Osbourne says no to currency union.

It’s a technical default.

Back in Feb, the situation was cleared up about the actual debt. You can’t split any debt up, that has always been misleading and would be an actual default. After the DOs stupid comment, HM T cleared this all up. The rUK will service the debt and an iS will compensate for its fair share of the benefits of the debt. The FC has laid this out clearly as has the the BT representatives

The rest is a smokescreen. A useful one given the lack of substance in yS but still a smokescreen.

No see…, I have consistent on this. It helps to understand how it works.

teamhurtmore – Member
It’s a technical default.

Back in Feb, the situation was cleared up about the actual debt. You can’t split any debt up, that has always been misleading and would be an actual default. After the DOs stupid comment, HM T cleared this all up. The rUK will service the debt and an iS will compensate for its fair share of the benefits of the debt. The FC has laid this out clearly as has the the BT representatives

The rest is a smokescreen. A useful one given the lack of substance in yS but still a smokescreen.

No see…, I have consistent on this. It helps to understand how it works.blah blah, give it a rest eh, and move the discussion on.

You are talking as if these extreme scenarios will happen, they won’t.

Scotland will be sterlingized with a share of the assets and the debt(It’s the blatantly obvious middle position). The only arguing points there are how much of either, which will not solved on this thread.

So all the countries in the EU have the same tax regime do they?

Do you guys not read the news? No, that’s why it doesn’t work (among other things) and why Mark Carney explained why it was necessary. Currency unions require (1) conditions from optimum currency area to be met (tick, UK; cross Europe) and (2) monetary and fiscal union.

Europe (to exist) needs to have full fiscal union – that is the lesson of the crisis. The rUK would not be stupid enough to grant a CU without very clear rules over Scottish fiscal policy which as the FT leader states to today, negates the whole point on the referendum.

So we do spin around indeed on the vanity project roundabout.

jambalaya – Member
The Yes campaign in Scotland wants to be Scotlands “political elite “
Well, seeing as the Yes campaign consists of around 50% of Scots, that’s a lot more equitable than the current situation.

The Yes campaign isn’t 50% of Scots or anything like it. It’s a small group of people with whom possibly around 50% of the electorate agree.

You can stick you head in the sand if you want (and salmond hopes you do) but a currency has not been, is not, and cannot be an asset. It’s BS designed to deceive. And you seem to have fallen for it hook line and sinker. The DO will be delighted.

Your last point doesn’t make sense I’m afraid. Sterlingisation is the extreme version where Scotland uses the £ outside any formal arrangement. So the rest of the sentance is irrelevant.

konabunny – Member
jambalaya – Member
The Yes campaign in Scotland wants to be Scotlands “political elite “
Well, seeing as the Yes campaign consists of around 50% of Scots, that’s a lot more equitable than the current situation.

The Yes campaign isn’t 50% of Scots or anything like it. It’s a small group of people with whom possibly around 50% of the electorate agree.We understand what representative democracy is.

Is there a legal definition, to cut through all the BS?

teamhurtmore – Member
You can stick you head in the sand if you want (and salmond hopes you do) but a currency has not been, is not, and cannot be an asset. It’s BS designed to deceive. And you seem to have fallen for it hook line and sinker. The DO will be delighted.

Your last point doesn’t make sense I’m afraid. Sterlingisation is the extreme version where Scotland uses the £ outside any formal arrangement. So the rest of the sentance is irrelevant.

Why are you campaigning on here? No-one is moving from their positions. You aren’t convincing anyone.

Sterlingisation may not be ideal, but it’s what will happen and will be made to work.

The rUK would not be stupid enough to grant a CU without very clear rules over Scottish fiscal policy which as the FT leader states to today, negates the whole point on the referendum.

A CU would also mean that every time something bad happened to the Scottish economy, the rUK would be blamed by Scots politicians and media. Being hectored by Alex Salmond for not doing enough for Scotland post independence could get incredibly trying.

Scottish Labour had to come out as No, firstly because that’s whats best for the whole of the UK (and Scotland IMO), secondly because a Yes vote does weaken Labour nationally.

Scottish Labour have a visceral hatred for the SNP, and Alex Salmond in particular – Labour has run Scotland, from the MPs down to local councils, as a one-party state for decades and they resent anyone else taking “their” votes.

It’s not about what’s best for the UK, it’s not about what’s best for Scotland, it’s about what’s best for the Labour Party.

Will we follow the same tax policies as the UK?

