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Alex Salmond said what?

According to the Guardian, in a meeting with SNP backbenchers after his disappointing performance in the debate with Alistair Darling, this:

He [Salmond] said, using the pound without a formal pact – an option known as “sterlingisation” or the Panama option – was “quite attractive”, but insisted the Treasury would never allow that to happen because it would let Scotland walk away from more than £100bn in debt. “No UK chancellor would allow himself to be in a position where an independent Scotland gets away scot-free without the debt,” Salmond said.

Mr Salmond may have been misquoted. I may have misunderstood. But the notion that if an independent Scotland decides to use the pound in the manner that Panama or Ecuador uses the dollar (a quite sensible idea in itself, though it would require fiscal discipline), that somehow negates Scotland’s share of the UK national debt sounds delusional to me. At least, I suppose Scotland could default – Argentina does it all the time – but there are huge practical penalties to that. Lenders demand a high risk premium before they will lend to defaulters, particularly unrepentant defaulters.

Having written the above, I’ve just found another link confirming that Mr Salmond was not misquoted. He really is claiming that the famous missing Plan B is, in the event of the remainder of the UK refusing a currency union, for newly independent Scotland to refuse to take its share of UK debt.

Alex Salmond defends Plan B currency stance after losing Scottish debate on TV.

“If the UK Government’s position is “‘thou shalt not be entitled to your own currency” then “of course we have no entitlement to take liabilities either,” Mr Salmond said.
“If we had a zero share of debt then Scotland would be in both balance of payments and budgetary surplus in the first year of independence. We wouldn’t be paying up to £5 billion in interest payments.
“That is the logical conclusion of the UK Government claiming all of the assets of the country – they end up with all the liabilities.”

Wow. To me, those words above look like a bigger misstep than anything he said in the debate.

55 comments to Alex Salmond said what?

  • Mr Ed

    Surely the departure of Scotland from the UK would be a blessing for liberty for England, we might say ‘Heck, do we need Wales and Northern Ireland?’ and then we might have a chance of getting rid of the most statist parts of the UK.

    In a revitalised England, I would be happy to devote a week’s holiday a year to help to secure England’s borders against the Celto-Bolshie hordes.

  • Lee Moore

    Not sure I follow. The UK’s debts have been contracted by the UK. That’s presumably what it says on the gilt tin. If Scotland were to become independent, the UK would continue to exist, and creditors would come knocking at the UK Treasury door for payment. If the UK said, sorry guys, here’s 90p in the pound, get the other 10p off Alex Salmond, I assume the creditors would sue in a UK court for their 10p and win. If the UK Parliament changed the law and said “henceforth the UK Treasury is only liable for 90p of every £1 of debt contracted during the Union, and any court order to the contrary is void” then the international committee of banking gnomes would declare a UK default.

    If the residual UK would like an independent Scotland to pay for some of the debt, then it would need to reach some sort of agreement with Scotland for the Scots to make a contribution. Presumably all Alex is saying is the UK would require a formal pact if it wants Scotland to contribute to the debt servicing. Why is that controversial ?

    Politically, if the Scots vote “Yes, we’ll be off thanks” then it will be difficult for Cameron to say “No you won’t, until you have signed up to pay 10% of the debt.” He would look like he was thwarting the democratic will and so forth. So if they vote to go, and he wants to get Alex to cough up, he’s going to have to offer Alex something in return. Such as being allowed to use sterling.

  • lucklucky

    Me neither.

    “That is the logical conclusion of the UK Government claiming all of the assets of the country – they end up with all the liabilities.”

    This makes sense if true.

  • Natalie Solent (Essex)

    Presumably all Alex is saying is the UK would require a formal pact if it wants Scotland to contribute to the debt servicing. Why is that controversial ?

