yes vote means higher borrowing costs and a weaker currency definitly in the short term. Medium term there is a colossal job to come up with a mutual economic governance model that can work. Its madness to introduce a new currency for scotland the transactional costs for scotland are horrendous. The euro is desperately trying to sort out a fiscal pact to keep the show on the road. rUK and Scotland will need to do something similar.

Scotland as you say is forced to give up fiscal autonomy and to be realistic if its to the EU or london makes little difference without them it would be the currency markets. However something simple like keep govt. spending versus income within a 2% margin of 0 or no greater than Englands deficit gives scotland the freedom to decides its own mix of tax and spend.

Other options woudl be a peg to the value of sterling. This happens in south america with dollars and it leaves you pretty reliant on keeping markets happy. SCotlands oil may allow it to keep everyone sweet btu it restrains fiscal flamboyancy.

Coming back to sovergnty the UK parliament was bounced into a coalition ina tearing hurry due to market perceptions. did it really make sense to fight an exhausting election campaign and then immediately negotiate a governement for 5 years? Of course not but the UK civil service perceived that the markets gave them no choice.

In reply to alasdair19:

The problem with that is entering the euro..

Its almost inconceivable the Scotland could join the EU and not commit to the euro-zone..

That'll be the factor… and it seems a new currency may be the best way to do that.

In reply to IainRUK:

there is no way Scotland will join the euro. There is now a two speed Europe on paper yes its ever closer union but the euro is harder and harder to stabilise the bigger it gets so it'll be a generation at least before any others join even if they want too.

In reply to alasdair19:
Thoughtful replies thanks.

Why would rUK entertain a currency union with iS? Would it be a quid-pro-quo for something else? Faslane? A share of the national debt?

In reply to blurty:
my understanding on all this is...

current Union maintains investor stablility. if you go for a new currency, it's likely anyone with have a brain would move their money from scotland to rUK to protect it from the devaluing effect of converting to a new currency.
I'd suggest that as we're not a war or anything, taking smaller steps might work out "safer" for everyone.
from the other side, if iScotland is forced to leave the £ why would it accept the £'s debt? so wouldn't it make sense for rUK to allow scotland to continue to repay it's "share" of the debt in exchange for continuing to use the £. also loads of companies north and south of the border trade with each other. if both sides don't use the same currecny wouldn't that make those business more unstable?

(dropping value of the £ recently) as an outsider it seems the stock market is mostly based on confidence. it's enevitable that uncertaincy over the UK's position will result in a drop. of course gideon saying on the TV on sunday that he absolutely will not allow a currency union ever ever ever ever no ifs nor buts almost certainly made that worse than it needed to be. the man is in charge of the countries finances and is behaving like a child.

In reply to IainRUK:

But how seriously would a new currency be taken internationally? Who's going to be buying the new Scottish muckle*? Where would the exchange rate be set? It's a mind-boggling risk to take with savings and mortgages.

* Composed of many mickles, obviously.

In reply to Dave Garnett:

youtube.com/watch?v=z2BKrh43rhI&

kevin bridges has a better name for the scottish currency

In reply to rallymania:


Because it inncurred it as part of the UK? The fact it no longer used the currency doesn't seem relevant to me. Do you expect all £ denominated mortgages to be annulled too? (This, I can see, would be a good reason to vote yes!).

In reply to alasdair19:

Has the idea of a peg to sterling been discussed as part of the campaign? I haven't seen it, but could have misse it

I'd have thought it shares the same problem as a currency union and sterlingisation; if you yoke together two economies which are fundamentally different, sooner or later the strains will show and policy will be set to the detriment of the less powerful one- in this case Scotland

I saw that happen in s America- I was in Argentina in 2001 when they fixed the peso to the dollar at a rate of 1.3. The following year the economy imploded and an entire generation had their savings wiped out.

