Wings Over Scotland

Why do YES have to come up with a Plan B… when NO have not even got a Plan A?

(Rhetorical question)

I think Alex is right to stick to his guns, until some new information comes to light!.

themadmurph

My view same as yours.

A neutral (not from UK and has no vote) friend of mine who is interested in finance, markets, etc did say to me that he thought a Plan B would have to come out sooner rather than later.

Maybe it’s dependent on events in the next few months. The Scottish government can’t be seen to being forced to play its hand, e.g. by reacting to bad news.

The Standard & Poors ratings report on Scotland was supportive of a Scottish currency.

Maybe the Scottish government could show 2 (maybe even 3) currency options with the steps required and the ultimate path being influenced by the extent of cooperation from the rUK government? It could cover all possibilities.

The unionists would look even more foolish if they argued that an independent Scotland would be the only country on earth unable to introduce a system of paper currency and metal coins.

I thought it was Plan McB anyway?

themadmurph – totally agree with you. Also, if the SG produce a plan B, then BT would just rubbish that and ask for plan C-Z, which they would also rubbish, in spite of other options detailed in the White Paper.

Wonder what George O found out on sojourn East to examine the operation of Currency Boards and CUs. He maybe now realises BT/WM have shot themselves in the foot financially, and backed themseves into a corner, by being so negative about the proposed CU. (I still think plan B was always plan A,though :-))

Yes, stick with Plan A. But the undecided that I know cannot move beyond this currency issue – it’s hard to convince them.

I think Salmond is playing a long game.
Don’t frighten the horses at this stage.Lots of time before the vote.Depending what Westminster come up with I think he’ll go with a Scottish unique currency & no debt.
True independence.

Hahah, nice one Chris.

Agree, SG should stick to it’s guns. If Westminster, having painted itself into a corner and encouraged public opinion agains a currency union, whilst the SG is reasonable and puts out olive branches and reasoned arguements, then I’m afraid no share of assets = no liabiliies. Quite happy with that.

I’ve always thought the ways things will turn are, hold steady for Plan A, with the rUK 99% dismissing CU. The strong points for SG are walking away with no debt, and the decrease in the balance of payments for rUK. If the rUK still maintain no CU option, then Plan B is sterlingisation, and prob for a period of a few years. Then introduce Pound Scots or (and i like this one) The Merk at parity. All gov contracts paid in Merks, both currencies run concurrently for a period and then Sterling handed in for Merks by a certain date. To go straight to a new currency would scare the horses. Better to wait a while methinks.

Question for others… If sterlingisation occurs, does Sterling retain its strength in terms of Oil and exports etc or does that only occur with a formal CU? If the latter then perhaps better to only have Sterling for a short transitional period

Alan Mackintosh – I think if we were in the CU, then all Scotland’s profits including oil, whiskey etc, accrue to WM’s balance sheet but not if we just peg to the pound. Others more knowledge than I on this subject, may have further clarity though.

When UK govt said they would nationalise / privatise coal / electricity / telecoms / mail and somebody said they couldn’t what was their plan B? Correct, they didn’t have one. They just insisted and insisted and eventually the others gave in. Because they were the democratically elected government and their aim was not unreasonable.

Yes voters know that the currency question is a process of negotiation. It’s a poker game between London and Edinburgh in which Edinburgh holds the two best cards: Firstly our oil, without which a purely rUK currency would be much weaker, and secondly the option of refusing to assume some of the UK’s vast debt.

No voters still believe that the UK has the power to ‘deny’ us the use of the pound. The poor wee souls believe that Westminster’s authority over Scotland will continue even after independence.

So we have two tasks when talking to unionists: First, to convince them that London’s current stance is not doctrine written on tablets of stone but merely a bargaining position. Second, to convince them that independence means that we’ll no longer be told what to do by London!

I too think we should keep saying plan A. If any other plan is muted it is being set up to be crushed by all and sundry. Better to stick to plan A until there is no choice but reveal plan B.

MajorBloodnok says:

apologies for errant apostrophe, etc.

You missed the ‘t’ at the end of ‘agains’ too. Rev may have to step in soon.

