Osbourne says no to currency union.

What will the base rate be in Scoltand? I thought your were going to be an independent country? Then again, without an central bank that would be a little difficult. I am sure the DO will have thought it through to the same extent as everything else though ie, hardly at all.

You can blame that on David Cameron. No Devo Max on the ballot paper was his decision…. Oh how funny it will be when that backfires.

@wan, Cameron did EXACTLY the right thing with setting the question. Is it not interesting that the SNP would rather have had a watered down Devo Max option. The fact is the SNP know that Scotland is better off with the UK as a safety net if they screw it up. Why should the UK agree to that ? Cameron has taken a calculated risk and I think he’ll be proven right with a No vote. The advantage with this is that the independence issue will be put to bed for the foreseeable future, hopefully 20 years plus. By giving Scotland powers to set tax and spending I think that will force the Scottish Parliament to face reality and stop politicking with fanciful promises of this mythical fairer society whatever that actually means.

What will the base rate be in Scoltand?

Well to start with we’ll be using Sterling, so the base rare will be the same as in the rUK. Later, if we transition to our own currency then we’ll have a good credit rating according to the credit rating agencies, so no reason why our base rate should be much different.

Would you not raise your base rate to reward savers and punish borrowers? Isn’t that the good proper thing to do?

The advantage with this is that the independence issue will be put to bed for the foreseeable future, hopefully 20 years plus.

Just out of interest, if Scotland is such a drain on rUK where is the advantage gained from putting the independence issue to bed for 20 years plus?

Just out of interest, if Scotland is such a drain on rUK where is the advantage gained from putting the independence issue to bed for 20 years plus?

Because by then the oil will have run out, so no reason to hang on to us.

Banksy has an opinion 🙂

Should that wee fella not be a Wild Haggis

Well to start with we’ll be using Sterling, so the base rare will be the same as in the rUK.

If only that was how it works..!!!!

THM – dear economics guru can you please enlighten us thick **** as to how the base rate would work for Scotland?

Well to start with we’ll be using Sterling, so the base rare will be the same as in the rUK.

http://www.tradingeconomics.com/panama/interest-rate

(just to help out, scroll down a bit for the US interest rate)

Later, if we transition to our own currency then we’ll have a good credit rating according to the credit rating agencies, so no reason why our base rate should be much different.

😆

http://singletrackworld.com/forum/topic/osbourne-says-no-to-currency-union/page/256?replies=9251#post-6269467

how the base rate would work for Scotland?

Assuming CU (not going to happen) it would be the same as it is now. You’d have to have your whole economic policy approved by the BoE though.

Assuming Sterlingisation you would have to set up your own Central Bank and set up your own currency reserves. This will cost a lot of money and involve a large amount of reserves which you’ll need to borrow at a higher rate as you’ve not honored your share of the UK debt.

This cost of borrowing will affect interest rates, which will be at a premium to what it will be for rUK. Scotlands interest rates could be 1-2% higher than rUK (£50-100 a month on a typical mortgage)

Also with Sterlingisation you’ll need to try and peg your currency to the £. Read about the ERM and find out how much fun that might be.

Exactly, the DO is now proposing that you will follow the policy of sterlingisation. In his madness, he reckons that it is a good idea for Scotland to have no central bank. No central bank, no base rate (since is is the rate the CB lends to fin institutions).

You will be able to transfer all that nice cash into your own reserves of your own version in time (a SMA?). You can do he maths in what that means for the tax and spending pipe dreams.

Since the FC basically rules out sterlingisation, poor old Alex hasn’t been briefed on how silly this makes Scotland look. I assume AS is one of the thick ***** on your reckoning?

Can’t see all this talk of sterilisation going down well – Scotland’s low birthrate means it’s facing a demographic time bomb as it is.

Chew said

Assuming Sterilisation

I say that’s quite an assumption!

Vote Yes or they’ll tie your tubes
🙂

Autospell/autocorrect throws up these unintended gems!!!

I think there may well be a few difficult years of transition, but in the long run we’ll be fine.

I totally agree with you on this Ben

Its just a case of:
How difficult?
For how long?
What percentage of the population is going to stick around through that transition period?

Autospell/autocorrect throws up these unintended gems!!!

We all know what i ment 😳

I think there may well be a few difficult years of transition, but in the long run we’ll be fine.

A difficult tomorrow is a price worth paying for a better next week.

Better, you hope…

A difficult tomorrow is a price worth paying for a better next week.

It probably is but if the votes that close what percentage of the No voters are going to stick around during the ‘difficult tomorrow’ period?

Sterilisation is not a bad shout since policy flexibility will be neutered by what is being proposed by the DO.

Better, you hope…

Whereas difficult you know. The only thing which is certain about next week is that where the politicians meet will be geographically closer.

It probably is but if the votes that close what percentage of the No voters are going to stick around during the ‘difficult tomorrow’ period?

Hopefully not that many…

The only certainty is the kerching of the lawyers tills.

Given the profile of many of the no voters, your desire Wanman will not do much for tax receipts and future Gov spending – still that is the least of the contradictions.

Given the profile of many of the no voters, your desire Wanman will not do much for tax receipts and future Gov spending

Have another wee think about that. Then have a think about who is most liable to dodge taxes in one way or another. There is little room in my ideal Scotland for people who have the ability to pay their way but choose not to to the detriment of others.

No need – I understand how the tax system works.

I would hope that you do. I suspect that you may struggle with how the tax system doesn’t work though.

Well! I’m not an economist or a tax expert – I’m too interesting for that – however I can look at the big picture.

Scotland has ample natural resources, lots of export businesses in the food, engineering and other industries, a world-leading education system, and a vibrant tourist industry. To imagine a country like that will struggle to pay bills is just ridiculous.

You hope… 🙂

As the saying goes – you don’t know what you’ve got til it’s gone.

Who is saying that Ben?

(Although the DO is now proposing ideas that are capable of bringing it on!!!)

lots of export businesses

Which will is very dependent on exchange rates, which is very dependent on what currency you’re using, which at this point you dont know.

If exchange rates moved against you by 5% that could have a very real impact on your ability to pay the bills.

Scotland has ample natural resources, lots of export businesses in the food, engineering and other industries, a world-leading education system, and a vibrant tourist industry. To imagine a country like that will struggle to pay bills is just ridiculous.

With sterilizationsterlingization, would the financial sector be able to continue, or would it all move South?

Which will is very dependent on exchange rates, which is very dependent on what currency you’re using, which at this point you dont know.

That question has been put to bed many times – it’ll be the pound.

Chew – Member
…If exchange rates moved against you by 5% that could have a very real impact on your ability to pay the bills.

This is a problem faced in the past and handled by many countries.

Are you implying that Scotland would be unique in not having the ability to adapt to a changed marketplace?

Have fun buying your £’s on the markets and I am sure they will not take advantage of you. There will not be a currency union.

fasternotfatter – so you keep saying. But here’s the thing – very few people give a shit.

As long as Scots accept that then I will sleep better tonight knowing that they no longer believe SNP lies that the rUK will capitulate and do what ever AS tells them to do.

Well they should do. Less than twenty days to a momentous decision that is being driven by extraordinarily shallow understanding, limited planning and flawed analysis. It’s almost as if AS is going for the more absurd the better approach as his proposals are either (1) so mind bogglingly stupid or (2) basic lies. It’s an extraordinary experience to see a politican getting away with a version of the Emperors new clothes in real time. If he was a CEO, the shareholders would have booted him out for breathtaking incompetence long ago.

The genuinely scary thing is that this whole vote will end up being so close. But perhaps, not giving a shit, really does sum the whole thing up. Utter madness.