Indyref Part 4

[SantanaLopez]

Evening all :)

Hi all - have been on my hols.

the currency debate is linked to the banking system.

So lets once again nail the currency debate.

1. Currency union is wanted by the yes campaign, but all of westminster and the bank of England have all said - no currency union. This is not the same as Scotland unilaterally utilising the pound (like Panama and the USD).
2. Sterlingisation - as plan B is called has been firmly rejected by the Eu (see letter from Oli Rehn VP of EU commission.) as being incompatible with any EU application (CF Iceland and Montenegro's applications)
3. Debt rescindment has also been rejected as incompatible with EU membership.
4. Scotland will have to apply to join the EU and would need to have its own central bank to do so and also commit to joining the Euro.

So. Scotland will need to get its own central bank, cant use the pound even unilaterally and apply to join the Eu.

Esssentially after independence - Scotland would not be in the EU, it will have to get its own currency and own central bank.

In terms of banking - you can mortgage your property with whover you chose. They will price the mortgage in terms of risk. A rUK bank will price political and currency risk into mortgages for Scottish property secured loans. Comments about land redistribution and second homes increase political risk. Therefore expect rates charged to Scottish property from UK banks to increase significantly and immediately from a yes vote.

Further, with no lender of last resort - all lenders domiciled in Scotland are a significant risk and will find raising cash on the wholesale markets increasingly difficult and will either face a mounting liquidity crisis (what did for Northern Rock) or need to redomicile toute-suite to a home with a lender of last resort (what the BoE does). If Scotland uses its government as a lender of last resort any previous debt behaviour will limit its access to funding.

So. The large banks (RBS, Lloyds, TSB, HBOS) will both redomicile south of the border and increasingly price their products accordingly to Scotland.

So - if you have a mortgage from a rUK bank - your rates will definitely and significantly increase. If you mortgage with a Scottish bank - that rate will be dependent on what it costs them to get their money. A country that has no lender of last resort, no currency reserves and whose government has just walked away from its public debts to score a political point will be charged a premium. I dont like to put a number on it - but the rate of 0.5% LIBOR rate would be hopelessly unrealistic. (a good comparison would be Argentina - 14%)

Furthermore - deposit rates will have to increase to attract savings. Iceland offered great savings rates - but they werent secured. A hiccup and most savings from foreigners in iceland disappeared. In order to attract Scottish savers, a premium will have to be offered to make up for the lack of a lender of last resort. They will need to correspondingly charge more for their lending products.

This will only settle when Scotland develops a track record for paying its debts, and the government gets a credible credit rating. reneging on government debt doesnt help you get much above junk status. Argentina has recently tried that. Inflation and interest rates sky high.

Sterling balances in Edinburgh banks would be covered until the bank either redomiciles or independence. If you have a US dollar account in Cypres - the US Government doesn't guarantee your balance. The cypriot government does. That would be a matter for the Scottish government.

This is not scaremongering - but basic economic consequences. By all means vote one way or the other - but do so in the knowledge of the consequences - this isnt just independence for you- but your children and theirs and so forth. It cant be tried - there is no going back.

Team it will be bizarre to see everyone turning up to vote in their badges, tshirts, waving their campaign pens - so different from the usual lack of engagement. I know it sometimes sounds trite, but the huge engagement (and it is largely positive, despite some well-publicised incidents) has been great.

oddcommentator absolutely! I've seen so many people shrug and say 'we will use the pound anyway' with no understanding of the consequences. I've spoken to people who think the consequences are worth it, and that's their choice, but everyone should at least give a bit of thought to it. If only our politicians could explain it the way you have!

OOAOML, I agree and hope that whatever the result, this continues.

BTw - i do believe the pencils cannot be rubbed out. Bringing in a pen may be seen as attempting to deface the paper.

Stick with pencil. It wont get rubbed out.

this video sums up exactly why I've always been yes.

It is the only way to make power accessible to the people.

We live in a plutocracy.

We are ruled by a cabinet of millionaires who have never done a hard days work in their lives.

New Labour are champagne socialists with no desire to change this system.

The only solution is independence.

Because the career politicians in Scotland are so different from those in Westminster...

I, like many yes voters, are in favour of Scotland having our own currency and our own central bank.

Most of the most successful nations are closer to Scotland's size and have their own currencies.

The UK economy is very unstable. The property bubble in the SE is happening again and WM is doing nothing to stop it.

The rich have got richer since the 2008 crash. They are in no rush to avoid another one.

The pound is sinking, a yes vote is our only chance to escape.

FWIW and nailing my colours to the mast - it seems madness to go for independence for anything other than romantic notions. the numbers don't stack up. Nowhere near. The mess with the currency will be terrible. The banking system will be in disarray, a lot of jobs will be lost.

The answer seems to only be - more and more government spending. Where is the money going to come from?

Scotland wont be in the EU and a number of countries have indicated that they will directly veto any attempts for Scotland to join. Scotland will have upset its largest trading partner and have no access to its markets without tarriffs so exporting will be hard. It will walked away from its government debt and find raising money very hard so there will have to be massive austerity to live within its means.

Its financial services industry will be in tatters - as many of the larger firms re-domicile and hence their taxes move to rUK. It wont be a pretty sight. It will affect all Scots and their children for the rest of their lives all based on a romantic notion and lets be honest - some downright hatred of the English and a dislike of the government you have on London. Even though because of the West Lothian problem - its voice is incredibly loud in a a 2.5trillion economy.

Generally secession doesn't work. look at every single new country since 1945 and tell me any that are as well off as the UK is now. Either they are mired in disputes with their neighbours, fight constantly or end up an economic basket case.

Now the UK might not be perfect at the moment - but in 2015 the UK most likely will have a different government - how will many Scottish voters feel about that? Wouldn't you rather be part of a 2.5tn economy that is growing at the fasted rate in the developed world or be part of a 0.2tn economy that has no banking system, has a political establishment that has made a career of blaming their neighbours for everything, has real problems with currency, government spending a rising unemployment. An instant recession if you like, with rising unemployment, cut spending and a rapid hike in interest rates.

Thanks - but no thanks.

Wildthong- compare the expenses scandal in WM with Holyrood.

Weatherall - the pound has lost 1 cent or 2 against the dollar. That is not sinking. The successful nations of which you speak are all in EFTA - not currently available to Scotland. They do indeed have their own currencies - and central bank. All of which you will need. The EU will be off the table. Scotland will truly be alone.

if you think that it will be some how a clean and simple democracy, by the people, for the people then you are i am afraid wrong.

I have never read wings.

I get my information from women for independence, business for Scotland, radical independence and national collective.

Odd thank you for that post - I sort of knew how it works from an ancient Economics A Level, but had forgotten the detail .

And it is very worrying how little people understand about this bigger reality, however much the Yes contingent stick their fingers in their ears and sing 'la la la scaremongering'.

Article today from Oil and Gas People

www.oilandgaspeople.com/news/1039/scottish-west-coast-untapped-oil-and-gas-reserves-worth-trillions/

I have never read wings.

You should - its a pretty good, and because everything is referenced back to source it is a useful resource.

The key part in that article is
Yet the area – off the west coast of Scotland and Outer Hebrides and Shetland –has remained largely untapped due to deep waters and difficult geological conditions.

Whether or not the fields are viable is down to the international price of oil. Complicated fields are the last to be tapped as it is damned expensive getting the oil out. Could be amazing, could be nothing.

None either independent or particularly rational sources of information