    Because it’s not all he’s saying – he’s saying that unless the rUK agrees to a currency union, then he will repudiate the debt.

    i.e. it’s not just like the parties to a divorce or the breakup of a commercial partnership agreeing a formal sharing-out of the debts they had incurred when they were together, it’s like one of the parties saying that they will not pay anything unless they continue to have access to the joint account.

    If it’s OK to unilaterally declare that you have no share of a debt jointly incurred, why couldn’t the remainder of the UK do it to Scotland? “Right, we keep the nuclear subs in Faslane or you guys owe the world nine hundred billion quid.” [CORRECTION: fourteen hundred billion quid.]

    Incidentally, what he said about the “UK Government claiming all of the assets of the country” looks like rubbish to me as well. Surely the use of a currency is not an asset.

  • PeterT

    Salmond’s statement is either completely disingenuous or he has an exceptionally poor grasp of economics. If Scotland were to do this we should put in place a trade embargo and we would see how long their balance of trade surplus persists.

  • Anything… ANYTHING… that leads to an independent Scotland is fine by me. Hang in there Alex, you can do it! Personally I think an independent Scotland should introduce the Cuban peso (the non-convertible one of course).

  • Natalie Solent (Essex)

    I would be extremely sad if Scotland becomes a foreign country. And doubly sad to see five million people on our doorstep reduced to penury. Of course there is no necessary reason why an independent nation of five million should not prosper; some of the world’s wealthiest countries are small – but if they take their economic policy from Zimbabwe as this comment by Salmond seems to indicate, penury it will be.

    When the painful results of socialism and similar follies are made clear by events, I gladly point it out. Doesn’t mean I’m glad to see the suffering inevitably involved. I’d head it off if I could. In a small way, that is what I am trying to do now.

  • lucklucky

    “it’s not just like the parties to a divorce or the breakup of a commercial partnership agreeing a formal sharing-out of the debts they had incurred when they were together, it’s like one of the parties saying that they will not pay anything unless they continue to have access to the joint account.”

    Okay i understand now.

    I am all for people/communities take their lives in their own hands. So if Scotland or any other places wants to declare independence the better. We need many more countries not less.

  • Paul Marks

    And if the Scots refused to pay their share of the national debt, but still used the Pound as their currency – what could we do about it?

    In theory we could do lots of things – in practice I think we would huff and puff and then do NOTHING.

    However, it looks like the Scots are going to vote no.

  • Lee Moore

    Still not following you, Natalie. The legal entity which incurred the debt is the UK. The UK will persist as the same legal entity as before. The new Scotland will be a new legal entity, separate and distinct from the entity which incurred the debt. I very much doubt that the UK and Scotland could legally agree to split the debt – that would require the consent of the creditors, which would not be forthcoming. So all the UK can do is remain fully liable for the whole UK debt, and enter into a legal agreement with Scotland for Scotland to make a contribution to the UK’s debt servicing costs.

    It’s not like the break up of a marriage, or a partnership, where both the two persons concerned have a pre-existing legal existence, and in any event there are domestic laws governing how liabilities may be divided for marriages and partnerships.

    If you must have an analogy, think of a corporate demerger, where UK PLC spins off Scotland Ltd to shareholders. Scotland Ltd is a new legal entity, and it takes whatever assets and liabilities have been put into it before the spin off. Generally speaking, since liabilities are not transferable, it will never take any of the old liabilities. It will only take new liabilities incurred when it buys assets from UK PLC just before the demerger. And the directors of Scotland Ltd have to agree with UK PLC what assets to buy in return for what new liabilities. In a corporate demerger, UK PLC can stuff the board of Scotland Ltd with its placemen, and so stuff whatever assets and (newly minted) liabilities into Scotland Ltd that it likes. But in this case, Scotland Ltd intends to appoint its own board of directors.

    UK PLC has only one bargaining chip, it can say no to the spin off, unless the rebellious board of Scotland Ltd agrees the sort of deal that UK PLC wants.But this is a hard chip to cash after a yes vote. So practically Alex can demand a quid for his quo.