😉

Plan A as the no side are for a fall when the markets see that a Yes is likely then the UK will have to announce that a currency union is in all of the UK best interest, otherwise the £ will come under increasing pressure.

The cards are all in our favour and the UK know it as military intervention, their favoured/usual tool, is confined to barracks.

I don’t think we have any problems with our future currency. Alex Salmond has always said from day 1 that he thinks a Currency Union is best for both countries. The problem lies in the lap of Osborne and co. NOT with the Scottish Government’s lap. 😉

I do seem to remember that Alex did say at one point recently that if there was indeed no C.U. then we would still carry on as normal and use the pound as our currency. However, as there would be no currency union then of course Scotland would not take her population share of Westminster’s £1.6 Trillion debt. Of course no one in the unionist supporting media will report this because they know damn fine that to do so would blow a massive hole in the no C.U. argument from Osborne and co as they would be left holding ALL the £1.6 Trillion debt and we all know how well that news will go down South of the border.

So long as Alex keeps to his argument that a C.U. is best for both countries I think that he is pushing the unionists into a very tight corner. They can demand answers till the cows come home regarding his plan B but we already know what his plan B is, they just don’t like the sound of it. The longer he refuses to repeat his plan B, use the pound without Westminster agreement and NO debt share, the more desperate the unionists appear. The more desperate they appear the more pathetic and ridiculous they appear and ultimately the more people who are undecided or even NO supporters will move to supporting YES. 🙂

What is significant, in my view, is that we have someone on our side who is a trained economist who knows what he is talking about as opposed to those on the other side, none of whom are trained economists and ultimately have no idea about what they are talking about.

@tonylittle
That’s my story too. 50 this month and waited my whole life for indy. Like you, I believe beyond the YES, everything else is either policy or negotiation.

We can’t allow WM to bully and frighten us to a no vote. After that we will get a kicking!

I thought the use of the words “highly unlikely” re a CU – is because as there will be a no vote (snigger) there will be no need for such a thing, or am I still not getting this ‘How Politicians Speak’ thingy?

Regarding the debt. Dont forget that the BofE hold about £350B of bonds so the actual debt is not £1.2T. And we notionally have a share of that asset( BofE), so the debt levels talked about are significantly different form the figures being chucked about. This was discussed in an article on Bus for Scot

Could it be old mother Westminster Hubbard don’t want a CU because they don’t want the SG to find out the auld cubby is bare?

Darling did leave a note after he left office AND as the day nears he gets more and more nervous, something is wrong at the treasury and i’m sure AS knows this. A great bargaining chip if you’re the only one holding the chips.

Cracking cartoon Chris – hope you’re going to be illustrating the upcoming wee blue book.

I’m in agreement with the “stick with plan A” line, at least for now. It’s not tenable for the Westminster parties for a whole variety of reasons. Not least that the Tory deputy leader in Scotland has already admitted he’d be “manning the barricades with the SNP” for one after a yes vote. So will most businesses in Scotland who have also already made that clear. So what’s Labour in Scotland’s view about it? They’re banging on about how much they want to keep the pound, while at the same time rubbishing the idea of keeping the pound if we get independence! I’m not sure they can keep that up for 7 months.

But meanwhile, those who support a Scots pound should be working hard, along with the Fiscal Commission, Scottish government etc to devise a a very solid plan B which can be brought out nearer the time.

Chances are the Westminster parties will be forced to back down long before September. But if they don’t, that plan B can be combined with the debt free idea, and become plan A, but on the understanding that once done, it’s no longer up for negotiation after a yes vote – it would have been adopted because it’s clear there will not be negotiations on it. That would be risky unless the polls are looking very good for yes though!

The SG are in it to win it and know Westminster’s weak points and currency is their weakest and now back to nostalgia.

link to allpublicdomain.com

an observer – who signed for the debt? Westminster that’s who – so international lenders will expect it back from … guess who? Why Westminster of course. You can’t have it both ways – the world is watching and the world is well aware of what British Governments are like!!

