If the current financial crisis has a silver lining, it is that it has put an end the the fantasist Salmond’s dream of an independent Scotland. As two major Scottish banks go cap in hand to the Bank of England for their share of a 37 billion GBP bail out, one wonders what would have happened if Scotland were independent now. Salmond would be trying to negotiate this bail out with the central bank of a foreign power; the country would be practically bankrupt, as Iceland is now. Salmond’s idea that the engine of Edinburgh’s financial market would drive prosperity throughout the country is now laughable in the extreme. And so, for this reason alone, I say to those architects of the US sub prime mortgage market, and the creators of the derivatives in which such obvious bad debt was hidden, and to the regulators who were asleep at the wheel; thank you.
Where’s your evidence
Evidence of what?
Thats this will put an end to Scottish independance.
Because Salmond can no longer argue that the engine of Edinburgh’s finance district will fuel scottish prosperity, when clearly it wont, and it’s hard for him to argue that Scotland can be independent when the Bank of England has to bail out RBS and HBOS. All the arguements that he as put forward that Scotland is viable as an independent country now lie in tatters. You watch, you’ll not hear anyone speaking about scottish independence for a long time now.
You can hardly call RBS and HBOS Scottish banks now, can you? I mean RBS is a multinational investment bank with a very small amount of domestic accounts in Scotland, and although HBOS has it’s HQ in Edinburgh, it’s certainly much larger south of the border than BOS was when it was independent.
And just because they’ve had to be bailed out by the government doesn’t prove that an independent Scotland would have faired any worse. Every other major economy around the world has had to do exactly the same thing.
It’s only because of irresponsible lending that this has happened, and with hindsight it was a disastrous decision to make, if they didn’t participate in so-called “sub-prime” lending, their market share would have decreased dramatically.
I mean sure, you could compare an independent Scottish economy to the likes of Iceland now, but on the other hand, you could also compare it to other economies of countries of similar size, like Norway or Ireland, and to be honest, I believe that if Scotland were independent now, the outcome would be more likely to be recession rather than collapse.
RBS and HBOS are Scottish banks with regard to the fact that they are registered in Scotland and that they are examples Salmond always uses of just how prosperous Scotland could be if it were independent.
The need for a bail out does not mean that they would have faired worse under and independent Scotland. What I am saying is that they were able to go to the Bank of England for the bail out money. In an independent Scotland the Bank of England would be the central bank of another country, so where would they go? Would Scotland have a central bank? If so who ‘cos, as you point out, we haven’t even got a bank at the moment never mind a central one and even if we did have one, would they have 37 billion GBP to throw around? Not likely! So without access to the money from the Bank of England we’d be in the same boat as Iceland, i.e., stuffed.
You want to compare an independent Scotland with Norway or Ireland instead of Iceland? Okay then. Ireland was the first Eurozone country to go into recession and in the fist quarter of 2008 its growth was -1.3% and as for Norway, well they had to beg the US Federal Reserve for a 5 billion USD lifeline (Source: Jenny Hjul, Sunday Times, October 12 2008). Not, in my opinion, what we Scots should aspire to.
I think regardless of what we should aspire to, every country has been affected. Whether it was the bank of England or the Federal Reserve, I don’t believe the fact that we were independent would have meant we would have faired any worse.
There are other European countries of a similar size to Scotland that are holding up well, and protected by the now Europe-wide guarantee that major financial institutions in Europe will not be allowed to fail.
You are not understanding the point I am making. I’m not saying we would have faired worse in the crunch if we were independent, I’m saying that because we are part of the Union the Bank of England is obliged to help, if we were independent then we would have to negotiate that help from the BoE or other body. There is no guarantee that any help would be forthcoming (as in the case of Iceland) or that, if the help was forthcoming, that the interest rate would not be punitive.