Why is Salmond celebrating our humiliation ?

[longshanks]

UK Treasury announces that it won't pass over our share of UK debts (c.£120 billion) if we vote yes but will continue to assume responsibility.

Why....because international investors are happy with the prospect of rUK's ability to repay the debt and nervous that iScotland may not.

So; if we become independent rUK will effectively guarantee our debt !

....and Salmond celebrates !!!!!!

Its a humiliation Alex ! You're celebrating the revelation that international investors consider iScotland to be too small, too little, and too poor.

It blows away the spin that iScotland will be one of the richest countries in the world if we have to have rUK guaranteeing our share of debt Alex !

Jeez....vote No and save us from this fool.

[MonaLott]

Nonsense, Longshanks. The announcement is based on the fact that it it has already been agreed by both sides that, in the event of a Yes vote prevailing, Scotland will take on its agreed share of the huge, over 1 trillion pound, UK debt (as clearly stated in the White Paper). The announcement thus reflects the maturity and responsibility shown (consistently) by Alex Salmond (described by James Naughtie this morning on the Today programme as perhaps the foremost politician in Europe).
Besides which, you are indicating a misguided respect for the speculations of the profiteers and marketeers whose track record in many areas but especially in their own field has recently been absolutely pathetic.

[jimcee]

But I think he is using it as a bargaining chip to get all sorts of other concessions out of the deal - time will tell.
You can be sure of one thing - he is not offering to share our portion of the National Debt out of any feelings of benevolence.

[longshanks]

No Mona.

The fact is that on day one there will not be a single gilt in Scotland's name.

The fact is the bond markets have made it clear that they see rUK's creditworthiness as being much higher than any prospective iScotland's and do not want to see, in the event of a Yes vote, any UK gilts rewritten with iScotland as the debtor.

So rUK will have to stand behind, guarantee, our share (c£120 billion) of the debt.

If that isn't a humiliating admission that we will not be able to stand on our own two feet then Salmond is deluded.....he bloody celebrates the fact that international investors think we may default !

and Alex S has only exacerbated the situation by threatening default.

Yes, I know he didn't use the "d" word (I've had to make that clear on the main Argyll forum) but his threats certainly indicated that.

Whatever you opiniuon may be of the sovereign debt market may be you and Salmond need to get real and realise that it has the power over nations to bring governments down. Fact, however unpalatable.

Realism is in short supply in Bute House and amongst His nationalist lackeys obviously.

[longshanks]

But I think he is using it as a bargaining chip to get all sorts of other concessions out of the deal - time will tell.
You can be sure of one thing - he is not offering to share our portion of the National Debt out of any feelings of benevolence.

Agree.

Despite previous SNP spin about negotiations after an unlikely yes vote being friendly and mature Salmond has laid down a marker in the last week that they'll be anything but.

I don't fancy the chances of Holyrood Civil Servants (mostly ex RBS bankster redundified at its collapse) versus the might of Whitehall with a centuries old skill base in negotiations.

[longshanks]

Besides which, you are indicating a misguided respect for the speculations of the profiteers and marketeers whose track record in many areas but especially in their own field has recently been absolutely pathetic.

I'm talking about the Bond Market......track record recently pathetic eh ?

Investing in Bonds over the last years under the advice of, say, PIMCO, would have given you a considerable return. Considerable.

Are you sure you know what the Bond Market is and how Governments issue debt ?

[MonaLott]

Interesting, LS, that these wonderful wizards of yours in Whitehall with all that knowledge and experience that so impresses you have run up over a trillion of debt, while Scotland continues to outperform the rest of UK in terms of economic strength per capita. I'm sure that international investors will recognise, as did the OECD, that Scotland will rank around 8th in the world prosperity league, well above rUK. And, Jim, Scotland must absorb its share of the UK debt to balance the fact that it will be due the same share of all its assets. If Salmond's such a wally, LS, and your No case so strong, why won't chicken Cameron take him on face-to-face?!

[longshanks]

You can try to change the topic as much as you like Mona but you cannot get away from the fact that The Treasury's announcement that it will have to put iScotland's share of the debt in the name of rUK and Salmond's demurring and celebration (a big phew from Nicola and John too) of this action is a clear admission that iScotland will not be able to stand on its own two feet fiscally but needs UK as guarantor of its debt.

Why is Salmond so scared of the alternative ? The route a financially strong country would naturally take.....

ie iScotland goes to the sovereign bond market, raises £120 billion in the name of iScotland, and refunds rUK with the proceeds.

[longshanks]

I'm sure that international investors will recognise, as did the OECD, that Scotland will rank around 8th in the world prosperity league, well above rUK.

What international investors have demanded is that rUK guarantees iScotland's debt because they are worried about iScotland's ability to repay its debt.