    England could of course do a runner from the UK and leave the residual UK with debts it couldn’t pay. The gnomes would probably argue that England, rather than the Celtic residue was the “real” UK, but I doubt they would win in court. So England would escape debt free. Obviously those with a lot of UK gilts in their pension plans would look and possibly vote askance, and it would be difficult to get the gnomes to lend to England for a while. But given their enthusiasm for lending to basket cases like Argentina, they’d probably be back lending away to England within a decade.

  • Mr Ed

    Losing Scotland is for the UK like the Commonwealth of Independent States in 1991 losing Belorussia, or eastern Ukraine joining Russia from Ukraine. It’s a win win, get all the crappy statist whinging Marxist types in their own little hole, and let them eat each other if the economy collapses as the economy is managed in accordance with their wishes, whilst the rest can get on and watch the show.

  • Mr Ed

    The answer to the UK debt is simple. Amend the Rockall Act 1972 to make it part of the UK, not Scotland. Expel England, Wales, Scotland and Northern Ireland from the UK and leave the creditors (those who lent money on the basis of a take on future tax receipts, let them rot) to ask the gannets of Rockall not to crap on them.

    A new England with no National Debt and no hope of borrowing to fund state expenditure could only be a good thing.

  • Lee Moore

    1. Good luck with the pensioner vote, Ed.

    2. I suspect both an independent Scotland and an independent England launched debt free onto the international stage would follow the Argentina path rather than the Hong Kong path. Both would be defaulting again within a decade or two. Imperial Spain, at the flood tide of its gold and silver from the Americas, still defaulted five times in a century. Governments spend the maximum that the can.

  • Mr Ed

    Well Lee, what I would tell the pensioners is that their pension is funded in part by their tax demand, to pay the interest on the gilts that funds their pension, we have to tax their pension and surely you can see that your fund has diddled you by pretending to invest your money when it actually lent it to a government to piss it away in the expectation that future tax payers will pay.

    At least the old Marxist Mr Darling stated openly in the debate that state pensions aren’t a pot of money, but a claim on future tax payers and thereby implicitly stated that the state pension fund is a Ponzi scheme. One chap in the audience asked a question that seemed predicated on the idea that your pension contributions are stored up somewhere to be paid out when you retire. He was either a libertarian plant or someone with a very sheltered life.

  • Natalie Solent (Essex)

    Lee Moore,

    ” I very much doubt that the UK and Scotland could legally agree to split the debt – that would require the consent of the creditors, which would not be forthcoming.”

    Why on earth not? It’s what happened in the Czech-Slovak split. Here’s a link about possible ways of splitting the debt from the National Institute of Economic and Social Research. I believe the NIESR generally takes a fairly statist, establishment line. I offer it as an example not necessarily of the correct answer, but as an illustration that people are discussing the issue seriously.

    “UK PLC has only one bargaining chip, it can say no to the spin off”

    If Scotland starts going for confrontational policies like walking away from debts voluntarily incurred then all sorts of normally unthinkable options come right back onto the table. Trade embargoes, seizure of physical assets (no different in principle from repudiation of debts), border controls, refusal to honour pension obligations… and that is in addition to the Argentinian-style bad consequences of being a defaulter that you yourself have already enumerated. The rUK will be a country ten times the population of iScotland, physically situated so as to inevitably be Scotland’s major trading partner and such that much of Scotland’s other trade must pass through it. It can make its smaller neighbour’s life unpleasant in an infinity of ways.

    I must stress that I would consider all these hostile moves between us a dreadful outcome.

  • Robert Howden

    So I can summarise in my mind what is being said lets go through the scenarios.

    One. Salmond is right that the creditors signed an agreement with the UK and not with Scotland and therefore the responsibility lies solely with the Westminister Government. Therefore he can make the UK sign a currency agreement on condition of assuming part of the liabilities.

