Does anyone here believe we can't use the pound?

[Baxter Parp]

Not too sure about that, how would it work if we demanded that we left the pound and (for example) wanted to join the Euro ? The attutude of expectation is fine if its part of the 'game' thats being played, I get that but I'm not sure that everybody see's it as moves and counter moves because they get so wound up (on both sides).

We can't join the euro. Hope this helps.

[chomp my root]

We can't join the euro. Hope this helps.

I did qualify it as 'for example'. If it's preferable I could say in this extremely hypothetical scenario the Scottish Groat or whatever else takes your fancy. If you read my post you would see that I could have said turnips and it wouldn't have made a blind bit of difference to the jist of my post.

[Ad Lib]

Now you've covered the BT side of it, perhaps you could cover the Yes side, you know, the side you support, and confirm that they cannot force us to assume our "share" of the debt? Probably too much too ask to ask you to support the Yes argument, but I thought I'd give it a whirl.

1. I have not "covered the BT side of it". I have stated the position in international law. Truth has a bias against wrong claims.

2. I'm not interested in supporting wrong arguments.

3. International law clearly provides that Scotland would assume an equitable share of liabilities. It is not true to state therefore that they can avoid their share of the debt.

4. The UK has several responses it can turn to if an independent Scotland refuses to accept a share of the debt or to honour it. They can veto EU membership and introduce trade sanctions against us, just as they did when Ireland reneged on their debt. The Clown Collective seem to think only the Scottish Government have a nuclear option here. This is just untrue.

Not back to this pish again. Repeating the same shit will not make it right.

Just to dispel this notion that the £ is the same as a Kg. Can you tell me which international standards agency determines what a pound is equal to? Does this vary dependant on external factors? Does an alternative unit to the £ exist on a fixed conversion?

Please point to the place where I said that "the £ is the same as a Kg [sic]". You can't do it because I didn't say it.

As is abundantly clear to anyone with a brain, the point I was making was that units of measurement are not assets. They are units which explain the relationship between other variables. Those variables in the case of the kilogram are constant, because they are governed by the laws of physics, over which human beings have no control. These variables are not constant in the instance of currency, because it is a unit that is created by states and whose rules underpinning them are governed by a regulatory framework, determined by a government.

This difference is not material to the question whether or not the pound is an asset. If someone were able to change the laws of physics in their country such that mass and, say, weight, have a different fundamental relationship, that wouldn't mean that suddenly the laws of physics were an asset.

For the sake of completeness, yes, it is perfectly normal for currencies to have an alternative unit that exists on a fixed conversion. This is called a pegged currency. The GBP has several literal examples including the Manx Pound.

For example; A farmer cannot turn 1kg of barley into 2kg just by printing a ticket that states that it is 2kg. A currency issuing government can perform this in terms of a unit of currency and indeed the UK has done so to the tune of many £blns.

This is straight out of the Harold Wilson school of economics. Of course governments can redenominate. But doing so causes the relative purchasing power of stores of value like bills of exchange or legal tender denominated in GBP to increase or decrease. This only happens because governments control the rules that establish the value of those bills and tender in the first place. Units do not themselves have value. They represent value as defined by a set of rules.

In much the same way as a bagel weighs more on Jupiter than it does on Mercury even if it has the same mass, so too a bill of exchange denominated in pounds can buy you more actual physical things in Zimbabwe than it can in Kensington. The mere fact that the rules underpinning what a unit of currency represents are dynamic whereas the rules surrounding what a kilogram is are relatively constant does not transcend the "asset or not an asset" divide.

And actually, a society could just decide that what is meant by a kilogram means something different in their transactions. This is no more or less analogous to deciding whether to adopt an SI unit of measurement or one of various Imperial measurements. If a country wants to imitate the rules underpinning the value of someone else's currency, they are at liberty to do so. This would peg their currency in the same way the ounce doesn't vary against the gram.

The UK want Scotland to take on a share of the UK government gilts (issued in £s) without any say over the worth of the same £. If the UK were to tighten fiscal policy then Scotland (with it's own currency) would then contribute more relative to the initial debt. This is why the two issues are being linked.

This is the biggest wrongness of the lot. What UK government gilts are issued in is irrelevant for several reasons:

1. The UK government is not saying Scotland must/ought to/should take on a share of the gilts. They are saying that the principles of international law provide for an equitable apportionment of assets and liabilities. The precedent on this is clear. The equitable debt share can be given effect to independently of the gilts. A new debt will be created, the creditor being the UK and the debtor being an independent Scotland. It will exist at an agreed value denominated in whatever currency it is agreed it should be denominated in.

That denomination will probably be GBP as it pegs the contributions to the unit of value in which the gilts were actually sold, with fixed rates of return already known. That obligation will be extinguished by regular payments from Scotland to the UK Treasury until an agreed point. This is broadly what was arranged when Ireland became independent.

2. Countries incur debt denominated in a currency over which they have no political control as to the value literally all the time. It is especially common in countries where they lack the market credibility with reference to their own currency precisely because they control the purchasing power relationship in the monetary rules. Zimbabwe cannot borrow meaningfully in the Zimbabwean dollar because they have a track record of using inflation, which devalued gilts relative to other stores of value. As such, they mainly borrow in US dollars. They do not, however, have a currency union with the US and they have zero influence over the policy of the Federal Reserve or the US government, both of which come together to determine the purchasing power of the USD.

