[Closed] Osbourne says no to currency union.

Scotland runs a trade deficit with rUK of 3-6%

Quite a lot of that is interest payments on the UK's debt. Another big wodge is paying for Trident.

The 9.3% vs 9.9% thing has another effect, though, related to deficits. When the UK's economy is in deficit (like now) then the UK borrows on the international markets, and gives 9.3% of that to Scotland. But Scotland pays 9.9% of the interest on the loans.

No, interest payments are not included in trade stats. You will have to run me through the other numbers - I can't follow that one. I do not believe that the final point is correct, but may well be missing something.

Missed what my old mucker Paul Donovan said in the ft the other day

If the Scots want independence, they should of course become independent. [b]But on the issue of monetary union, economics must triumph over politics and nationalistic emotions if the problems of the Euro are to be avoided. [/b]Monetary unions need fiscal unions to survive, and this is not on the cards for a post-independence Scotland. The question Alex Salmond has to answer [b]is a simple one: can he give a single example of a democratic monetary union, for any mid-sized economy, that has survived in the absence of a fiscal union?[/b] There are two millennia of economic precedent to examine. [b]“No” is the answer.[/b]

[quote=Junkyard ]Cooperation is best but I have no idea how to best achieve this

Tricky. I wonder what they reckoned the best way to do that was 307 years ago?

"Liar" - very nice.

Why do you use it and so many other terms towards AS then ?

Salmond doesn't post on here. As far as I'm aware.

I could describe Nick Clegg as a worthless tosser, and I really wouldn't be bothered if someone called me the same, but if I called you a worthless tosser I would expect the mods to quite rightly have an opinion on the matter.

Aracer +1

Ernie, very true. Odd that the mods seem perfectly happy for people to call each other liars though. Seems at odds with

The ethos of this forum must be one of mutual respect for everyone who uses it. You may argue and debate with anyone but when the argument becomes heated or abuse begins to creep in, then you will have crossed the line. If you don't step back from it then you will likely be moderated.

Perhaps calling someone a liar twice is deemed not to be abuse? Who knows?

With respect to AS -[b] he has lied repeatedly.[/b] The example I use every time is the one about the pound being an asset. So the proof is there. Funnily enough, the whole GO thing yesterday is all about the need to back liabilities with corresponding assets. No surprise that these guys got things correct (under oath). And no hint of a currency being an asset. I wonder why? Even less surprise that these facts were greeted by the 3Bs!

The World was a bit different 307 years ago, and it was more about wealthy Scottish investors who had lost everything in the Darien scheme than anything particular about the Scottish economy.

I've got an original copy of the 1699 book "A Defence of the Scots Settlement at Darien" - it's fascinating reading, though mostly it's a massive whinge about how the natives are annoying and the English won't trade with them 😀

With respect to AS - he has lied repeatedly. The example I use every time is the one about the pound being an asset

With respect to you, you use the word "asset" in a narrow economic sense that doesn't tally with what most people think of as an asset.

So you're both liars 😉

Ignorance is no excuse. And AS is an economist so he was doing it deliberately and with good effect as people swallow the untruth (see above) So by definition he is also a deceitful one. It's a clear are the waters in the Moray Firth.

Remember what it says on a bank note - "I promise to pay the bearer on demand the sum of..." So it can only ever be a liability and only then under certain circumstances. Non-accountants get confused with creditors and debtors but still doesn't mean that folk should deliberately mislead the layman.

Lots of people think Edinburgh lies east of Carlisle but that doesn't make it true!

Anyway Ben, a bit of AS macro tutoring to do this afternoon. You have reminded me to go over the parts of the current and capital accounts. Just because lots of students get confused with them doesn't meant that we shouldn't help them score the correct marks in next weeks exam!!

Remember what it says on a bank note - "I promise to pay the bearer on demand the sum of..."

Except that if you go into the Bank of England, hand over a £10 note and demand they pay you the promised amount, they'll give you another £10 note.

So that's not really a liability for the bank.

However, if you go into a shop, hand over a £10 note, they'll give you £10 worth of stock.

So it is an asset for you.

See, I can do economics too 😉

wonder what they reckoned the best way to do that was 307 years ago?

if I called you a worthless tosser I would expect the mods to quite rightly have an opinion on the matter.