    Two. Salmond is wrong and legally Scotland is liable for it’s portion of the debt whether Salmond likes or not and so has no leverage over the currency.

    So this comes down to whether Scotland is legally liable and I don’t know the answer to this.

    However if scenario one is true the UK government now has a cost/benefit decision. Is the cost of having a currency union (bank bailouts, regulatory differences in Scotland, etc) greater than £100 billion (or whatever it is)?

  • Robert Howden

    I would also say that if the possibility of trade embargoes, border controls, customs, etc were thrown out as a threat (however remote the scenario is) then the Yes campaign would simply state the anti EU line whenever this argument arises about trade with the EU

    why would we want to be in a union with people that do that sort of thing

  • Lee Moore

    I think in the Czech and Slovak case, both states were new. Also the debt was very small, and creditors are only going to complain if they don’t get paid. And they were paid. And the two new states made a deal, including the debt split.

    In the UK-Scotland case, the UK is the original debtor and remains. If the UK told Scotland to pay 10%, with no agreement from Scotland, and Scotland defaulted, I’d be very surprised if the creditors were unable to sue the UK for the money.

    I don’t think Alex’s position that he doesn’t have to pay anything unless he agrees is remotely batty, in legal terms. For future relations between the UK and Scotland, refusing to pay unless you get a quid pro quo is indeed liable to get things off to a sticky start. But that is not his priority at present – winning the referendum is. And telling the Scottish electorate that they are not legally on the hook for any of the UK’s debt, unless the UK offers a cracking deal, is good politics. If it was obviously legal nonsense, it might be embarrassing. But it’s not obviously legal nonsense.

  • Natalie Solent (Essex)

    A general comment: my objection to what Mr Salmond has said is not just that the practical result of a nation refusing to pay its debts is that it finds it ruinously expensive to borrow. While I don’t approve of deliberate defaulting in the manner of a professional foul, I do generally think that nations should borrow far less than they do, so it being expensive to borrow can be a good thing. I bet it’s good for Panama in the long run that it knows it can’t go running to the US as a lender of last resort.

    My objection is also that he appears – or pretends – to have beliefs about economics, or rather accounting, that are not even wrong. Being “entitled to your own currency” is not an asset except in the loosest metaphorical sense, any more than being entitled to your own coat of arms is an asset. Participation in a system of exchange may well be a good thing, but it can’t be weighed against liabilities. Where does he claim it comes in the accounting equation, then? “Assets = liabilities plus capital plus the right to your own currency”? It’s not apples being compared to oranges, it’s apples being compared to matrimony.

  • Jim

    It has already been announced that the rUK will take responsibility for all the current UK’s debt, for precisely the reason that it would be impossible to say to some Gilt holders ‘Right, you now own Scottish government debt, not UK Gilts’. Scotland is ‘supposed’ to reimburse the rUK by taking on a national debt equal to its share of the UK debt, and paying that over, or some such equivalent. If they decide they are going to welsh on that deal (perhaps the phrase will change and hereafter doing a runner without paying will be known as ‘scotting’) then they better look out in the various negotiations post a Yes vote – the rUk could make life for a newly independent Scotland very uncomfortable if it so chose.

  • Natalie Solent (Essex)

    Robert Howden,

    why would we want to be in a union with people that do that sort of thing

    Well, no one’s done anything yet. The whole situation only arises if Scotland has already (a) left the union, and (b) already itself done “that sort of thing”, in reneging on the debt.

    However, coming back to the real world, all the polls – all the polls – say the situation won’t arise. Scotland will vote No.

    On another track, as it happens I don’t think that the argument above would have much appeal to referendum voters. While some Scottish voters might meet the thought of embargoes, trade wars, seizure of gold reserves and so on with a defiant “bring it on”, in general the polls suggest that the question “will I be better off?” ranks very high in determining how Scots propose to vote in the referendum.

  • Robert Howden

    Natalie Solent,

    the polls suggest that the question “will I be better off?