Was the ERM not a variant of this- trying to rope together different economies- with unfortunate results

Overall is it your view that the restrictions in sovereignty that currency union with rUK would involve would be a lesser evil than having a separate currency and incurring transaction charges?

I wish that the televised debates had properly explored this, as these aren't things that I've heard from salmond, nor have I heard the no camp properly question him on it,

Cheers
Gregor

In reply to rallymania



See, that's the sort of unnecessarily personalised and partisan comment that just makes me disregard the rest of your post.

In reply to IainRUK:


They have no choice if they want to rejoin the EU as all new members must accept the Euro as their currency. So in a way the whole procedure is a bit weird, Scotland will just accept one "master" instead of another, if one looks at it from the point of view of a ScotNat.

The poster above who suggests Salmond didn't really want independence at all may have a point - look at what he is proposing, same currency, same head of state (the queen), being under the same defence umbrella (a minimal army is proposed)... hardly real independence.

In reply to no_more_scotch_eggs:

Simply, Scottish banks have assets of 1000% of Scottish GDP. Iscotland cannot cope in any way without being completely bankrupt in the event of another banking crisis. They need a lender of last resort.

Who is going to be responsible for consumer protection? Has anyone on the YES side explained what will happen to the FSCS scheme in iscotland? Will your deposits be protected like they are in the UK currently? To what value? (maybe they have covered this but I haven't seen it)

I wonder what would happen to the value of the pound if Brent Crude suddenly started to be traded in a different currency?

In reply to no_more_scotch_eggs:
Politically, Scots like the pound. So it helps Eck is he claims we keep it.

Economically, the UK enjoys better lending rates and credit rating than a young start-up country would do. So it is better to stay in that set-up - pooling resources and all that. Also, Scotland's largest trading partner is England, about 70% of trade is with England. There are mortgages, loans, contracts denominated in sterling between countries. Suddenly Scots would be paid in S£ and have mortgages in GBP£. So and hence, currency union. It's not as stable as what we have now (witness the Euro) but its the next best thing.
For England et al, benefits would be be a) that trading certainty mentioned above, and b) balance of payments - Oil helps the UKs trade deficit, so keeps sterling strong. But against that A), a GBP devaluation caused by the loss of oil would help exports grow, so that balance of payments shortfall would probably be a short-term thing - 5-10 years. b), SNP white paper envisages currency union for medium term only - no more than 10 years. So borrowing costs for both countries would rise for periods beyond that (eg all of it). Plus, with BoE being lender of the last resort, any defaults would be with both countries. And SNP White Paper proposes 5% spending increases, and a deliberate undercutting of the UK in corporation tax rate; putting Scotland on a course to be Greece in <10 years and england et al picking up the tab. hence - no currency union.

Pegging the Scottish £ - desirable in the medium-term due to mortgages/trading contracts etc, but also difficult to achieve due to balance of payments issues and the likelihood of the GBP£ dipping in value then rising, while Scotland's natural x/r may follow the opposite path and would certainly be highly dependent on oil price.

In reply to Fultonius:


It's traded in dollars now, which currency are you thinking of?

In reply to Bruce Hooker:

Yes indeed, 'be careful of what you wish for...' I suspect that Salmond was riding a bandwagon which then became too big to control.

FWIW I suspect the vote will be a 'Yes', (Westminster really is helping them a lot), but that once the dust has settled and the fine detail worked out the negotiated end result will look more like Devo Max than a truly independent state like Ireland.

In reply to no_more_scotch_eggs:
Has the idea of a peg to sterling been discussed as part of the campaign?

The problem with a fixed peg is the cost of maintaining the fix as iscotland is constantly buying and selling it's currency. Iscotland could end up owning billions of GBP in theory (if it was fixing to sterling). Then, if the BOE engages in more QE and the value of iscotlands foreign reserves plummet. Obviously it can work the other way but it's a gamble and not ideal.