I am genuinely stunned you think it should be moderated out and amazed that after that you called him a liar again.

Well played Ben 😉

THM Wee eck knew what he was doing for sure.

Except that if you go into the Bank of England, hand over a £10 note and demand they pay you the promised amount, they'll give you another £10 note.

So that's not really a liability for the bank.

However, if you go into a shop, hand over a £10 note, they'll give you £10 worth of stock.

So it is an asset for you.

See, I can do economics too

Indeed, I've read a few opinions from people who teach economics about why the classic view of currency as a liability is outdated/wrong today.

THM has also failed many times now to explain why currency wouldn't be an asset the same way a brand is an asset. It's reputation has value, otherwise we wouldn't be having arguments about it in the first place, so why is it not an asset under those terms?

Except that if you go into the Bank of England, hand over a £10 note and demand they pay you the promised amount, they'll give you another £10 note.

So that's not really a liability for the bank.

Well that's not correct at all but never mind. In fact the promise to pay the bearer stuff is a historical legacy and has no legal standing anymore. Perhaps that explains WNB first point.

WNB- i have explained it twice before, but get tired of repeating it. But if you want to disaggree then go and inform all the Central Banks around the world to change their accounts, their definitions and their policies. Since they are all wrong clearly. Failing that, go and have a look at the balance sheet of the BoE or the Federal Reserve and look where currency is - a tip, dont waste time looking on the asset side, much quicker to look in the other. You will find it by reserves!

BTW, where is the missing $?

Well that's not correct at all but never mind. In fact the promise to pay the bearer stuff is a historical legacy and has no legal standing anymore.

You're the one who brought it up to prove that the pound is a liability 😀

It still is but you cant exchange it for gold anymore!

Many also carried the words “or bearer” after the name of the depositor, which allowed them to circulate in a limited way. In 1694 the Bank of England was established in order to raise money for King William III’s war against France. Almost immediately the Bank started to issue notes in return for deposits. Like the goldsmiths’ notes, the crucial feature that made Bank of England notes a means of exchange was the promise to pay the bearer the sum of the note on demand. [b]This meant that the note could be redeemed at the Bank for gold or coinage by anyone presenting it for payment;[/b] if it was not redeemed in full, it was endorsed with the amount withdrawn.

From the Bank of England. The background and the fact that it is a liability (when in issue).

So if I want to go from Carlisle to Edinburgh I should keep going (north) east?!? Most people would say yes and only "narrow" geographers or cartographers would object. Who should you listen to? The masses or those with the skills and understanding of the facts.

Ah, so you're advocating going back to the gold standard?

WNB- i have explained it twice before, but get tired of repeating it. But if you want to disaggree then go and inform all the Central Banks around the world to change their accounts, their definitions and their policies. Since they are all wrong clearly. Failing that, go and have a look at the balance sheet of the BoE or the Federal Reserve and look where currency is - a tip, dont waste time looking on the asset side, much quicker to look in the other. You will find it by reserves!

BTW, where is the missing $?

I have no idea what you mean by the missing $, I must of missed your reference to it way back when.

I must also have missed our repeated explanations of why a currency can't be viewed in the same way a brand can, due to the value it's reputation. I'm not looking to disagree, I'm not an economist, I'm just looking for an explanation. All I've seen is the question asked numerous times, but obviously missed all the answers.

[url= http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/03/is-modern-central-bank-money-a-liability.html ]Here's one link about the history of currency being a libilty[/url]

WNB - thats an interesting link. What it indicates is what i said first on a different but related thread. The asset/liability issue is in reality a red herring. It is more meaningful to think of it as neither in truth. If you have to use one then it is a liability (under certain circumstance) but it cannot, by definition, be an asset.

Of course, the DO is using this ambiguity very subtedly and with great effect. To the layman (as with many accounting defintions) it seems to have some characteristics of an asset. So he cleverly intermingles this as being a counter-item to UK debt. It isn't of course, and he knows that. Whatever else he is not a fool. But like Farrage he knows just how much manipulation and deceit the public will swallow. (Hence my analogy of the missing $). And to date, he has done that really rather well.

Junkyard - lazarus
Its either ok to call someone a liar or it is not THM thinks it ok for him to do it but not for him to be called one.

I stand by the suggestion I made,but will moderate it to "falsify" in future...On the advice of the Mods.