    I agree that the argument is solely this point which is why I cannot fathom why Darling made a bit of a hash of answering Salmond on whether Scotland could be viable. Of course it could but we’re not asking that question, we want to know if it will be better than the uk.

    Hence the No campaign is “better together” not Uk or bust.

  • And if the Scots refused to pay their share of the national debt, but still used the Pound as their currency – what could we do about it?

    The Bank of England could issue new banknotes, make the old ones void in England, and flood Scotland with the old notes thereby hyperinflating Scotland’s currency.

  • Nick (Natural Genius) Gray

    Perhaps the People’s Democratic Republic of Scotland Forever could design its’ currency to look very similar to the UK’s. New Zealand notes and coins look very similar to Australia’s, and are often used (especially the coins!) interchangeably.

  • Sam Duncan

    “Salmond’s statement is either completely disingenuous or he has an exceptionally poor grasp of economics.”

    Well, he did work for RBS, and look what happened to it. ;)

    “Salmond is right that the creditors signed an agreement with the UK and not with Scotland and therefore the responsibility lies solely with the Westminister Government.”

    Which makes his position on EU membership – that Scotland would not be an entirely new legal entity sharing none of the UK’s rights, obligations, or liabilities – somewhat hard to maintain.

    I’m not saying that the two should be conflated, simply that negotiating from two apparently condratictory positions could prove awkward. Member states would be perfectly justified in wondering why, if the agreements its creditors made with the UK don’t apply to Scotland, he thinks that the one they made should.

    Which, of course, would make the other aspect of this debate academic. New applicants must adopt the Euro as soon as possible.

    “However, coming back to the real world, all the polls – all the polls – say the situation won’t arise. Scotland will vote No.”

    Indeed. Having spent more, per capita, over the course of two years, than any political campaign in British history, “Yes” has never led a single poll. I don’t want to tempt fate – six weeks is still a long time in politics – but a win for them looks extremely unlikely.

  • Regional

    Remember it was El Gordo a Scotsman who ran up a massive debt and then indulged in Quantitative easing and gave massive subsidies to Scotland, the Scots are about partly responsible for the Debt.

  • Lee Moore

    I’m rather embarrassed at continually popping up and appearing to defend A. Salmond, for whom I have very little time (though I think he’s a pretty effective politician) but I think this gets us to the nub :

    “Scotland is ‘supposed’ to reimburse the rUK by taking on a national debt equal to its share of the UK debt, and paying that over, or some such equivalent. If they decide they are going to welsh on that deal “

    What deal ? Has there been a deal ? There may be a deal, in future, and if so it looks like A. Salmond is saying “my price for agreeing to sub you 10% on your old UK debt is X, Y and Z. Z being being able to continue to use the pound.” Of course that’s his public position, he may have another deal in his coat pocket (such as “how’s about 2% rather than 10%, George ?” But there’s nothing remotely strange or looney about saying if you want me to agree to pay you some money, you’re going to have to make a deal. Nor is it remotely politically foolish.

    I confess that I’ve been paying next to no attention to the Scottish shenanigans, but my vague recollection is that fairly early in the piece Osborne popped up and said, you Scots do realise that if you vote to leave, you won’t be able to use the pound any more. This wasn’t terribly friendly, though it was both economically sensible and politically effective. The Yesses have been on the back foot ever since. On Natalie’s amicable “divorce” analogy, this sounded not very joint ownershippy. More like the UK claiming that the pound was “our” currency and if Scotland chose to depart, it would depart without “our” currency. This is entirely consistent with the legal reality – that the UK is the entity which issued the currency and continues to issue it, and Scotland will have to go and find it’s own currency. But it’s quite hard to then escape the UK being the original and continuing debtor too.

    To me, Salmond’s retort about the debt, seems neither ruder, sillier or more belligerent than Osborne’s statement about the currency. If you’re seeing it as us leaving, and you’re going to keep the pound, fine, keep your debts too. If you acknowledge that both countries share the pound, then sure, we could share the debt.