From his mutterings in the Clan Destiny film as linked above, it seems Brian ‘Is that Yer Ayrshire Bacon?’ Donohoe will be part of the line-up on Taylor’s All-Star Roadshow in the Harbour Arts Centre, Irvine, next Friday.

Just checked Taylor’s BBC lair, and the gig hasn’t been flagged as ‘capacity filled’, so there may be some spaces left.

I would apply, but it’s pointless. I can’t even complete the application form honestly without exposing myself as a SSP member – which is fair enough – but to then expect the chance to ask a question would be plain daft.

Anyone up for it can find the application form here:

link to bbc.co.uk

A good question might be: ‘Mr Donohoe, why did you veto filming of your debate with Tommy Sheridan in the Volunteer Rooms a week ago?’

If only WM would accept the same status as Scotland instead of insisting on being the continuing state. If Scotland can lose any/all debt obligations from becoming a seceding state then surely England could do same? Neither Scotland nor England would be liable because neither would be named on the debts. Just wondering like.

@Barry Blust

The No’s would argue over the colour of sh*te. This is why they are called Onionists. Peel one layer off and guess what! There’s another. Ach well, the joys of union.

I’m away to wipe away the tears, I’ve had enough Onionism for one day. 😉

You can only sensibly pay off Sterling debt if you have an equal / proportional share of any sterling ‘created’, either electronically, or via the printing press.

Such is the nature of fiat currencies.

An iScotland not sharing a Sterling central bank could not create Sterling. Ergo, it can’t be expected to pay sterling debt.

I do not think there is any requirement for the Scottish Government to outline their “plan B” because they do not believe that Plan A is off the table. That is reasonable for now

What I do think essential is to make plain that without currency union we will not take a share of the debt and that is because we cannot afford to take such risks with an independent scottish economy

The decision about currency union is for the rUK to take, and we cannot control that. But they do need to understand that that decision has consequences which are inevitable: foreign denominated debt is not an option. That is not a threat nor a retaliation: it is merely an outcome of a particular rUK decision, and the rUK electorate have a right to that information, as much as the Scots do.

Such a plain statement might be seen to imply that an independent currency would follow; but using sterling as a tradable currency is not ruled out by such an announcement, though it does not make much sense to me.

But however that is seen there are good reasons for setting that consequence (non acceptance of the debt) out clearly,and for making the reasons plain. It will also allow rUK some wriggle room, if it is truly believed currency union is in the best interests of both countries, and I accept that is what the Scottish Government do believe. The rejection of currency union was portrayed as final, and to row back from that will be politically difficult unless the rUK electorate can see a reason for revisiting that decision: and the fact that Scotland must not take the debt without currency union is such a reason. From what I have seen of unionist comment they do not understand that these two things are enmeshed and are encouraged to think that they can refuse CU and yet expect Scotland to accept debt in sterling. The connection needs to be spelled out properly, no matter what else is said or not said

I would really like to know what the other parties propose about currency in the event of a yes vote. They have rejected currency union so what is their plan? We need to know that, just as rUK voters need to know that we will not take debt without the CU

The polls will decide the currency.

They will decide who blinks first.

If a victory for yes looks likely the markets will start blinking faster than Darling’s eyelids would after a caffiene overdose and inadvertently answering a question truthfully – on camera.

an_observer says:

The idea that Scotland can just ‘walk away’ from its share of the national debt – whatever currency it ends up using – is a total fantasy.

Perhaps we should let Stu answer this one folks. 😉

Rev. Stuart Campbell says:

“This implies you think the threat to renege on debt which clearly belongs to Scotland is credible.

(Also: if Salmond didn’t get a currency union but took on £150bn of UK debt anyway he’d be chased out of Scotland by a howling mob with pitchforks and flaming torches, and I’d be in it.)

I don’t think there’s much else that can be said really. 😉

I’m with Plan A. It’s all there is for BOTH sides. We will all want/need a stable currency and Plan A is what will give us that. rUK WILL HAVE NO OTHER OPTION unless they are going to crash sterling to spite us. Simply not going to happen.

