2141 replies to this topic

[Rosssco]

Same thing as previous statements - they can't stop us using it. Forgetting (conveniently): Use Sterling and there goes Scotland's flexibility to "change the world" being under the control of a foreign countries monetary policy Or.. Scotland can still use Sterling informally, meaning there will be currency issuer in Scotland (as is currently) meaning no money supply and requirement to hold lots of currency reserves (there goes the oil fund) The political pressure on rUK parties to reject a currency union or at minimum demand strict controls over what we can do with it Again SNP politicians thinking they hold some form of massive political or economic power over their 10x larger neighbour.. Oh, and the EU... And the world... So instead of having a voice and a real say in how in how things are run (plus all the economic, social and cultural benefits of being in a union), we'll be subject to our now foreign neighbours, and what ever political direction they go in, what ever monetary policy they decide to take, whilst contenting our selves that we're "free!" to shuffle the pack to make it look like we're in control with our slightly varied tartanised tax rates, slightly varied distribution of benefits (yay, look, I can get more money for drinking / smoking myself into disability payments!), and get that cuddly, secure feeling that I've rid the West of Scotland of nuclear weapons I'll never see and made the world a truly better place (unless I live in Helensburgh). Whilst voting in the latest jumped up local counsellor to be given seat at the Scottish parliament..

[Rosssco]

By Professor Ronald MacDonald, Adam Smith Chair of Political Economy at the University of Glasgow "The debate between Alistair Darling and Alex Salmond illustrated yet again that the SNP have no tenable currency plan for an independent Scotland. They say they are going to keep the pound and remain in a sterling zone post -independence. However, economically this option would not work for Scotland and it has clearly been ruled out politically by all of the UK parties. There are good economic reasons for saying that a sterling currency union post-independence is a non-runner for Scotland. This is essentially because a post-independence Scotland would have a different economic structure and profile to that of today because it would no longer share tax and spending with the rest of the UK. All independent economic analysis that I have seen confirms that this is the case. So if an independent Scotland were to have such a currency union imposed it would break up, at great cost to the people of Scotland I have estimated in the region of £30bn, and that is a conservative estimate. The inevitable break-up of the currency zone would also result in a steep upward rise in Scottish interest rates, with the knock on effects this would have for mortgages and the cost of servicing the large debt levels held by households. The break-up of the sterling zone post-independence would also result in the Scottish Government having to run a fiscal austerity programme to gain credibility on international financial markets. This would, in turn, mean cuts in public spending and probably tax rises, with the implications this would have for jobs and public services. The alternative of adopting the pound anyway, which Mr Salmond seems to be suggesting is his plan B in the debate, is an even worse option than his plan A. Our banks would no longer have the protection of the Bank of England if they needed bailing out or indeed got into any difficulties short of that. It would also be a system of recurring crisis and uncertainty until it inevitably broke up with the implications noted above. The only realistic way to avoid the above crises outcomes of Plans A and B is to combine political union with remaining in the sterling zone. It is only with political union and the fiscal sharing it allows that the sterling zone is a credible currency arrangement for Scotland, and it is only by remaining with the rest of the UK that such an arrangement can work. By sticking with his notion that that the sterling monetary union is absolutely central to the economic well-being of Scotland, Mr Salmond is therefore actually making the case for voting No in the referendum, because it is only be staying part of the United Kingdom that the costs to both businesses and households in terms of their day-to-day payments and transactions are minimized and job stability, employment and economic growth are secured and maximized."

[LY_Scott]

Did you even watch the video? He's arguing for the currency union nothing else. And makes a fair point on monetary policy.

[Rosssco]

Did you even watch the video? He's arguing for the currency union nothing else. And makes a fair point on monetary policy.

Yes. And I thought I would expand on the topic slightly. Have you even read what I posted above?

[Rosssco]

And to reiterate his comment on monetary policy, he claims that the BoE is an 'independent' central bank that only really sets interest rates (sorry, BS, it's neither independent or only sets interest rates, it prints feckin money!) and that both rUK and Scotland would follow a sensible inflation rate target etc... He seems to be getting the UK confused with the EU and the ECB (who's primary purpose is interest rates and inflation targets, which just happen to favour the big Eurozone economies..). So a currency union is in the best interests of Scotland. I agree! That's why we already have one.. And for the final time (although I suspect not), Sterling is NOT an intrinsic asset..! It's a currency that has a variable value based on the success, stability and political direction of a particular country. It's not a bunch of stuff sitting in a vault somewhere.. Scotland can have 10% of the stuff. What that 10% will be worth is an entirely different matter... These SNP ministers really do make me (with their rhetoric) make me feel like some sort of political and economic genius! I actually have far more respect (even though I don't agree with most of them) on the Yes campaigners that want true Independance that doesn't involve a fudged currency union, a headlong plunge into the EU and adoption of a more radical review of society, as long as you accept you can't have a revolution without some significant pain..