    Osborne elbowed his way to the bar, and told Salmond to piss off. Salmond has simply resorted to an ancient Scottish legal maxim – “Stitch that Jimmy.”

  • Nick (Natural Genius) Gray

    O.k., Kiwi notes look different, but their coins are very similar!

  • Regional

    England should quit the U.K.

  • Laird

    I think Lee Moore has the better of this argument.

  • Roue le Jour

    “If the UK Government’s position is ‘thou shalt not be entitled to your own currency’ then of course we have no entitlement to take liabilities either,” Mr Salmond said.

    It that what he actually said? It’s the opposite of what I understood he said. Surely he meant “If the UK Government’s position is ‘thou shalt not use our currency'”?

    That aside, I entirely agree with Lee, it’s a perfectly sensible position for Salmond to take.

  • Nick (Natural Genius) Gray

    Why don’t the British just vote to expel Scotland and Eurotopia from the rest of Britain, (keeping London as the unofficial European finance center) and let the Scots try to come up with their own currency?
    As for the debt, perhaps England could keep that if it can also keep any UK defence force sites scattered around Scotland, a real estate swap. Scotland would then need to defend itself from Irish and Norse pirates, but nobody except a politician said that life would be very easy.

  • Roue le Jour

    Actually, looking at it again – “we have no entitlement to take liabilities” surely he means “obligation”?

    Does Salmond’s output have to be interpreted before one can examine it?

  • APL

    lucky lucky: “all of the assets of the country”

    Salmond considers the £ sterling and asset of the country. Does the residual oil reserves in the North Sea fall into the same category?

  • APL

    Don’t know what all the fuss is about anyway, two grown men squabbling over a currency that is worth 2% of it’s value a century ago.

    Both countries would do better to start out with a brand new currency.

  • PeterT

    The Uk could monetise the entire debt before Scotland leaves, which would then share in the cost through inflation.

  • Mark

    Hasn’t Wastemonster already said that it would guarantee debt in the event of a Scottish default, doing so to protect sterling?

    I doubt if even Salmond is stupid enough to believe his own bullshit here and its quite clear that he doesn’t and probably never has wanted genuine independence. One way or another he probably will get the “devo max” that has always been his goal. While this will go down well with the deep fried mars bar elite, it will ratchet up English resentment (it certainly will mine!) and Scotland will pay a heavy price sooner or later.

    I would happily see the back of them and I increasingly get the feeling that I will live to see it happen.

  • APL

    Mark: “will get the “devo max” that ..”

    Since the last devolution ‘settlement’ the Scottish executive has had the authority to vary income tax in Scotland by +/-3%.

    They haven’t used it.

  • PaulM

    Scotland might consider issuing its own currency, printed by the government directly, not a central bank, using as backing the assets of the country. aka The Bradbury.
    Interestingly Wikipedia don’t have any reference to the Bradbury.

    It might be fun to name the new Scottish currency, I propose “The Dram”

  • bradley13

    Ah, well, I find the Scotland situation a shame. As lucklucky says above: more and smaller countries are preferable to fewer and bigger ones. In this sense, I find the EU (political union) to be terrible, whereas the European common market (open trade amongst independent neighbors) was excellent.

    In this sense, Scotland should be independent. It’s a different region, with a different history, and a different mentality. If the Scots vote “no”, it is likely because there are to damned many English now living in Scotland.

    Unfortunately, other comments are right that the Scottish political sense is entirely insane: to many people see government as an endless source of money and benefits, with no thought as to how it all ultimately gets paid for. An independent Scotland would quickly find itself in an unenviable financial situation, regardless of the starting conditions.