Jingly Jangly – thanks for the vid. Sheridan very accomplished speaker (sorry Ian :0 ) Donahue obviously under pressure and defensive. I liked the bit:

“Let me just answer the question. Don’t talk over me, there’s not much point in doing that. If you’re asking a question then you wait ’til you get an answer, then you ask another one. That’s the way you deal with things.”

I hope this os going to be a labor policy and that Johann Lamont will adhere to it.

BTW Was at Nat central in W Aberdeenshire today with Rab C plotting the downfall of the union. Good day. The downfall’s on the 19th September – just so you know. I passed on your message about contributing to Wings. He just laughed. 😉

In three months time Westminster the most common phrase will be “Oh shit”. Let them stew and stab each other in the process and bye bye Trident before this decade is out.

The white Paper outlined plans A to D.

As Scotland holds aces in that UK refusal of Plan A means No debt for an independent Scotland plus RuK will need to take Trident back there is no need to concede anything at the moment.

If we vote Yes in September how are Osborne and Balls going to explain to English voters six months later in the last ever UK general election that if you vote for me Ruk’s balance of trade will double, £130 billion will unnecessarily be added to our National Debt and £400 millions added to our businesses through transaction costs.

This is a game of poker and Scotland should not blink first.

What is “Scottish” Labour’s position as part of Scotland’s negotiating team after a Yes vote?

Our state broadcaster should be asking them this at every opportunity.

Also the general public will have little understanding of or interest in currency.

Exactly. All the vast majority of people will hear is “you’ll lose the pound” fast followed by “well of course no one can force you not to use the pound, you can keep it but…” and the but then moves onto Sterlingisation and the possible downsides, and to be brutally honest, who the hell understands or cares about the details of that? So people just see lies and bullying. The actual ins and out and pros and cons of the various options is a discussion for technocrats and experts.

Big scary question for the Tories (=Labour=Lib Dem) is that perhaps what Salmond flashes in front of them as Plan A is actually Plan Z,

Aye, I have to say when there’s something Salmond seems to really want, or really need, and it can only be delivered by his arch enemies, I always tend to suspect it’s something he’d wouldn’t be too unhappy to see knocked off the table.

Main point is that Scotland has subsidised the UK treasury for each of the last 32 years.

One day one of independence Scotland will have a balance of trade surplus and a budget surplus.

That’s why Standard and poors says Scotland should have a triple AAA credit rating even without North Sea Oil revenues.

Keep repeating that when asked about debts and bank bailouts etc.

There is fundamental inconsistency in the Union argument with this whole issue which is not really being picked up BBC and the MSM.

The Yes point of view with Plan A currency union is quite consistent and logical and it is worth sticking with up to September. What happens in the long term really would be up to the people of Scotland and it’s government which really is the whole point of having an independent government. We can change this to Euro/Merk/Punt, etc as appears appropriate and suits our economy and financial circumstances in ten /twenty years timescales if the people vote for it.

However, what is the rUK going to do after independence if we do not contribute to our share of the national debt?

And why should we contribute to this if we are denied a share of our pound?

I think the rUK economy could is be fundamentally crippled by this additional debt combined with the loss of oil revenues and Scotland’s significant contribution to GDP.

An independent Scotland can do quite a lot with not having the millstone of ~£120B around our neck. So I would be quite happy to down the route if we are forced to. All this rubbish about being a financial liability because we have walked away and have no debt therefore making us unreliable and risky to the money markets is just a ludicrous position.

So aside from questions about our plan B, why is nobody in BBC/MSM questioning the unionist plan A – no currency union – and how it would result in the rUK having to shoulder all the debt burden on its own as an independent Scotland would be quite justified to walk away from it.

This is the real question on the currency issue!

link to johnkay.com

A wee snippet from John Kay’s piece in the FT dated 4th April 2013:

“If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England, and expect to fail.”

Is our Plan A actually the Scots pound with no debt?

The most important part is that we will benefit from the current standing of GBP in the markets through being pegged, but we will not be married to an economy (rUK), which has a very dim future.
The banking economic cycle is coming to an end, what does the UK have to offer once all the London property starts to fall?
There is such a great future for Scotland, we need to be flexible.
Vote Yes to Independence for Governing and Currency

The Fiscal Commission doesn’t need to define a Plan B but could outline some sort of algorithm ie prioritise. This might help the politics over the next 6 months.