An good example of maintaining a peg that has proved expensive recently is the Swiss Franc. The SNB have spent billions defending their currency from safe haven flows in the last crisis by effectively selling swiss francs and buying euros. In June 2012 their foreign reserves jumped from SFR238 billion to SFR304 billion just to maintain the peg to the euro.

In reply to Fultonius:

I think you have that wrong. It's the dollar that oil is traded in (as well as gold for example). it's the reason the USA is accused of having exorbitant priviledge of having the worlds reserve currency.

http://en.wikipedia.org/wiki/Exorbitant_privilege

In reply to no_more_scotch_eggs:

It's not compatible with independence

In reply to Bjartur i Sumarhus:
I didn't say it was currently traded in the pound, I was pondering the consequences of trading in a different currency and it's effect on the pound.

If it was traded in a new Separate currency, it would be a strong one. We could then use any surplus as a sovereign wealth fund to prevent it becoming too strong and catching the Dutch Disease.

In reply to Fultonius:

Sorry, I thought it was implied in your post

In reply to Fultonius:

Brent crude trades in USD. what seperate currency are you alluding to?

In reply to Fultonius:



How are you planning to make OPEC start trading in the groat?

In reply to no_more_scotch_eggs:

Just flashed up on my bloomberg screen....interesting poll stat

"GBP HITS FRESH 9-MONTH LOW OF 1.6052 VS. USD....story of 54% yes poll going around the FX mkt."

In reply to Fultonius:


That's what Ghadaffi wanted to do and look what happened to him! Mind you thinking of Salmond with a stick up his backside might please some people.

In reply to no_more_scotch_eggs:

Standard Life just released comments that they will definitely relocate (effectively) 90% of their business out of Scotland in the event of a yes vote FYI

In reply to alasdair19:


the euro is one of the most traded currencies in the world..

quite simply if you want the eu… you have to go the euro..

In reply to no_more_scotch_eggs:




ok i'll take that on the chin and am happy to retract the comment.

the man is in charge of the countries finances, The party he represents has decided to play hard line politics and he is following that mindset. i think that's a big mistake.

i'll add, what ever the outcome next week, there seems to be a real sea change happening in politics in the UK. Maybe England will get it's long over due English parliment with an overal UK "senate / federal government"?

I'd have voted for devomax if DC had allowed it to stay on the ballot paper. Again i think he made a mistake and under estimated many peoples mood.

hope that's a more balanced response

In reply to no_more_scotch_eggs:

Ok, thanks for the replies so far.

Which haven't really reduced my anxieties. They all seem to involve extra costs, or risks of a disastrous unravelling of the arrangements at some point in the future.

Am I correct in thinking that one of the reasons austerity was so much worse in Greece and Ireland, despite their deficits being of a similar order to the UKs, was that they had no control over their interest rates, nor could they engage in quantitative easing, so couldn't 'devalue' their way out of the crisis; they had to make cuts in govt spending on a scale much larger than the UK has done.

If so, as the smaller player in a currency union with the rUK, is that not exactly the position that an iScotland would risk being in? With the rUK at risk of having to bale us out, as Germany had to with Greece?

I'm really looking for some of the pro-independence stalwarts to reassure me that my analysis is wide of the mark and that these are not as big as a concern as they seem, especially given the Economist article about predicted demographic changes on the other thread. The lack of input from usually vocal contributors is not exactly easing my worries over whether an iScotland would be able to pay my pension when I come to need it...

Cheers
Gregor

In reply to rallymania:
Thanks, appreciated.

I'm not sure it's any more 'hard line' than Alex salmond's entrenched refusal to offer a 'plan B' during the televised debate. I understand why salmond has done it, though I disagree with him for doing so

I can see why devomax was not an option, though with it being so close, if its a no, there will have to be some more transfer of powers to Holyrood, and that will inevitably lead to a review of the constitutional arrangements of the rest of the UK. not sure that will solve matters, or whether it will be a stable solution in the longterm though.