Edited by Rosssco, 11 August 2014 - 11:46 AM.

[techieboy]

Professor Ronald MacDonald

Bet he's never suffered with any credibility issues.

[LY_Scott]

The above summary is all worst case scenario. From a standpoint that it all falls apart after Scotland turns into some sort of rogue state. It talks all about that than what is actually proposed. So how do you feel about the economic impact for the rest of the UK if Scotland was to have an currency union rejected? I'm talking exports and balance of payments here.

[LY_Scott]

In one sentence Professor MacDonald says the currency union will break up....then the rest if focused around if it does. He doesnt give any detail why it would. Surely that's the proper point to make?

[LY_Scott]

Also I'd be hard pushed to argue for social and economic benefits of the union as it stands given the current social state and the economic spend in the south east. Admitted by the government themselves.

[LY_Scott]

http://newsnetscotla...eds-of-millions

[LY_Scott]

http://www.cityam.co...ould-keep-pound

[Rosssco]

The above summary is all worst case scenario. From a standpoint that it all falls apart after Scotland turns into some sort of rogue state. It talks all about that than what is actually proposed. So how do you feel about the economic impact for the rest of the UK if Scotland was to have an currency union rejected? I'm talking exports and balance of payments here.

For things that really matter in life, I like the term "plan for the worst, hope for the best". Not "plan for what you think might happen and what you can sell to the voters as the least scary option" There would be a negative impact on both Scotland and the rUK. Sterling would suffer in the short term certainly, but such decisions shouldn't be based on the short-term only. The rUK will have to balance short-term pain with longer-term risks (political and ecomically) in tieing itself to a country with a divergent economy and political direction. The 'worst-case' is far from completely remote possibly given Swinneys playground economics and the aim of many to turn Scotland into a proper Leftie state.. Again we only have to look at the Eurozone to see how a small country can risk the stability of the whole venture by blowing the budget but having no ability to service it's debts without big cash injections from foreign states. That's the extreme case, but it depends whether you believe all this talk of "sensibleness" by the SNP, despite the fact that economies don't often do "sensibleness". So two options: No currency union, meaning we all suffer (to an extent) Currency union, meaning Scotland "feels" a bit more independent but it isn't really, and we advance book sleeper train tickets from Edinburgh to London for when our finance team has to head south to ask nicely for a loan. Or IMO, realise that there is no strong economic case for Scotland to become independent, and even less so in the future.

[Rosssco]

Also I'd be hard pushed to argue for social and economic benefits of the union as it stands given the current social state and the economic spend in the south east. Admitted by the government themselves.

Please provide evidence that the South-East gets a greater share per head of spend tha Scotland.

[Rosssco]

http://newsnetscotla...eds-of-millions

Yep, it will cost everybody, hence why it's a bad idea. This is not new news.

[LY_Scott]

Its a bad idea rejecting it?

[Rosssco]

http://www.cityam.co...ould-keep-pound

You do realise he's a former banker, and therefor by default a Tory..? Maybe we should pay attention to his closing paragraph: "Independence is about taking responsibility. Without fiscal, regulatory and institutional responsibility, an independent Scotland will not succeed, whatever its currency arrangements, and as ordinary Venezuelans, Nigerians and Russians can attest, even with all the oil and gas in the world."

[LY_Scott]

What makes you think we would not be responsible?

[LY_Scott]

For things that really matter in life, I like the term "plan for the worst, hope for the best".

I don't read any hope for the best in his statement. It's all sun falling out the sky stuff. Why doesn't he write something on how it could work? Or at least disect at little why it will fall apart other than just asserting it will?

[Rosssco]

What makes you think we would not be responsible?

Maybe because the current spending plans do not add up and are based on fairly optimistic predictions Maybe because we are basing much of the predictions on a diminishing and highly variable asset Maybe because so many people have got worked up that they will be £5k better off a year Maybe because we have an aging population and ballooning social welfare bill These aspects mean that unless there are hard choices made, we'll have to borrow..

[Rosssco]

For things that really matter in life, I like the term "plan for the worst, hope for the best".

I don't read any hope for the best in his statement. It's all sun falling out the sky stuff. Why doesn't he write something on how it could work? Or at least disect at little why it will fall apart other than just asserting it will?

There doesn't seem much point in further debating this, as it's going round in circles. You're trying to make the reality fit the circumstances like most of you're YESNP chums, and working on the basis that those warning of the real dangers and problems that COULD be faced, are "scare-mongering" and taking a negative view. The arse just about fell out of the Eurozone a year or two ago, damaging all the economies within, so you'd think providing a quite good example of why currency unions without political unions CAN be very problematic with economies that diverge. If the economies are not going to diverge that much, then what's the point in Independance..