  • Jim

    @Lee Moore: the deal I mention is not anything concocted recently in terms of the independence decision. Its the deal that is inherent in the Union in the first place. The Scots joined the Union with considerable debts, which became the joint property of the Union, ie England took on responsibility for them. If the Scots now wish to break the Union, and take their share of the assets, but refuse their share of the jointly run up debts, then they are ‘scotting’ on the deal. When one gets divorced the assets and the debts are shared, not just the assets.

    The issue with the currency is a nonsense – a currency is not a ‘thing’ in its own right, that can be shared. Its a fiction backed by the wealth and productive capacity of real people, ie the population of the issuing nation. If the Scots wish to shelter under the productive capacity of the rUK population, then they better not leave the union. If they leave they leave behind the mutual assistance that is inherent in that Union, and have to sink or swim on their own. They can’t be a spoilt teenager, demanding the ‘right’ to leave home and do as they please, but still demanding that the parents pay for their decisions.

  • Gareth

    Lee Moore said: “Not sure I follow. The UK’s debts have been contracted by the UK. That’s presumably what it says on the gilt tin. If Scotland were to become independent, the UK would continue to exist, and creditors would come knocking at the UK Treasury door for payment. ”

    I agree. Due to this the UK’s position should begin with ‘What has been paid for by the UK remains the property of the UK’.

    Salmond can walk away without the debts and without the property, or with the debts and with the property. I can’t see him being able to walk away without the debts but with the property unless the UK government lets him.(Which I think likely to some degree as they are generally spineless shits) I think this is what Salmond means when he suggests that if the UK wants to claim all the assets (the property) it has to claim the debts incurred to pay for them.

    A Scotland using the Pound but without a currency union would constrain the spendthrift nature of political representation as they would have no means to print their way out of trouble.

  • APL

    Paul Marks: “new Scottish currency, I propose “The Dram””

    Or the Haggis, one hundred Drams to the Haggis.

  • PaulM

    Sorry APL I’m not Paul Marks, I suppose I should use my full name but it has not caused confusion before :-)

    The dram would consist of 100 nips.

    The Haggis would be made up of 100 chews.

  • Fraser Orr

    I find Salmond’s position on the pound really rather contradictory. On the one hand one of his main reasons for demanding independence from England is that he thinks Westminster does not represent Scotland, and that the Scottish people can best govern Scotland. However, on this most crucial of matters, monetary policy, he thinks that exactly the same situation should remain — where the Bank of England controls the Scottish currency.

    Why, if “the Scottish people can best govern Scotland” cannot the Scottish people, in the form of a new Bank of Scotland, also govern monetary policy too? If Scotland would prosper under this arrangement then their currency would too.

    My inclination is to say that there is a little Machiavelli going on here. I think that perhaps the SNP recognizes that it would take a decade to get Scotland into the EU, and when that happens they will be required to use the Euro. So this monetary pact is more a bridging thing until this EU membership happens.

    I might add, if the people of Scotland can best govern Scotland, why exactly do they want to send a substantial and undoubtedly growing amount of that governance to the burgeoning European super state?
    To me all of it is just an unconscious form of racism. A justification for manifesting that anti English, blame them for keeping us down, attitude that is inculcated into Scottish children from birth.

    And racism is a very bad reason to ruin an ancient and glorious race of people.

    FWIW, what I don’t understand is why England isn’t suing for independence from Scotland. After all, it was a Scottish king that took over the England, not the other way around. I am sure Longshanks was spinning in is grave in 1606.

  • JohnK

    If you wish to see how an independent SNP Scotland would be run, just look at how Salmond’s pretendy wee parliament is currently legislating to enforce firearms style licencing of low powered air guns. There is no aspect of civil life which the nationalist socialists of the SNP will not seek to control. Scotland will soon resemble another oil rich but ruined country, Colombia, only with drizzle.

    As to Scotland’s claim on UK assets, would Salmond be interested in 10% of the UK’s gold reserves (albeit the other Scottish economic illiterate Gordon the Moron sold half for bobbins), and also 10% of the UK’s foreign currency reserves? Surely he doesn’t think he would get his hands on those if he walks away from his 10% share of the National Debt?