@David Halley

…fiat currencies when done properly are great, a currency is effectively a share in a country’s productivity/GDP

Exactly, and it’s not just a passive share. When the economy is depressed below capacity, as now, the creation and spending of new fiat currency can boost GDP. This is where people get hung up on inflation; they assume more currency, money, means inflation, but when both money and GDP can increase there’s no inflation mechanism.

The details matter of course, not least the targets of the spending. It’s possible to hit bottlenecks in particular goods and services while there is still capacity in other areas.

Eventually the UK will have to default anyway. Noone can service that size debt and all the future unfunded liabilities, and the markets will work this out at some point.

I assume you mean in the case of a currency union. If the rUK continues to control the currency it uses then it can run deficits indefinitely, as it has for most of our lifetimes. Which is not to say that the rUK will prosper:

The banking economic cycle is coming to an end, what does the UK have to offer once all the London property starts to fall?

Nothing. Despite all the talk of rebalancing the economy all they’ve done is start inflating another property bubble in London and the south-east. That, a reduction in private sector saving, and one other thing, is driving the thoroughly inadequate ‘recovery’.

The ‘other thing’ is that when the coalition came into office they set about reducing the government deficit. They succeeded in reducing it, from around 10% of GDP to around 6%. They also succeeded in driving the economy back into recession. That deficit reduction ended after the first quarter of 2012, and since then the deficit has held pretty steady at either just below or a smidgen above 6% of GDP.

The government deficit is currently big enough to shore up economic activity — government policy is driving a substantial proportion of the activity in unproductive directions, but that’s a different problem — but not big enough to drive real recovery. The government deficit, the creation of new fiat currency, should be bigger.

@CyberNiall

How long will the UK keep a AAA credit score when the debt soars over 2 trillion?

It already lost AAA from one rating agency, as did the USA. In both cases bond yields went down, not up. Credit ratings are meaningless for nation states which have their own floating currency.

How long will it be until they default their own debt?

If they keep control of their currency they cannot be forced to default. They might go mad and choose to default anyway, but that’s a whole other problem.

If, on the other hand, they lose control of the currency they use, by joining a currency union with Scotland for example, they would find themselves in the same position as the Euro nations with large external deficits. That’s why they can’t agree to a CU.

If you explore the rest of the matters affected by independence first, sharing a currency with a country ruled by Westminster becomes undesirable.

I agree, but I’d expand it by saying that independent nation states should always have their own currency. Acting in the interests of the people requires flexibility to respond to shocks, and to changing conditions generally. An export surplus can provide similar capacity, but even an apparently secure surplus can itself be lost, as Japan is now discovering. Nothing else has the flexibility of a fiat currency under the control of the nation in which it is used.

Does the price of a transaction cost outweigh the benefits of a country that puts its own interests first?

The answer is no, and it’s an answer that can be seen with appalling clarity in the Eurozone. Despite that most people even in Greece and Spain seem to want to stick with it.

A proportionate share of foreign currency reserves is a reasonable expectation, but the Bank of England is not independent; it is wholly owned by the UK treasury.

That aside, if Scotland either uses sterling without ‘permission’ or pegs a Scottish currency to sterling, then yes, a share of existing UK currency reserves, added to currency acquired via export surpluses, would provide backing or enable the peg.

If Scotland has its own floating currency then those foreign currency reserves would not provide ‘backing’ since none would be necessary.

As David Halley said, modern fiat currencies are effectively shares, and active ones, in a country’s productive capacity. They are backed by the total economic output of the country, not foreign currency or gold reserves.

In that case the reserves would serve the same purpose they serve for the UK; as instruments of monetary and, where it exists, exchange rate policy.

@Skip_NC – Spot on with your analysis but it’s not that the message isn’t getting out it’s the mainstream media and in particular the BBC who keep pushing for ‘PlanB’ are trying to make it look like the Yes side has no answer and so put doubt in to the undecided voters

@an_obersver

Our eyes are wide open to what happens if Scotland stays in the UK.