And re Osborne and other no figures ruling out currency union- if dont think this is just a debating position- as I've posted above, and others have, given the white paper proposals of spending increases and the demographic changes predicted, I fear for whether the economic direction proposed for an iScotland is sustainable. If Osborne thinks this, and judges there is a risk of economic failure in Scotland, which would require a bale out by the rUK exchequer he'd rightly conclude it wasn't in rUKs interest to enter a union.

What i don't get, and the reason for starting the thread, is why it would be in Scotland's interest to be in such a union- yes, it would be easier in the short term, but looking at what's happening in the Euro zone to small countries that aren't able to set their own interest rates, its pretty chilling. It seems inevitable that there will be economic turbulence at some point in an iScotlands future, and currency union ties its hands behind its back and leaves massive austerity the only tool to manage it.

As far as I can see anyway- but looking to hear arguments as to why this might not be the case...

Cheers
Gregor

In reply to no_more_scotch_eggs:


The worst of this is that if this happened once again "Westminster" would be accused of crushing the Scots, of taking revenge against a small, defenceless nation that "only wanted to regain its freedom after three centuries of oppression". It would be an awful mess and I think any British government would most definitely refuse to take such a risk.

In reply to no_more_scotch_eggs:

"looking at what's happening in the zone to small countries that aren't able to set their own interest rates, its pretty chilling"

Some examples?

Greece cannnot be compared to Scotland - we are, way, way healthier than they were when they joined the Euro.

Ireland? I don't like GDP as a "measure of nation's health" but it's all we have - their's is currently higher per person than the UK or iScotland.

In fact, all the small Eurozone (and Scandi) countries, Austria, Luxembourg, Norway, Netherlands, Denmark etc. etc. are further up the table than the UK.

The countries doing badly? Greece, Italy, Spain - all large countries with quite different economies to their Northern Eurozone counterparts.

I think the flexibility of a separate currency would have some benefits, but in the short term I think the stability and risk sharing of monetary union outweigh the lack of monetary control.

In reply to Fultonius:

So in fact just a few.. But again very different... There's none very comparable to Scotland's case..

Luxembourg is totally incomparable.. It's like considering Edinburgh on its own ..,

In reply to IainRUK:
Yeah, there are no exact parallels - this has never truly been done before.

I was just refuting his statement about the "chilling things happening in the Eurozone" which appears to have no backup...

In reply to Fultonius:
Well, chilling things *are* happening; as you rightly point out, it's how relevant they are to Scotland is unclear

And your comment that there are no exact parallels is an excellent one.

Does it come down to which side of the ' benefits of short term stability vs risks of lack of monetary control equation' you regard as more important?

Given that there are differences in Scotland's economy from the rest of the UK, and that the spending plans going forward post independence seem different (though we don't really know what they will be in practice), how confident are you that the interest rate set by a future central bank of Britain would not significantly diasadvantage Scotland? And that over a couple of generations there will not be a crisis where that lack of monetary control will prove a serious issue?

Cheers
Gregor

In reply to Bruce Hooker:



I think you've hit the nail on the head Bruce, the divorce would be painful enough, without prolonging the agony.

(That said, the UK & Eire managed it for fifty odd years)

In reply to no_more_scotch_eggs:
You make a very good point regarding where the YES supporters when the topic becomes purely financial. It really amazes me that so many Scots are voting yes when there are no answers to some of the most fundamental points of leaving the UK. It really does show it's heart rather than head (to me at least). I read just now that Salmond has rubbished Standard Lifes announcement that they will move south as "complete nonsense". Really? How can he get away with saying that? I really struggle to see why anyone would want to follow this guy into the unknown...but hey.. It's nothing to do with me, and admittedly, I am pretty obsessed with money...especially my own so maybe i'm the odd one here.

Will he rubbish the statement BP have just released?