    Scotland only entered into political union with England because its economically illiterate ruling class bankrupted the country over the Darien project. I somehow think that the rather shameful manner in which Scotland lost its independence fuels the nationalist socialists, and their pathetic resentment of all things English. But I rather feel that a few years of SNP nationalist socialist misrule, accompanied by falling oil revenues and the failure of the renewable energy bonanza to materialise, will lead to exactly the same outcome. England will have to save Scotland once again, and as we know, no good turn goes unpunished.

  • PersonFromPorlock

    As an American, I don’t have a dog in this fight but I do wonder about the apparently universal assumption that defaulting on government debt has disastrous consequences that deter governments from doing so.

    What consequences has Argentina’s government suffered? Certainly none that kept it from borrowing enough money to go into default again. And if Brazil is presently BBB-, so what? It costs them more to borrow, but not enough more to prevent borrowing, which is the only consequence that would register as ‘disastrous’ to government.

    Governments default, then bravely soldier on into more debt, like Napoleon pressing on into the Russian winter. The possibility of defaulting may give them pause, but it won’t give them ‘stop’.

  • JohnK

    Correction: I was thinking of Venezuela, not Colombia. but I still see Salmond as a chubby faced Chavez wannabe. I’ll wager a million Scottish pesos (5p) that he’s got the poster of Che on his wall.

  • Richard Thomas

    Scotland would be crazy to keep using the pound. The benefits of the madcap inflation currently underway accrue directly to the city of London. Any debt issue would quickly be dwarfed by that (though never put it past a politician to kick the can down the road)

  • Mr Ed

    It seems, per the Wikipedia article linked, that at the point of Union (1707), the Pound Scots had got to the point of 12:1 with Sterling, having been a parity some many centuries before.

    Why not simply revert to that ratio on independence and get all the inflation over with in one, true, big bang? Then blame the English for the ensuing chaos. After all, using, say gold now would be an option, but with no fun for the politicians.

  • The logical currency for an independent Scotland is of course the Cuban peso (the unconvertible one of course).

  • John B

    1. Scotland pays its debt or they don’t get their oil. So sue us.

    2. If Scotland wants to use the Pound, where will it get it from? Buy it on the money markets? With what? From Bank of England… yes at a premium, or no because you owe us money?

    3. Yes it would get Pounds from its oil revenues, but also would have to pay its external bills with Pounds… would there be enough Pounds circulating internally to run the economy?

    4. Would Scottish banks print Scottish Pounds with parity to Sterling…hello inflation and the Scot£1 million loaf of bread?

    Scotland needs either its own currency or a currency union with either UK or Euro zone.

    Plan A was the Euro…. fail.
    Emergency Plan B was currency union with rUK… fail.
    Now the Plan is, ‘Don’t panic Mr Mainwaring.’

  • John B

    And…

    Scotland not only has a share of UK debt, but also a share of UK bullion and foreign currency reserves, so their share of those could be retained to offset unpaid debt.

    Salmond is not actually in any position to negotiate and must know that. He is just trying to be a good poker player, more for the benefit of those watching the game than the other players who will well know they hold all the best cards.

  • bloke in spain

    Let’s be realistic. Jockland is a net drain on the UK Exchequer. It costs the UK more than it contributes. So it isn’t servicing its portion of UK debt now. A UK, independent of Jockland & not needing to subsidise it, will be better off. A Jockland independent of the UK & free of its notional portion of UK debt will still be worse off than before. From the UK’s point of view, what’s not to like?

  • […] Whatever the “Yes” campaign claims, threatens or believes, here will be no currency union between an independent Scotland and the remainder of the United Kingdom. All three major parties plus UKIP have said this outright, and the voters back them up. Quite right too, unless you think it’s a good idea not to cancel the joint credit card after a bitter divorce. […]