Danny Alexander' announcement yesterday followed a meeting that morning of the main debt purchasors to which he was invited. What do you think they told him which led to the Treasury announcement that iScotland would not borrow but, instead, have its debt guaranteed by the UK.

[longshanks]

If Salmond's such a wally, LS, and your No case so strong, why won't chicken Cameron take him on face-to-face?!

Maybe because Salmond has repeatedly insisted that the debate is solely between the people who live in Scotland and who will vote in his referendum.

Despite his Scottish ancestry I don't recall reading that DaviD Cameron (our third consecutive Scottish PM BTW) is entitled to vote in Salmond's referendum.

More to the point why is Salmond so scared of debating with Darling who does have a vote in our future (something which Bath resident "Rev" Stu does not have BTW) ?

[MonaLott]

1) Salmond v Darling. You're having a laugh! 'Mauled by a sheep' springs to mind!
2) What bit of 'rUK is 1 well over 1 trillion in debt' do you not get?
3) rUK will be amongst the worst bond investments available to man outside Spain, Greece and Italy, i.e. presently, the UK's borrowing rate is around 3% which is not healthy, despite your view that the UK, as it is, is Mecca and that the brains behind it are all wizards! A bankrupt overpopulated residue of Empire, in many ways an anchor round Scotland's neck! By the way, the civil servants at Holyrood and the Scottish parliament have totally outperformed their Westminster counterparts in recent years. Honest, responsible, within budget, accountable, all despite any significant serious opposition from Scottish Labour or Tory.
4) Without Scotland's resources, rUK is properly stuffed.
5) Cameron is rightly afraid of being shredded on TV! Useless.

[NickB]

The debt up to independence is UK debt. It is only reasonable that they guarantee it. Scotland will owe Westminster the appropriate amount, not the people who originally loaned the money. You can't just pass debt on without the approval of the creditor.

It's no big deal. I am sorry Longshanks feels humiliated, but I certainly don't.

[longshanks]

2) What bit of 'rUK is 1 well over 1 trillion in debt' do you not get?
3) rUK will be amongst the worst bond investments available to man outside Spain, Greece and Italy, i.e. presently, the UK's borrowing rate is around 3% which is not healthy,

There's no point addressing any of your points apart from these two as the others are no more than rants.

So your point 2)

Lets just have some facts shall we? The UK gross debt is c.£1.2 trillion.

Of that £0.375 trillion is held by the BoE as a result of QE and can, no doubt will, be cancelled at the click of a mouse with no affect whatsoever on the economy.

And c£0.120 trillion is Scotland's responsibility (but guaranteed it now seems by England, Wales and N.Ireland).

So rUK's true (net) debt will be £705 billion.

......and that, my friend, can be wiped out by more QE if so desired. The danger of QE (essentially printing sterling) is inflation but with CPI now at 2% that fear was unfounded over the last QE exercise.

NOTE: iScotland, if we use sterling, will not have the QE fiscal tool at its disposal !

Now point 3)...

We have to face facts that you probably no little about sovereign finance.

3% borrowing costs are way below normal and to be celebrated http://www.gecodia.com/UK-Government-10 ... a1789.html

Greece, Spain, Italy are part of a currency union and that is their weakness; they do not control it.


btw UK borrowing costs are less than Norway's and always have been. T hat means that those who invest in sovereign debt see UK as better than Norway.

...........................................

The significance of yesterday's Treasury announcement is it is the very first dose of REALITY we have had since the separation debate began. Prior all we have had is speculation, hopes, worries etc from both sides. At last we have reality.

The reality is that the economy of iScotland is seen as weak and rUK will have to guarantee iScotland's debt.

For anyone who believes that separation may be a good thing and has swallowed the speculation hook line etc that is humiliating, made more so by Salmond's celebration of the revealed fact that we will not be standing on our own two feet.

[PentlandPirate II]

It looks like come September Britain's recovery from 13 years of Labour over spend and worldwide recession, all the economic indicators will show that Britain is doing quite nicely against our competitors. It will make a powerful argument for the Don't knows and Yes voters to be reminded we are better together, and that socialist governments have only ever bankrupted the country. Scotland cannot afford to go it alone, which is why Scotland's debt is having to be guaranteed, even at this early stage, to prevent damaging the economy.

[jimcee]

Over the last 3 hours there have been eleven postings to this site.
If this level were to be maintained until September the number of postings would probably outstrip the National Debt. I am not a mathemetician so stand to be corrected.
However I cannot envisage this level of activity being maintained for any length of time and would suggest that the pace should be slowed somewhat in order to maintain any outside interest in the subject.