In reply to no_more_scotch_eggs:

Those are my worries too, and I don't have the answers to convince you I'm afraid.

There are also the risk of staying in the UK to worry about - the "next" banking crisis, the SE Housing Bubble. These are just as real risks. Although, in a monetary union I guess we'd feel those too. The more I think about all this, the less I feel I know...

If Scotland becomes independent, and in 10 or 15 years the economies are diverging and interest rate issues are really hurting Scotland, could Scotland then "go it alone" with a new currency?

In reply to Bruce Hooker:


That's a really good point Bruce, and must be a factor in the Cameron/miliband/clegg et al's thinking

Cheers
Gregor

In reply to Fultonius:

But bad things did happen in the Eurozone, that's irrefutable. And size doesn't come into it. Italy, Spain and France (may be next) are not small countries. What they all have in common is massive deficits, and debts, which became unsustainable when the increased borrowing levels wasn't followed by an expanded economy. The lesson learned and now being applied is that monetary union has to be matched by fiscal harmonisation. The union proposed by SNP is monetary union paired with fiscal disharmony and tax competition.

In reply to Bjartur i Sumarhus:

BPs statement is brilliantly at odds with what they are doing with theirmoney - £4.5bn investment into the Clair Phase 3 project? That seems like a lot of money to throw at something that has no future.

Yes, BP and Shell will want the union continued - lower risk. Pretty simple really.

In reply to Fultonius:

Too many unknowables! And good points re the housing bubble and potential effects of that finally bursting

Given that there are no answers to these questions, I wonder how much people's choice comes down to underlying psychological factors- willingness to take risks based on incomplete information, preference for sticking with known circumstances rather than adopting new ones.

And the point of their life they are at- whether an iScotland will be able to pay my pension 25 years hence is a real concern for me, but maybe not so much on the mind of someone 20 years younger (I know I wasn't thinking about that when I was around 20)

None of which actually matters- as an exile south of the border, I don't even get to vote. Which is a disgrace; I will be entitled to a Scottish passport if the vote is for yes, so I should have a say in whether that outcome comes to pass!

Cheers
Gregor

In reply to Fultonius:

Lower risk - nail, head

In reply to Bjartur i Sumarhus:

Lower risk for them, yes - I doubt anyone would argue about that.

Let me think, should I vote yes or no. Hmm. Well, BP and Shell want me to vote no because their investments will be less risky. Ok, that's it sorted then, I'll vote no to keep those nice men at BP and Shell happy.

In reply to Fultonius:

"Lower risk for them, yes - I doubt anyone would argue about that."

I bet Alex Salmond would.

In reply to Fultonius:

'Yeah, there are no exact parallels - this has never truly been done before.'

Yes. Enjoy being guinea pigs. Or rather - I hope your kids enjoy being guinea pigs. Because that's who'll be affected when the sh*t will really hits the fan.

In reply to no_more_scotch_eggs:

Join the club!

You will be able to vote in local elections though, assuming Scotland joins the EU.

I saw a report on the French news last night which touched on another aspect, Scotland is just one of a whole series which could lead to breakup of existing EU states, Catalonia, Flanders, N Italy, are all in similar situations... a bit of a trend, after so many years of European peace people forget why countries exist? It's surprising that the EU doesn't have a commission on the job to provide a common policy on how they will react to such cases? Or maybe they do and it's not very public?

In reply to no_more_scotch_eggs:

there's a few people on this thread posting from a position of knowledge in the financial world (from observation)

would you mind taking a few minutes from your busy day to watch this, and then the 5 videos it links to for a reasoned opionion on what's right and wrong with them?

youtube.com/watch?v=VBbIP0QWa_M&

this is clearly a YES postion, just wondering what's right / wrong with it?

i watched them and thought they made sense, but it's not my area of expertise

In reply to Rob Exile Ward:
Which shit, which fan? Why is it so difficult to see that there's nothing stopping Scotland working well. Every single one of the financial analyses have said the same.