@epic, we can’t be sure as no one has told us.

What I suspect is that an independent Scotland will follow similar tax policies to countries like Ireland and Luxembourg, ie very low business tax rates to attract/retain businesses. Given the spending desires of the SNP this will mean higher taxes elsewhere, the SNP will tell you it will be raised from all these extra oil/gas fields which will magically appear but the fact is it will have to be raised from personal taxation/employment taxes. As Scotland will be fairer the “rich” will make up the shortfall, more so than in the UK where the top 1% pay 30% of the taxes, so I guess Scotland will go for 40% or 50% I hope Sean Connery et al are planning on coming back. Of course not paying for Trident is going to make every Scot rich.

edit: Also as Scotland won’t know what currency its going to use I don’t see how the government will be able to borrow any money, not least if it walks away from its share of the UK government debt, so in that case taxes will have to be even higher as Darling pointed out countries like Panama have to run a budget surplus. As the UK doesn’t run a surplus Scottish taxes will have to be higher and/or spending lower than the UK.

No it won’t because that is the worst case for Scotland as the YS team have shown – remember they dismissed it in one paragraph. It’s that stupid.

Why is anyone on this thread then? Bizarre comment. I can see why you talked about spinning, your comments seem all over the place.

Seems like you need to read what the FC actually said about sterlingisation and understand what it is.

In the end though you are correct. No one is moving (well not enough anyway) so the vanity project will be parked where it belongs come 19th. Scots are far too canny (well enough are anyway) to know what is in their best interests.

jambalaya – Member
Will we follow the same tax policies as the UK?

@epic, we can’t be sure as no one has told us.
What I suspect is that an independent Scotland will follow similar tax policies to countries like Ireland and Luxembourg, ie very low business tax rates to attract/retain businesses. Given the spending desires of the SNP this will mean higher taxes elsewhere, the SNP will tell you it will be raised from all these extra oil/gas fields which will magically appear but the fact is it will have to be raised from personal taxation/employment taxes. As Scotland will be fairer the “rich” will make up the shortfall, more so than in the UK where the top 1% pay 30% of the taxes, so I guess Scotland will go for 40% or 50% I hope Sean Connery et al are planning on coming back. Of course not paying for Trident is going to make every Scot rich.You’re presuming to know what the people of Scotland will vote for.

Big assumption.

Labour has run Scotland, from the MPs down to local councils, as a one-party state for decades

Ahahaha ahahahahaha ahahahahaha ahahahahaha.

A snapshot of a one party state.

@seosamh – yes I had to make some assumptions to answer the question, all speculation of course. Like many have to around this referendum not least those with a vote.

Ahahaha ahahahahaha ahahahahaha ahahahahaha.

I always wonder what motivates someone to write “hahaha” – anyway, glad I’ve amused you, now go back and look at historical results:

http://en.wikipedia.org/wiki/Elections_in_Scotland

I always wonder what motivates someone to write “hahaha”

Sometimes it’s when someone writes something laughably stupid – like you did, just then!

Your own Wikipedia link shows that Labour’s share of the vote peaked at 49.9% in 1966. It got about 60% of the seats. That’s the high water mark – everything else is lower.

In other words, very far from a

one party state

Ahahahahaha ahahahahhhha ahahahahaha hahahahahahaha 😆 😆

jambalaya – Member

@seosamh – yes I had to make some assumptions to answer the question, all speculation of course. Like many have to around this referendum not least those with a vote.

Nice of you to argee, what with most poeple making, what come across as, statements of fact on here. I fully agree everyone here is making assumptions. And understand certain assupmtions will need to be made when I place my ballot.

Look at the general election results – you have to go back to 1964 to find an election where Labour didn’t get more than twice as many seats as the next party.

Same with Scottish local elections – the SNP’s massive rise in the last decade excluded, Labour usually has more than double the number of seats of the next party.

Nice snapshot Konabunny I wonder which party is doing best according to your graphic?
Also does the graphic depict a result which was considered remarkable at the time? If so why was it considered remarkable?

Anyway, have we done this yet?

http://www.theguardian.com/commentisfree/video/2014/aug/27/spoken-words-luke-wright-video

Brilliant 😉

@ben excellent !