That really depends how you define it.

Goldsmith's notes were obviously a liability for the goldsmith - the goldsmith would have to produce gold for every note. Banknotes based on the gold standard fall under the same category. But banknotes now don't do that - their only value is in themselves.

So what makes one piece of paper "worth" £10 and a different piece of paper worth nothing? Why could I not write my own £10 notes?

Reputation. Sterling bank notes have a reputation behind them which means people trust them, and are happy to accept them in exchange for goods.

So they have a value, but they aren't a liability for the Bank of England, because the Bank does not have to hand over any gold.

What do you call something that has a value and isn't a liability? I'd call it an asset.

Dare I say it, but I think you are mixing a few ideas up there Ben. The roles of currence eg, store of value, medium of exchange etc are different to the fact that they are liabilities. But 16:00 tutorial now, so I will leave you to it!

A currency is merely a representation of money, it gets a "reputation" in two contexts. First, "Sterling" is often used loosely as shorthand for the economic performance/reliability of the UK in managing its finances. Second, the true "value" of sterling is that it is highly liquid because it is currency predominately used in one of the biggest economies in the world. As a result, there is lots of it about and therefore people are happy to invest in sterling denominated assets as the frictional costs of converting them into other assets are tiny. Currencies in smaller currencies don't have the same liquidity and costs increase. Scotland in seeking independence is essentially separating itself from the large economy and therefore cannot expect to benefit from the liquidity it provides.

The proposed date of Scottish independence should be delayed if it is not in the best interests of the rest of the UK, a House of Lords report has said.

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27424993

An unelected bunch of people* dictating the terms of independence to an elected government after a democratic referendum? Not at all worrying?

*The House of Lords is the second largest legislature in the World, after the Chinese Politburo.

and just as representative

Mr Cameron told BBC Radio's Good Morning Scotland programme that he would "stick absolutely" to the terms of the Edinburgh Agreement

I wonder how many yes voters know exactly what that means? 😉

It does agree to do what is in the best interests of the whole UK- is that what you mean 😛

I wonder how many yes voters know exactly what that means?

Those of us who have been paying attention know that that could be an interesting problem.

[quote=bencooper ]Those of us who have been paying attention

Well done 🙂

I'd love to see the whole of the direct quotation, but my immediate though was that he knows exactly what he means by that - the use of the word "absolutely" being the giveaway. I doubt there is any advantage to be gained for BT by spelling it out, and clearly yS aren't going to.

Clarification required for the dumb troll please - I only read it once and i have definitely not been paying attention 😉

Perhaps optimistically, the Yes side is probably relying on the "in good faith" bit of the Edinburgh Agreement. Perhaps not the best idea when you're dealing with a Tory politician 😉

Really, though, is there any way the Westminster government could turn around after a Yes vote and say "sorry, you're not getting independence as it's not in the best interests of the UK"?

Really, though, is there any way the Westminster government could turn around after a Yes vote and say "sorry, you're not getting independence as it's not in the best interests of the UK"?

None,but the real games will go on during the negotiations. It would probably take the life of a Government and so would be a vote winner in a general election.

This is true - "Vote for us and we'll be bigger ****s in the independence negotiations than the other guys"

[quote=bencooper ]Really, though, is there any way the Westminster government could turn around after a Yes vote and say "sorry, you're not getting independence as it's not in the best interests of the UK"?

I doubt very much they will do that, but I'd suggest that any idea that Sir BS is going to get the terms he wants is incredibly optimistic. Which brings us back neatly to the title of this thread.

JY - in summary it says that any independence negotiation will only happen taking into account the best interests of the rest of the UK, and that as Ben points out even given a yes vote the UK government is not obliged to give independence if suitable agreement can't be reached. Not that ridiculous a position to take, as otherwise Sir BS could demand whatever terms he wanted.

In reality as has been pointed out multiple times on this thread there will be a certain amount of pragmatism - just as it would do iS credibility no good to refuse to take on any debt, it would do UK government no good to be totally intransigent.

