Sep 122014

scotland2By Keith Marley.

Now, I am not a politician or an economist. I have 2 o’levels, Arithmetic and Engerlish, so I hope you don’t mind if I offer a simplified view of the situation. No doubt some ‘learned’ person out there may be able to illuminate me with a bag full of numbers, but, this is just the way I see it.

There still seems to be some confusion about the currency, so what happens if Westminster says no to a currency union?

To me Westminster does not have a choice. Ask yourself what would happen to the pound without Scotland. At the end of June the national debt of the UK was £1,304.6 billion.

A figure which has continued to climb despite all the austerity measures put in place. In other words we are currently failing to pay off the debt and actually accruing more debt. Refusing Scotland to share the pound would mean the rest of the UK would have to service this debt themselves. This would mean the pound would have 4,000,000 less people helping to service a debt they are failing to meet at the moment.

They would also not have the massive benefit of oil revenue contributing to pay off this debt. Put in simple terms the debt would be unserviceable and the pound would be well and truly screwed. To refuse Scotland the pound would make the austerity measures currently in place seem like a walk in the park.

Of course we could use an independent pound in the same way as Tokyo uses the dollar, but we are told by the ‘No’ people that this would leave us high and dry because we had defaulted on our side of the national debt. Without the Bank of England as lender of last resort other countries would be scared to trade with us or loan us money because we have no track record or credit history.

However, the way I see it is if Westminster does not allow Scotland to continue to pay our side of the ‘debt’ then it is them who are defaulting.

It’s a bit like borrowing from a bank to buy a car, making your payments regularly and then the bank coming and taking away your car and then claiming you were defaulting if you didn’t continue making the payments…..I don’t flaming well think so!

As for the other scary side of this suggestion, ask yourself this question. Two people you know come to your door looking for a loan. One is deep in debt, regularly gets into fights with other people costing him a fortune, (Argentina, Iraq, Afghanistan to name just a few) pays a high price for personal protection (Trident) and is having trouble meeting the repayments he already has, he’s just lost his major asset, (Oil), which will only make it more difficult for him to earn the money he needs to service his current debts.

The other has no debt at all and has an asset which provides a good regular income (Oil), has no wish to get into fights with strangers and doesn’t have any need for personal protection.

Which one would you be happy to offer a loan to?

Speaking personally, I would choose to say stuff Westminster, we will use our own currency, however, Alex Salmond says we should share the pound, a currency union. Mr Darling says it’s not on offer. One thing they both agree on is that all the other options would not be as good for Scotland.

So what would happen if Scotland votes ‘Yes’?

Mr Salmond would press for a currency union, but what is more important is what would all the other Scottish politicians do? If they truly have the interest of Scotland at heart then they would have no alternative but to pursue a currency union as well.

So, if we vote ‘Yes’ we won’t just have Alex Salmond arguing for a currency union, he will also be backed by Alistair Darling, Ruth Davidson, Johann Lamont and Willie Rennie, all their parties, as well as all the rest of the ‘No’ campers too who still have a job in Scotland.

The formation of a united ‘Team Scotland’.

Despite all the political posturing Scotland will have a currency union if it wants one and I suspect we will also get it on our terms too.

This is just my opinion and the way I see it.

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  12 Responses to “A View On Currency Union”

  1. Keith,

    You appear to taint your article before it starts by your inability to refer to the term “English” without resorting to the infantile use of the derogatory term “Engerlish” Are you really that bitter?

    The rest of your article is dedicated to the attempted propagation of the quite incredible proposition that a nation of 60,000,000 will “have no choice” but to bend to the will of a neighbouring nation of 5,000,000. You have already admitted and clearly demonstrated your difficulty with economics and seem determined to exhibit a similar lack of expertise in relation to the reality of nationhood. Can you offer anything at all, by way of substance, to support assertions, which you yourself confess have been arrived at from a position of complete and utter ignorance of the subject matter?

  2. Couldn’t agree with what you say more. If we consider the fact that New Zealand, when they gained independence, retained The Pound for many years before moving to a currency of their own, why not Scotland? New Zealand is similar in population to Scotland but does not have the same natural resources as Scotland does/would have, which is why most economists believe that Scotland could be a successful independent country.

    Given as is said above, the UK debt is increasing, not decreasing, the loss of 10% of contributions to pay it down could prove more than a little problematic for rUK. If Scotland were to move to it’s own Pound in the fullness of time, that currency could well become worth more than the rUK Pound, a frightening thought for Westminster, hence all the sudden panic and trips north for senior politicians in the Better Together camp.

    Independence could be very good for Scotland but a disaster for rUK.

    • Hi Ron.

      For the avoidance of doubt, I feel I should point out that New Zealand was not part of the UK, had no UK debt liability and did not, at any time, enjoy currency union with the UK. They used the Pound in the same way as anyone can use the Pound but did not have access to a UK based lender of last resort.