We let that chap Brown have a go, auch no

If you ever make the split, you’ll fail as we’ll see to it

sadmadalan – Member

The bill that set up the Independence vote, came with the statement that NEITHER side would enter into any pre-negations discussions. Which bit was that in?
http://www.scotland.gov.uk/Resource/0040/00404789.pdf

It’s a technical default

Definition of technical default:

A deficiency in a loan agreement that arises not from a failure to make payments as promised, but from a failure to uphold some other aspect of the loan terms. Technical default indicates that the borrower may be in financial trouble, and can trigger an increase in a loan’s interest rate, foreclosure or other negative events.

Is there a different definition of “technical default” or are you just making shit up?

@wanman – there will be many definitions of a technical default. A default is when you don’t pay. A technical default is typically when you have breached some other obligation or financial test but as you haven’t yet missed a payment.

A technical default is typically when you have breached some other obligation or financial test but as you haven’t yet missed a payment.

What would that other obligation or financial test be in this case, given that the treasury has said that it is liable for all the UK debt?

“Just making shit up” obviously.

It has been explained numerous times on this thread. Even yS have made an attempt at explaining this and did a good job. It cannot be an actual default because there is not actual debt to default on. Hence failing to pay Scotland’s share is best explained as a technical default. In the eyes of capital markets, the impact is the same. An iS would be extremely foolhardy to even threaten non payment. Financial markets need to be warmed up for all the future borrowing not pissed off from the start. The DO is not doing a good job at creating credibility. No wonder he doesn’t actually want to be independent after all.

It has been explained numerous times on this thread.

No – you have mentioned a technical default several times on this thread and presented no evidence to back it up.

http://singletrackworld.com/forum/search.php?q=%22technical+default%22

So can you now explain in detail how Scotland would be technically defaulting on a debt that it is technically not liable for?

What would that other obligation or financial test be in this case, given that the treasury has said that it is liable for all the UK debt?

Since the Scottish government hasn’t been borrowing money from anyone, I don’t think it can be in any kind of default on loans it hasn’t taken out, technical or otherwise.

But annoying its largest trading partner and closest neighbour from the get-go does seem a bit self-defeating.

For the advocates of sterlingisation, the Scottish Government summed it up like his

7.26 As an aside, there is the option for Scotland to adopt Sterling through an informal process of ‘sterlingisation’. While this option would retain some of the benefits of a formal monetary union there would also be some additional drawbacks. In this instance, the Scottish Government would have no input into governance of the monetary framework and only limited ability to provide liquidity to the financial sector – this would depend on the resources and reserves of the country. The amount of currency available would depend almost entirely on the strength of the Scottish Balance of Payments position.

7.27 The two clear options for Scotland are therefore to seek to join a formal monetary union with Sterling or the Euro.

From the horses mouth. Funny that they also ruled sterlingisation out from the start. Where are the 3Bs Alex, or where they the original ones? So full of **** it’s unbelievable.

And from the same source

8.63 Upon independence, the Scottish Government is expected to inherit a share of UK public sector debt. In 2015-16, UK public sector debt is forecast to peak at 80% of GDP, equivalent to almost £1.5 trillion – the highest since the 1960s.

Box 8.05 of their document is about how it all works and where you see how they propose to do it. I am surprised supporters don’t don’t read their own stuff. They know that a default is not an option. That is folly in the extreme.

So can you now explain in detail how Scotland would be technically defaulting on a debt that it is technically not liable for?

I’m assuming that you didn’t see this question the first time and have just missed it. I in no way think that you’re avoiding answering the question because doing so would be impossible without making yourself out to be a liar.

There is the figure which explains the options for currency to which THM is referring above – just because his text has lost some of the context of the document.

And here are the paragraphs that follow his last point:

8.65 The proportion of this debt which would be taken on by Scotland post-independence would be subject to negotiation. The Scottish Government should seek to negotiate a fair and equitable share of UK public sector liabilities and assets. One would expect that if Scotland was to bear a proportional burden of historic liabilities that it would receive a corresponding share of both tangible and non-tangible assets.

8.66 There are complex legal issues surrounding existing UK Government debt, particularly around the definition of ‘successor state’ and the transfer of debt between borrowers without obtaining the approval of the creditors.

Allocation of national debt

8.67 There are no agreed international rules on the division of assets and liabilities in the context of state succession or independence and there is also a lack of clear precedent or consensus. In practice the position on sharing the national debt is likely to be governed by political rather than legal considerations. Any final agreement would form part of wider negotiations on the division of assets and liabilities of the UK State.

8.68 As an illustrative example, if Scotland assumed a population share of UK public sector net debt in 2017-18, it would be estimated to be worth £126 billion, which would be equivalent to 72% of Scottish GDP. This would be slightly lower than the equivalent UK figure of 77%.