Hmm, clearly I've been getting too involved in this as when trying to find the direct quote I got "You've now read three articles in the last four weeks. Register to access three more articles for free, a total of six every four weeks." when acessing http://www.heraldscotland.com/politics/referendum-news/cameron-makes-strong-vow-to-legislate-more-powers-for-holyrood-in-first-yea.1400232636 - though here's a similar article I can read http://www.expressandstar.com/news/uk-news/2014/05/16/pm-makes-positive-case-for-uk/

Yup - Scotland will enter into a debt-sharing union in return for being in a currency-sharing union 😉

There are a few red lines. Trident is going, the only question is how quickly. Osborne is trying to convince people that "no currency union" is a red line, but lots of people don't believe him. Apart from that, everything is up for negotiation and compromise.

That "positive case for the UK" thing. Cameron keeps saying it, others on the No side keep saying it. "We're making the positive case for the Union" - every time I hear it, my response is "Well, you've got a big microphone in front of you, go on then."

Just [i]saying[/i] you're making a positive case isn't the same as actually making a positive case. He seems to be hoping that if he says he's made a positive case often enough, no-one will notice that he hasn't.

Ben AS has said nukes are not up for negotiations though i dont believe that either - Leasing land to rUK so it is not in Scotland is my guess there.
Ah I knew that bit - I even deleted a post saying that 🙄 - but i had not considered anyone using it to ignore a democratic vote or spinning it that way

Would they risk it with the nukes being in Scotland 😉

there will be a certain amount of pragmatism

I vote for duckman and THM to thrash it out 😈

I would love to be a fly on the wall with wee eck and CMD negotiating 😯

Perhaps optimistically, the Yes side is probably relying on the "in good faith" bit of the Edinburgh Agreement. Perhaps not the best idea when you're dealing with a Tory politician

As for the 9.9 vs 9.3 revenue stuff that's all about how Oil is accounted for again isn't it ?

On a separate point I saw a regional wealth survey which showed Scotland to be amongst the very poorest parts of the UK on a per head basis. This suggests to me quite strongly that Scotland is supported by the wealth and taxes of other parts of the UK, in fact mostly by the wealthy predominantly English in the South East. It also says to me Scotland would be a somewhat impoverished independent nation.

[url= http://www.theguardian.com/uk-news/2014/may/15/britains-richest-1-percent-own-same-as-bottom-55-population ]Regional Wealth[/url]

EDIT: In my view good faith means we will try and reach a solution, it doesn't mean agreeing to the other side's view of being "fair"

There's been some discussion over what legal power the agreement actually has, not much seems to be the answer, but of course, that doesnt mean that it's useless.

The acting in good faith and in the best interests of lines apply to both the people of the UK and of Scotland, so I wouldn't count on those particular lines holding much sway in any debate.

[quote=bencooper ]Yup - Scotland will enter into a debt-sharing union in return for being in a currency-sharing union

I think that is covered by

[quote=aracer ]I'd suggest that any idea that Sir BS is going to get the terms he wants is incredibly optimistic.

Neither side gets everything they want in a negotiation but yes wee ecks is the most fanciful. I am still not convinced that they wont negotiate re currency though as rUK is stuffed if iS goes under so they have to "prop it up/bail out/support/ whatever" even if only for self interests - see Ireland for an example of this.

Scotland wants to leave the UK, that means you leave on the UKs terms

Well, yes. The rUK is under no obligation to enter into a currency union, Scotland is under no obligation to share the debt.

Both moves could have negative consequences for the respective countries, which is why things need to be negotiated in detail.

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Well, yes. The rUK is under no obligation to enter into a currency union, Scotland is under no obligation to share the debt.

And UK is under no obligation to give you independence - as a reserved issue it still has to be voted on by the entirety of Parliament in westminster remember, and therefore the deal on the table has to be palatable to the elected representatives of the whole UK, not just Scotland

You can harp on all you like about 'obligations' and legal duties' - Westminster can trump you on them every single time!

This suggests to me quite strongly that Scotland is supported by the wealth and taxes of other parts of the UK, in fact mostly by the wealthy predominantly English in the South East.

Sure, Westminster [i]could[/i] do that, but it'd be diplomatic suicide - refusing to accept the democratic will of the people in a referendum?

[quote=bencooper ]Scotland is under no obligation to share the debt.

That's the point I think you'll find the UK "stick absolutely" to the EA. It's not as if Sir BS can claim the moral high ground on that issue.

Ben - so where is the line? Is there no demand so unreasonable that the will of the people must not be ignored? I'm not sure it's quite as simple as you suggest.