      Should Scotland, which unlike New Zealand is part of the UK and has a UK debt liability, decide that their Plan B is to use the Pound without access to a lender of last resort and refuse to accept ANY and ALL liabilities, then it will, in so doing, waive their right to ANY and ALL of the assets, including those assets in the North Sea.

      The inevitable consequence of saying, as First Minister Salmond has, “no assets then no liabilities” is “no liabilities then no assets”. It is morally and legally impossible to walk away with no debt and with the most valuable assets and to attempt to do so would, in my opinion, be completely insane.

      • I think you’ll find your reference to The North Sea to be wrong in international law Bruce.

        The basic point I was making was NZ is a perfectly sound, small, independent country. Are you disagreeing with that fact? Leading on from that statement of fact, there is no reason cannot be likewise with all the resourses that we have that NZ does not.

      • We are of course talking about independence Bruce. NZ is now independent, as are Canada, India, Australia and many other countries, all once part of The British Empire, or would you care to hair-split in regard to all of them. These days are gone and I think the people of Scotland have seen through the “benefits” of “better together” – food banks, starving, cold, pensioners, gross mismanagement of the economy etc etc.. Time to move on methinks.

  3. Hi Ron,

    First of all Ron, you cannot promote the use of international law in relation to rightful claims to assets whilst ignoring such law in relation to liabilities. I know reality is a difficult concept for nationalists but they will have to come to terms with it sooner or later.

    There is, as you say, nothing stopping Scotland from being a successful independent country but it is not “hair splitting” to point out that comparing Scotland with imperial colonies of the UK, who were not part of the UK and who did not, at any time, use the Pound as part of a currency union is quite ridiculous. Scotland is not a colony of the UK, it is an integral part of the UK and was an enthusiastic partner in the imperial rule and exploitation of colonies such as those you mention. Neither Canada, Australia, India or New Zealand sought independence on the basis of relying on the Bank of England to dictate their monetary policy or to bail them out in the event of problems. This is what made them truly independent as opposed to the cowardly and pathetic half – way option favoured by Scottish Nationalists.

    • Hi Bruce. So what you’re telling me is that New Zealand did not use the Pound for a lengthy period after gaining independence, whether or not the Bank of England was Bank of Last indulgence?

      • Of course they “used” the Pound but, as anyone can do, but not as part of a “currency union” as proposed by the Yes Campaign/SNP and their supporters. This would not have been permitted in the case of New Zealand and will not be permitted in the case of Scotland. As things stand, and I’m listening to Alex Salmond confirm this as I type, no alternative to currency union is being considered.

        Using the Pound independent of the Bank of England is, as you say, one option but there will be negative consequences, which perhaps explains the reluctance of the Yes Campaign to announce this as their Plan B.

        What would be be your preference Ron; Pound without the B of E or Euro?

  4. On the subject of international boundaries: You seem to be saying that all the eminent lawyers, academics and indeed senior politicians are wrong that, in their opinion, Scotland would have entitlement to 90% of the oil that lies in the North Sea in Scottish waters. Have I got that correctly? There has always been a border between Scotland and England as you well know. You may even recollect that, in fairly recent times Westminster had the audacity to move that border line over the North Sea to their advantage.

    • What I am saying is that you can’t have it both ways. There is not even the remotest chance that Scotland can walk away from the UK with assets but no liabilities. Even attempting to do so would result, as I see it, in the most severe repercussions for an independent Scotland.

      Should Scotland accept it’s share of the debt, they will receive their rightful assets based on geographic boundaries. Geography was never my strong point, indeed I’ve never had any strong points, so could you just remind me where the Bank of England is located please?

  5. Hi again Bruce,

    You can’t have it both ways. “They will receive their rightful assets based on geographic boundaries.” The geographic boundaries are clear and laid down in international law so, clearly, the massive oil and gas reserves in The North Sea and West of Shetland (and potentially The Clyde) would be Scottish assets, not the preserve of Westminster, as at present. That’s not a bad start – a significant bonus I’d say. Geography doesn’t need to be your strong point, try Mr Google, who should be able to resolve matters for you on that score.

    We can agree that sterlingisation could well be problematic for Scotland in the short term but much more so for Westminster. If you have massive debts and lose 10% of your income, it become more than a little problematic. At least one of the credit rating agencies has given Scotland a 4 star rating, the same agency removing that status for the UK. Not a bad start I’d say for an independent Scotland.

    Last time I looked, The Bank of England resided in Threadneedle Street. Hope this clarifies. I seem to recollect the head honcho there – a Canadian. Apparently there’s no competent Englishman to do the job) saying he would be able to work with whatever scenario emerges from the independence referendum.

    I know which way I’ll be voting today. What you do is, of course, entirely up to you.

  6. It’s all academic now as the people of Scotland have employed their democratic right to good effect and have rejected Independence. Now it is up to our leaders to accept the sovereign will of the Scottish people and work positively to improve and enhance our lives as part of the United Kingdom.

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