Box 8.05: Transferring Debt to Scotland Post-independence

Post-independence, there are, in theory, a number of hypothetical options for managing and servicing Scotland’s national debt.

Three options, based upon the assumption of Scotland inheriting a share of debt, include –

Transfer of a proportion of UK gilts to the Scottish Government immediately post-independence;
Transition mechanism in which the Scottish Government pays an agreed share of debt interest on outstanding debt until maturity then repays the principal (with any new debt issued separately by the Scottish Government); and,
Transition mechanism as above followed by issue of Sterling Bonds (i.e. jointly issued by both governments).
The first option would allow for an immediate division of debt and avoid lengthy transition arrangements. However, this may require a change of legal entity in existing contracts or the issue of new Scottish gilts to replace pre-existing UK gilts. There are complex questions surrounding the legality of transferring debt between borrowers without obtaining the approval of the creditors.

The second option would mean that the Scottish Government would gradually assume its own debt through refinancing the agreed share of the original UK debt stock. There would be a corresponding reduction in transfers to the UK for interest payments as the gilts ‘rolled-over’ onto Scotland’s books. In theory, the initial legacy debt servicing payments could be arranged through a bi-lateral arrangement (e.g. a loan) between the Scottish and UK governments.

A final option would be a similar transition mechanism in which the Scottish Government pays a share of coupon payments on outstanding legacy debt to the UK. When the gilts mature, they could be refinanced by new Sterling-bonds [123] which would be jointly issued and guaranteed by the UK and Scottish Governments.

Just looking to keep the context as I see THM likes to do the wee free minister’s trick of quoting single lines from a huge document to attempt to make them appear to say something completely different to their intended meaning by removing the context.

Instead of just trying to look silly, just go and read it up. (Edit for cross post, glad to see you have started to do this now)

It’s a “technical” default precisely because there will be no actual debt to default on in practice – although they do suggest that in the Box I mentioned. But you cannot simply split existing debt – that would constitute a real default.

So you have a form of financial compensation instead. The technical default refers to the failing to make the compensation payments. Hence it’s technical not actual.

Read your sides stuff. It’s explains it simply enough. Notice which currency option is missing from the diagram. Oddly enough Alex’s current favourite. Hmmmm….

You mean box 8.05? which has this in it:

Three options, based upon the assumption of Scotland inheriting a share of debt, include –

Pretty big assumption to make. So, assuming that Scotland doesn’t inherit a share of the UK’s debt due to not getting any of the assets, there is no financial compensation as per the box up there, so there is no default actual, technical or otherwise. If we take the other point where Scotland does take on some of the liability, and it’s agreed so not a technical default, and paid so not an actual default – where is the default coming from?

I’m trying to see how anyone can technically default on a debt that you say doesn’t exist. Can you explain it to me please in lay terms. You are after all an expert, and experts are good at explaining things simply.

I think I’m just being especially stupid today, but I don’t see how there could be any kind of default if Scotland just walked away from its share of the debt.

The Scottish government hasn’t taken out the debt, the UK has.

(Of course it would be morally reprehensible and would leave a very bitter taste in the mouths of the rUK).

So, please can someone explain where this default would come from. Which creditors would be affected?

In practice the position on sharing the national debt is likely to be governed by political rather than legal considerations. Any final agreement would form part of wider negotiations on the division of assets and liabilities of the UK State.

That’s the biggy in how it will all pan out.

For a Currency Union to work, the BoE would be controlling both Monetary and Fiscal policy for Scotland. Thats not really independence is it?

Same thing for joining the Euro and we all know how thats working for the smaller countries of the union.

The only way to be independent is to have your own currency and that will be full of risk and uncertainty. AS may want to play devils advocate on if we cant have the pound, we’re not going to take the debt, but hes not really in a strong bargaining position vs rUK.

For a Currency Union to work, the BoE would be controlling both Monetary and Fiscal policy for Scotland. Thats not really independence is it?

That’s a shite argument and probably incorrect.

A couple of definitions:

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy.

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.

Which creditors would be affected?

Government debt is bought by all institutions, but mainly pension funds and banks (ie. you and me)

All Governments need to borrow money (even if you’re running at a surplus) to cover short term shortages in cash flow.

Need to pay this weeks pension payments, but havent collected the tax receipts yet, you’ll have to borrow the money from the financial markets.