New Currency for a new Country

HAMISH_MCTAVISH

BACKFRMTHEEDGE wrote: »

"Scotland, with a geographic share of oil, raised £53bn in taxes in 2012-13.

Yet the state spent a staggering £65.2bn, running up a fiscal deficit of over £12bn, or around £5,000 for each household.

Government spending represents just over 50 per cent of Scottish GDP, some 5 percentage points higher than in the rest of the UK.

A deficit of that magnitude is not sustainable in the long term"

This should be required reading for anyone daft enough to believe the Nat lies.

Those are Scottish govt figures as well....

Braveheart100

IveSeenTheLight wrote: »

Whatever currency Scotland finally decides on, we will still be able to run the country effectively.

Yes because investors are queuing up to place their money in a country that has an undecided currency solution, no direct access to the European Union and concerns about trade and export....;)

kabayiri

BACKFRMTHEEDGE wrote: »

Prosperous?

"Scotland, with a geographic share of oil, raised £53bn in taxes in 2012-13. Yet the state spent a staggering £65.2bn, running up a fiscal deficit of over £12bn, or around £5,000 for each household. Government spending represents just over 50 per cent of Scottish GDP, some 5 percentage points higher than in the rest of the UK. A deficit of that magnitude is not sustainable in the long term"

Seriously, when I read this I think "Off you go then!"

Exactly why is the UK government so keen to keep this part of the Union which is costing money?

I don't get it. Clearly a No vote won't change this situation by one penny/groat/centime.

Braveheart100

kabayiri wrote: »

Exactly why is the UK government so keen to keep this part of the Union which is costing money?

I guess because in the short run the uncertainty will affect the whole of the UK. Sterling has dropped to a seven month low (not all bad - helps exporters) and there is clearly a risk initially of a sell-off in the gilt market. ("Arguably, 10-year gilt yields at approximately 2.4 per cent are not discounting a “yes” vote; there is no real precedent in quantifying the potential market downside but it would not be unrealistic to assume a spread over 10-year German Bunds widening to more than 200 basis points, with sterling against the US dollar reversing to well below $1.60." Source : FT).

The Banks - another worry - Lloyds and RBS both trading down today. Scotland's property market could seriously crash - again effecting banks. Another financial crisis. More bailouts.

kabayiri

Braveheart100 wrote: »

I guess because in the short run the uncertainty will affect the whole of the UK. Sterling has dropped to a seven month low (not all bad - helps exporters) and there is clearly a risk initially of a sell-off in the gilt market. ("Arguably, 10-year gilt yields at approximately 2.4 per cent are not discounting a “yes” vote; there is no real precedent in quantifying the potential market downside but it would not be unrealistic to assume a spread over 10-year German Bunds widening to more than 200 basis points, with sterling against the US dollar reversing to well below $1.60." Source : FT).

The Banks - another worry - Lloyds and RBS both trading down today. Scotland's property market could seriously crash - again effecting banks. Another financial crisis. More bailouts.

Uncertainty - sounds plausible. But then, we seem to be in an uncertain era - worst financial crash in a century; aggressive acts from Russia; middle East extremists; a decade long war on terror; Eurozone trading partner in poor health.

It all makes the Scotland issue seem pretty minor in the grand scheme of things.

Is it to do with the sudden loss of oil revenue?

Braveheart100

kabayiri wrote: »

Is it to do with the sudden loss of oil revenue?

I don't think so - Scotland spends more than it brings in in oil revenues. It's the stuff to do with the currency and the size of Scotland's banking sector. It happened with Quebec - the volatility that created for the Canadian dollar weeks ahead of their referendum. Mind you I just read another analyst say that "Sterling's correction to date has far more to do with the UK rate rethink than anything else, and there is very little political risk premium in the pricing - yet," said Juckes.

"A fall below 1.60 is likely in due course," Juckes said in a note on Wednesday morning. "If they were to vote 'yes', you could add another 3-5 percent or so to the potential downside. And if the U.K. decided to leave the EU, you could probably add another 10 percent at least."
But not all agree on this long-term scenario. Eimear Daly, the head of market analysis at Monex Europe, believes sterling is likely to regain its strength and trade back towards the £1.68 level. Daly has been bullish on the pound for several months and correctly predicted the break above the $1.70 level earlier this year.
In the short term, she told CNBC via email that if Scotland were to vote "yes", then sterling-dollar would see an immediate sharp sell-off, breaking below $1.63 and heading towards $1.60.
"The protracted negotiations that would follow a 'yes' vote would be horrific for investor and consumer uncertainty. This would affect third-quarter growth as businesses delayed deals and investments and consumers cut back on big ticket items until the political and regulatory environment becomes more certain," she said.

chewmylegoff

I agree with the OP - I think I understand why the Yes side has entrenched itself so firmly in the currency union option though (despite previously arguing that one of the key drivers for independence was to get away from the pound and into the Euro - until that all went wrong). All the politicians care about is your vote. They don't care about presenting what they think the best argument for Scotland is- they care about securing your vote in their interest, and focus groups etc have led Yes to believe that more votes will be secured if people believe the currency won't change; meanwhile No believes on the same basis that more votes will be secured if people believe they will have to use a different currency.

Given that many pretty tinpot countries seem to manage having their own currency without everyone dying this all seems a bit silly. The biggest mistake anyone can make on either side of the debate is to believe that politicians are motivated by anything besides their own agenda.

Which is why the best argument for independence is the desire for self determination, whilst recognising that brings unquantifiable risks and the best argument for no is that you don't like unquantifiable risks, regardless of what rubbish any of the politicians are prepared to wheel out in order to further their own careers.

kabayiri

chewmylegoff wrote: »

...
Which is why the best argument for independence is the desire for self determination, whilst recognising that brings unquantifiable risks and the best argument for no is that you don't like unquantifiable risks, regardless of what rubbish any of the politicians are prepared to wheel out in order to further their own careers.

This sums it up for me.

I'm not sure we are a nation of risk takers nowadays. This might explain why many of the world class companies have emerged from stateside. Creating a Google/Ebay/Amazon etc - global companies - carries many risks in the early days. I suspect the aversion to risk might sway it.

There was a guy in the audience on the debate program last night. Unemployed. He asked if independence would change the outlook for him. Somehow that seems to miss the whole point.

dryhat

What a wonderful opportunity for the world's newest independant country (assuming a yes vote) to rewrite the currency rules and utilise the world's latest technology to create a crypto-currency of their own.

All countries are going to do it eventually, so why not be the first?

michaels

dryhat wrote: »

What a wonderful opportunity for the world's newest independant country (assuming a yes vote) to rewrite the currency rules and utilise the world's latest technology to create a crypto-currency of their own.

All countries are going to do it eventually, so why not be the first?

A sort of bitcoins backed by (black) gold? (oops, just creamed my pants)

As mentioned before to join the EU you have to be committed to the Euro and ever closer union. I can't see the point in giving up 'control from Westminster' in order to choose 'control from Brussels'? (I could see the point of going for independence even if it will cost but that is the sort of independence that gives self determination, not independence to do what the Brussels super state dictates.)