There are many reasons not to vote yes, but baseless fears about Scotland becoming the next Spain or Greece are not helpful.

In reply to Fultonius:

I'm not just worried about, and for, Scotland - this thing affects us all.

There is one absolute, golden rule that as an economist and politician, Salmond knows nothing about, and it is this: all actions have unintended, unexpected consequences. And the more radical the action, the more unpredictable the outcome.

This isn't based on fear, it's based on historical fact -and it isn't a plea against change, it's a plea for gradual change rather than big bangs.

In reply to Fultonius:



Shit will hit the fan, that's what happens. Not just for iScotland or because of independence, just because it happens in countries all around the world. 2008 was such a long time ago wasn't it?

In reply to no_more_scotch_eggs:

This is a very interesting thread- thanks for initiating it.

I was chatting to a couple of Scottish colleagues and asked the question that if the model is that of Scandinavian countries, i.e. strong social policy and governance but high taxation, could this be sustainable as oil revenues decline?

The danger is Scotland emulates Eire, with the low corporation tax offer which sees lots of multinationals locating within but significantly reduces the tax take leaving a very much reduced pot for social provision and "rainy day money" in the event of having to bail out their banks when we all do the recession thing again (which we will).

It's not an argument I particularly subscribe to but I would be interested to hear how the longer term economy will function if Salmond is making promises to retain the already better education and social care Scotland enjoys over England.

In reply to mav:

Bad things happened globally... That gets forgotten, everyone got hit..

In reply to John Rushby:

thanks John.

re scandinavian model- i cant see it being acceptable- when it comes to the crunch, scots are no keener than paying higher taxes than any other parts of the uk.

your final point is one that troubles me too- i've just watched channel 4 news where they had a debate in front of an audience of 16-17 year olds. the SNP spokesman said that scotland, if independent, will legislate so the NHS will always be free at point of delivery and free from private healthcare; and that there will be a 'triple lock' on pensions- upgrade by the highest of inflation, earnings, or 2.5%. also a 'right to free education', and repeal of the benefits cap. presumably free prescriptions and personal care for elderly will continue

thats a lot of spending commitments. the yes spokesman was less clear about how it would all be paid for, and the audience didnt seem particularly interested to find out either.

i guess the answer is 'releasing the potential of the scottish workforce' or something; but basing the future economic security of the country on an aspiration that everyone will be better than they are now, without acknowledging there has to be some uncertainty over whether that will be delivered, strikes me as misleading,

cheers
gregor

In reply to no_more_scotch_eggs:



>
>

It is hard to see how a Scandinavian model could be delivered on the basis of the Scottish Government white paper.

Income tax in Norway is 27% as opposed to a Scottish 20%, General VAT is 25% as opposed to 20% with VAT on food 15% as opposed to 0%.
Despite this level of taxation the Norwegian Health Service is not free at the point of delivery, You have to pay fees to see your GP, patient transport, for operations (non emergency) and more.

To fund this the Scottish Government will not be raising taxes.

The improvement in our lives will be funded by reducing corporation tax from 21% to 18% and by savings in not paying for illegal wars, Trident or the Westminster Government.

Norway has a corporation tax rate of 27% and does not pay for illegal wars, Trident or the Westminster Government.

Both countries have seen an increase in the use of food banks.



It may be that the Scandinavian model is desirable but we won't get there on the basis of the white paper and I am left with the depressing notion that it is the poorest in our society that will suffer from the idealism of others.