[MonaLott]

At the risk of upsetting Jimcee, one final post for the night. In LS and PP, we have unearthed 2 old-style Tory dinosaurs who prefer to disregard the OECD's modern assessment of an independent Scotland's wealth and the recorded fact that, in the recent past, Scotland has contributed more to the UK than it has taken. They worship market speculation and intentionally misinterpret its causes. The Holyrood government has been a model of responsibility compared to the Westminster counterpart. Salmond at al are head and shoulders in calibre above Cameron, Osborne, Clegg and Milliband. Those who wish not to go to war in Moslem countries every year, spending billions and killing tens of thousands, those who wish to retain the NHS, the post office service, free education, infrastructure in general, and to invest in Scotland's young people and to enhance living standards should vote Yes. PP and LS appear to love talking down Scotland and spreading irrational fears. On the other hand, the Yes campaign is positive and rational. My view anyway. And, at that, I obey Jimcee and say 'goodnight'!

[longshanks]

Well Mona; you can trot out the tired old SNP mantra (suspiciously like a script) as often as you like. You can be as anti-British as you want. You can insult Scots like myself and those of Scots descent like PP as much as you like.

But that doesn't get away from the first dose of actual reality to hit the separation project....

If we leave the UK then the markets don't trust us to service our debt and the rUK will have to guarantee (hold) it on our behalf.

The fact that Salmond not only contributed to that view by hinting at default but also celebrates it is humiliating for right thinking Scots.

[PentlandPirate II]

In LS and PP, we have unearthed 2 old-style Tory dinosaurs

. This is not aimed personally, but I begin to wonder if the yes/no divide follows class lines of poorer v better off. There's no doubt that the poorer in society include the subclass of out of work/work shy content to live a life dependent on benefits. To them all the talk of a fairer society sounds like great news although their thoughts will be tuned to getting more out of the system for free. Little in the Yes campaign seems to give any thought for those who create jobs, the entrepreneurs and business people who create wealth and employ people and support the poor on their backs through their taxes. It's only these people who can make a country prosper.

IF and and it is a big IF, Scotland gains independence at least Scotland will lose its Scottish MP's at Westminster ensuring a Conservative government for the future, then rUK can really move forward on the recovery it is already making. By contrast Scotland will go the other way and return to the tax and spend of a socialist state that has caused Britain so much pain before the Conservatives (and Liberals) started to sort it out.

All this talk of Scotland being like Norway, Sweden, Finland, etc, is daydreaming stuff. The most fundamental difference between those countries and Scotland are the people. They have totally different cultures. The Scots are nothing like the Nordics, therefore Scotland will never be like those countries.

[Herby Dice]

Longshanks seems to be the only one to see this as "humiliating". This announcement has nothing whatsoever to do with any uncertainty as to Scotland's ability to service her debts. It is an entirely pragmatic act by the UK Treasury. The UK govt. has steadfastly refused to discuss what would happen in the event of a Yes vote (Cameron won't discuss "hypothetical" issues) but in this case they had little choice. Given the shocking (humiliating?) level of UK debt already, and that the only solution seems to be to borrow more, the UK govt needs access to credit, and nobody is going to lend money when they don't know who is going to be responsible for paying it back.

In the event of a Yes vote, of course Scotland will take responsibility for a fair proportion of the debt (in return for a fair division of assets of course). The specific details will be worked out when the UK govt decides it is ready to talk, but Scotland will shoulder it's share of the burden - apart from anything else because the remaining, continuing, residual or rump UK would still be our closest ally and largest trading partner.

[longshanks]

the UK govt needs access to credit, and nobody is going to lend money when they don't know who is going to be responsible for paying it back.

An interesting intervention Herby and you've got it spot on with the point I've quoted.

Prior to the Treasury announcement those who provide UK with credit didn't know who would pay it back in the unlikely event of a Yes vote.

They wanted certainty that if they lend money to the UK, and Scotland then separated, it would be the rUK which took responsibility for that debt and not iScotland.

The Treasury has now given the firm assurance that the Bond Market was seeking.

That is the kernel of it Herby.

Humiliatingly for true born Scots this reality tells us that rUK is seen as stronger economically than the proposed iScotland, and the true sadness is that Salmond and his lackeys have celebrated this real fact.

....that is true, its now a reality.

Despite Mona's regurgitated SNP mantras about our prospective wealth in the world which are totally misleading because the figures the SNP love to trot out take no account that in reality the North Sea Oil (25% of our prospective GDP) is not owned by Scotland but overwhelmingly by multinational companies headquartered in foreign countries, and the whisky industry (15% of our prospective GDP) is not owned by Scotland but overwhelmingly by multinational companies headquatered in foreign countries.

BTW Laphroig became Japanese today; bought by Suntory. Profits from that lovely dram will now go to Tokyo.