Salmond "We can take Scotland in two weeks"

[Batcher]

The Panama option would be viable - if it were not for the fact we (both Scotland and rUK are running a big deficit) - a large chunk of which was caused needing to bail out UK banks.

With the Panama option, you have to run a budget surplus, or a small short-term deficit - and Scotland just can't do that at the moment - Oil revenues will pay most of the bills, but not all.

Panama currently has a 4% budget deficit, which is worryingly high (although small compared to our 8% deficit) - they can get away with that for a while, because they can borrow dollars.

6 months after independence, where will the money come from to pay benefits, pensions, public sector salaries. If they are going to pay in rUK pounds, they have to buy them on the open market - what will they buy them with. The credit rating will be shot if they walk away from the debt and they have no central bank to print the money.

FTFY

[Old Greg]

That's what I think will happen if the UK government carry through with their threats to ban us from a CU and therefore taking all the debt on by themselves.

Another specious argument. Assets and debts will be split. Currency is not an asset. I also don't understand why this intellectually dishonest position is taken. It's very puzzling.

[TestMangler]

It is possible to borrow money on the markets with the Panama option, you just can't print your own money. Of course you also accept that interest rates are set in London, and that you may be ineligible for EU membership, see: BBC News - Scottish independence: Sterlingisation 'would threaten EU membership'

On one side of the argument we have from former EU economics chief Olli Rehn:



Mr Salmond describes sterlingisation as transitional. But to what?

The whole debate is very peculiar and I'm not sure what Salmond is playing at. The obvious model is a separate currency pegged to GBP, as Ireland did for many years post-independence.

Scottish independence: FM backs sterlingisation - The Scotsman

So, and this is a serious question, if rUK is on the brink of offloading a giant financial millstone (Scotland) from the financial bottom line, why are the markets so nervous and why has the £ dropped against the dollar, so quickly, this morning ? The outlook for the £ should be champagne and 100% pure cocaine at the prospect of not having to pay for the little region to the north any more.

[Old Greg]

So, and this is a serious question, if rUK is on the brink of offloading a giant financial millstone (Scotland) from the financial bottom line, why are the markets so nervous and why has the £ dropped against the dollar, so quickly, this morning ? The outlook for the £ should be champagne and 100% pure cocaine at the prospect of not having to pay for the little region to the north any more.

Currency markets don't like uncertainty, and independence creates uncertainty.

I don't happen to buy into the boorish little Englander get rid of Scotland / financial millstone position, and I think independence may work out nicely for Scotland, but there are significant risks, principally around currency but also around EU membership (although I reckon that this will probably get resolved pragmatically).

But what bothers me is the dishonesty of the debate. Take Batcher's nonsense about the currency being an asset and there is therefore a threat to renege on a share of the debt. Currency is not an asset but a means of exchange. Have a look at:

Alex Salmond has undermined his claim the rest of the UK would be forced to share the pound with a separate Scotland after dropping his argument sterling is a shared “asset”.

The First Minister has said that he would refuse to accept a share of the UK’s national debt in divorce negotiations following a Yes vote unless the Chancellor dropped his opposition to a formal currency union.

He and other SNP ministers have argued that Scotland would not take on its share of the UK’s liabilities unless its resources were also distributed fairly, including the pound.
However, economists have said sterling is not an asset that can be divided between two countries as its value rests on the ability of UK taxpayers to stand behind it. A separate Scotland would no longer pay taxes to the UK Treasury.

Mr Salmond stumbled during a phone-in on BBC Radio Scotland after being pressed by a caller to admit that the pound was not an asset but “a means of exchange”.

The First Minister replied: “We haven’t argued it’s the currency that’s the asset, it’s the financial assets of the United Kingdom.”
The admission prompted unionist parties to claim the First Minister’s bluff had been called and intensified their calls for him to name his Plan B currency.

Mr Salmond has hinted that Scotland would continue using the pound unilaterally, in the same way countries like Panama adopt the US dollar, but this would mean having no central bank and large spending cuts to ensure there were enough reserves of sterling.

The First Minister has admitted this ‘sterlingisation’ plan would only be a “transition” currency, without saying to what, while one of his senior economic advisers said it could be a stopgap for as little as six months.

Alex Salmond drops pound shared 'asset' claim - Telegraph

[TestMangler]

Currency markets don't like uncertainty, and independence creates uncertainty.

I don't happen to buy into the boorish little Englander get rid of Scotland / financial millstone position, and I think independence may work out nicely for Scotland, but there are significant risks, principally around currency but also around EU membership (although I reckon that this will probably get resolved pragmatically).