In reply to rallymania:





irritating direction, jumping back and forth from close ups of the speaker

re the content- its one side of the story. but the sneering dismissal of no campaign positions ('dodgy dossier') and presentation of 'yes' statistics as the truth and any numbers from the 'no' camp as wrong felt like i was watching propaganda rather than a dispassionate attempt to discuss the subject

and it doesnt deal with my initial point in the OP: even if a currency union is agreed to by rUK, why would scotland agree to it? in video 4 he says tailored economic policies will enhance scotland's growth- how is that compatible with surrendering control of monetary policy to the rUK, which will continue to set interest rates for the benefit of the city of london and SE of england?

the scrapping trident pledge also irritates me- that's fine. but why join a nuclear alliance afterwards? that's having cake and eating it territory. if countries want to be in an alliance the main benefit of which is having a nuclear deterrent they should be prepared to chip in for the cost of it, otherwise it is freeloading. its also hypocritical to be 'anti nuclear', but to be happy to accept the protection of nuclear armed allies. there are historic reasons germany doesnt have a substantial military; but the position of other european countries in sitting under a nuclear umbrella mainly provided by the US while running very small defence budgets is a bit uncomfortable, and as Russia seems set to try to expand its influence, set to become more so.

the pension one was also unconvincing- its all very well promising generous pensions, anyone can do that. its actually being able to pay for them in a generation's time is what is under debate- especially with an aging population. ditto the NHS- of course we want healthcare free at the point of delivery, but delivering healthcare in the face of demand rising faster than economic growth is a really, really, really big problem for all developed economies, and good intentions wont buy proton beam machines and novel cancer drugs. in that regard, it was interesting to hear that there will be an intention to greatly increase immigration- which is good to hear, as it is a rational response to a falling birth rate, and may go some way to easing the demographic problems; but its not something i;ve heard Salmond say, nor has it featured in any of the other discussions on the media. i wonder how popular that will be as a policy.

note- its not that i choose to disbelieve the arguments made in these videos and accept no campaign literature- both sides have a depressing but predictable track record of distorting statistics and claiming support of authoritative figures. its just that these videos are clearly partisan and only part of a truth. i didnt find them persuasive at all i'm afraid,

best wishes
gregor

In reply to no_more_scotch_eggs:

For a 'Yes' campaigner.....

In the event of a Scottish bank failing who would be the Bank of last resort?

During the recent credit crunch the Bank of England was able to provide Royal Bank of Scotland which was technically insolvent with £40 billion worth of liquidy to prop it up and a further £500 billion in guarantee's for the rest of the UK banking system.

How would Scotland deal with a future credit crunch?

In reply to Indy:

iScotland would need a lender of last resort.

Scenario 1) Steringisation - The Scottish Government would need to issue bonds to build a (large) currency reserve (GBP + US + Euro + RBM). Legislate that this will be used to secure deposits/the integrity of local financial institutions. Scottish government lender of last resort.

Scenario 2) Euro -The Scottish Government would need to issue bonds to build an average sized currency reserve (Euro), ECB lender of last resort.

Scenario 3) Groat -The Scottish Government would need to issue bonds to build a large(ish) sized currency reserve (GBP + US + Euro + RBM). Scottish Central bank lender of last resort.

The unknowns in all three are the rates that the issuing entity would get on their bonds.

Cheers
LD

I think the figure for BoE support to RBS + HBoS was £200b of guarantees, and £50b of liquidity.

(£200b Vs a GDP of £140b for the whole of Scotland!)


You can see why the banking institutions will have to move South if it's a 'Yes'. Another blow is that, under EU regulation, the majority of employees have to be based in the country where a bank is headquartered; some jobs would be lost to rUK as well as lost tax revenue from the HQ Stat reporting/ taxation.

I don't think it would be total disaster for the sector though as banks with Scottish customers will retain HQ operations in Edinburgh

In reply to no_more_scotch_eggs:

I though the section on bank bail-outs was particularly piss poor. The message seemed to be 'we'll get bailed out by someone, probably the Fed or the BoE anyway, so f*ck it, let's not worry'

The banks will vote with their feet unless iS comes up with a proper plan, and quick.

I think the 'Groat' would get picked off by the Currency speculators immediately, they will circle the iS playpen like slavering wolves.