But what bothers me is the dishonesty of the debate. Take Batcher's nonsense about the currency being an asset and there is therefore a threat to renege on a share of the debt. Currency is not an asset but a means of exchange. Have a look at:



Alex Salmond drops pound shared 'asset' claim - Telegraph

I get that currency markets don't like uncertainty, but if what we are being told up here by Bitter Together is actually true, a Yes vote won't create uncertainty anywhere other than in iScotland as we'll be a)out of the EU and b) out of the Sterling zone.

rUk will have the certainty of knowing that they can reduce deficits in a flash (Scotland caused the current budget deficit with it's banks) and rUK will no longer have to support Scotland financially as it does now. You don't get much 'less uncertain' than that.

[jamesbrown]

I get that currency markets don't like uncertainty, but if what we are being told up here by Bitter Together is actually true, a Yes vote won't create uncertainty anywhere other than in iScotland as we'll be a)out of the EU and b) out of the Sterling zone.

rUk will have the certainty of knowing that they can reduce deficits in a flash (Scotland caused the current budget deficit with it's banks) and rUK will no longer have to support Scotland financially as it does now. You don't get much 'less uncertain' than that.

No, there's enormous uncertainty both in England and Scotland. In rUK, for example, this will significantly impact the balance of payments with Scotland gone (8% of GDP), and there's uncertainty about the extent to which large businesses will move south (many have stated they will). Also, these sort of political events leave a currency heavily exposed to speculation.

[TestMangler]

No, there's enormous uncertainty both in England and Scotland. In rUK, for example, this will significantly impact the balance of payments with Scotland gone (8% of GDP), and there's uncertainty about the extent to which large businesses will move south (many have stated they will). Also, these sort of political events leave a currency heavily exposed to speculation.

But the loss of Scotland's 8% GDP is to rUK's advantage. More money flows south to north than the other way round. I've got a Better Together campaign leaflet in my hand right now, backed by the Prime Minister, The Leader of The opposition and an ex Chancellor of the Exchequer telling me that Scotland receives more than it contributes.

For England, that should be like having the opportunity to switch off the life support of an ageing relative who's medical care you are paying for. Westminster should be shouting from the rooftops that the source of much of their debt is leaving not only the UK, but the EU too. The pound can only get stronger as a result.

Unless of course, what the people of Scotland are being told by the Better Together campaign is actually bollocks :-)

[DodgyAgent]

What I find remarkable and also sadly typical of people on a mission is their point blank refusal to accept any doubt or counter argument about their cause. You find this with Politicians because that is what they are paid to do. there are no certainties about what will happen after the referendum yet the yes zealots are insisting that there will be no problems and everything will unfold as desired by the nationalists.

An independent Scotland will face many problems many of which will revolve around its economy. The socialist Utopia of a "free everything" will not be affordable unless the Scots raise taxes. They will not be able to borrow money at low interest rates and raising taxes will stop North Sea Oil investment and businesses would relocate south.

The trouble with people who say there will be "no problem" is that the more they say it the less confident they are.

[TestMangler]

What I find remarkable and also sadly typical of people on a mission is their point blank refusal to accept any doubt or counter argument about their cause. You find this with Politicians because that is what they are paid to do. there are no certainties about what will happen after the referendum yet the yes zealots are insisting that there will be no problems and everything will unfold as desired by the nationalists.

An independent Scotland will face many problems many of which will revolve around its economy. The socialist Utopia of a "free everything" will not be affordable unless the Scots raise taxes. They will not be able to borrow money at low interest rates and raising taxes will stop North Sea Oil investment and businesses would relocate south.

The trouble with people who say there will be "no problem" is that the more they say it the less confident they are.

Funny how you start by saying there are no certainties after the referendum, then tell us what will happen with some tone of certainty.

Get back to overcharging for your services and let the rest of us debate the points

[jamesbrown]

But the loss of Scotland's 8% GDP is to rUK's advantage. More money flows south to north than the other way round. I've got a Better Together campaign leaflet in my hand right now, backed by the Prime Minister, The Leader of The opposition and an ex Chancellor of the Exchequer telling me that Scotland receives more than it contributes.

For England, that should be like having the opportunity to switch off the life support of an ageing relative who's medical care you are paying for. Westminster should be shouting from the rooftops that the source of much of their debt is leaving not only the UK, but the EU too. The pound can only get stronger as a result.

Unless of course, what the people of Scotland are being told by the Better Together campaign is actually bollocks :-)

Try to think outside of the narrow confines of your political position for a moment and take the perspective of the financial markets. The financial markets place a heavy premium on volatility. The best estimates of traders (i.e. the people that understand these markets) are that Sterling will depreciate by 5-10% following a Yes vote, partly due to a worsening of the balance of payments associated with the loss of oil/gas revenues and partly due to short-term speculation. Ignore the Better Together campaign, as a lot of what is being said on both sides is bollocks. I believe satisfactory compromises will be reached in many areas (although I am highly skeptical about a formal currency union - we'll see), but this will take time and, during that period, there will be enormous volatility.