3. Fiscal tightening by the UK would not increase the relative level of Scottish contributions to the debt. Only an increase in the purchasing power of the GBP relative to assets whose value is denominated in or tied to Scottish pounds would do this. This point is precisely why both a currency union or sterlingisation represents Scotland ceding sovereignty. If Scotland wants to pursue fiscal policies that have the effect of devaluing Scottish assets relative to the pound, that's their problem, not the UK's.

If, however, it wants the store of value of exchange operative in Scotland to remain indistinguishable from that of the rest of the UK, they have to restrict fiscal policy so that the Scottish pound mirrors the value of the GBP. This involves, as the Adam Smith Institute observed, and ignored by the Clown Collective, having to adopt a more conservative fiscal policy to protect the peg, thus in practice working within a fiscal envelope dictated by UK government policy.

[Mr Bairn]

Wait what? I thought Zimbabwe was plagued with hyperinflation to the point that basic goods cost tens of thousands of pounds?

[Tonsilitis]

AdLib, I am not answering all the points you make but can you refer me to the international law you refer to. Where are the statutes, who wrote them and who enforces it? I think there are conventions but enforceable law? I will not argue too much though as we are both agreed that the break up of the UK will involve divvying both the assets and liabilities. Alex Salmond's point on the Bank of England is that if we don't get a fair share of the assets, don't expect us to take a fair share of the liabilities and as far as I am aware there is nothing in International Law precluding that.

The gilts question is a bit of a red herring. Gilts are merely a mechanism whereby the UK government borrow money. Taking over liability for some of the gilts would merely be a practical mechanism whereby Scotland takes on some of the debt.

The wider point about no currency union is what happens to the £ if the positive Scottish balance of payments after factoring in oil is removed from the Sterling zone? A collapse in the value of Sterling is in nobody's interest, most especially the City of London which is what the UK governments whole economic policy is about.

[AUFC90]

What Ad Lib fails to mention is that international law means f**k all. Nada. Russia and Isael being fine examples.

Where is the law that states that a non-successor state must take a share of the debt ?

[chomp my root]

What Ad Lib fails to mention is that international law means f**k all. Nada. Russia and Isael being fine examples.

Where is the law that states that a non-successor state must take a share of the debt ?

Its not the school yard, but going with the analogy, if you owed me 5 quid and didn't pay it but your mate gave it to me instead I'd be less likely to risk giving you another loan.

[Blaven]

Its not the school yard, but going with the analogy, if you owed me 5 quid and didn't pay it but your mate gave it to me instead I'd be less likely to risk giving you another loan.

Is that why WONGA are going bust?

Jeezo. Who'd a Thot.

[welshbairn]

As Tonsilitis requested, could Ad Lib point us to the relevant law?

International law clearly provides that Scotland would assume an equitable share of liabilities.

[1320Lichtie]

this appears to be your current theme and to be honest, pretty tiresome it is already

As opposed to going onto threads calling everything pathetic and giving it the zzzzzzzzzz's?

You're one to speak.

[Ad Lib]

AdLib, I am not answering all the points you make but can you refer me to the international law you refer to. Where are the statutes, who wrote them and who enforces it? I think there are conventions but enforceable law?

If you think that the only thing that is law is a statute you're not going to get very far. The reach of international law is far more complicated than simply the enforcement of treaties by international bodies. There are legal norms which govern relationships in the absence of treaty provisions. We have specific precedents for how these issues are dealt with. For instance, as I mentioned earlier, Ireland was required to undertake a pecuniary obligation to contribute towards the UK Treasury when it seceded in lieu of debts accumulated in consequence of its being part of that state previously. When it reneged on that agreement, the UK implemented trade sanctions against it.

In the modern context, the refusal by a state to take on a proportion of the debt would be in violation of those legal norms. The remedies for such a breach include trade sanctions, but they also include multilateral political sanctions, in the form of exclusion from participation in international organisations. If an independent Scotland were to claim it was going to shirk the UK's debt the logical response for the UK government would be to veto Scottish EU membership and to veto any EU trade deal with Scotland, thereby in effect implementing a trade barrier to Scotland's main export market.

Customary international law has a clear and robust set of principles when it comes to the default position as to how secession is dealt with with regard to state assets and liabilities. Those principles have been readily applied in several instances in terms of framing negotiations about specific and particular apportionment. It creates a series of presumptions about how we deal with fixed property, moveable property, property serving particular purposes like military and diplomatic assets, and public debt too. Those presumptions are only departed from by agreement between the parties.

I will not argue too much though as we are both agreed that the break up of the UK will involve divvying both the assets and liabilities. Alex Salmond's point on the Bank of England is that if we don't get a fair share of the assets, don't expect us to take a fair share of the liabilities and as far as I am aware there is nothing in International Law precluding that.

But getting a share of the assets of the Bank of England is a completely different proposition from being part of a monetary union. There is clearly a distinction to be made between membership of bodies and control of institutions on the one hand and the splitting of stuff on the other. If the UK refuses to enter into a currency union they are not denying a single asset to the Scottish Government. Not one. A fair share of the assets in the context of the Bank of England would be a share of its reserves in precious metals and foreign bills of exchange and possibly a pecuniary sum representative of Scotland's share of incidental assets belonging to it. A fair share is not a currency union.

It therefore simply does not follow that if the UK says no to a currency union that therefore Scotland should not take its fair share of liabilities. Whether or not a currency union exists is a question of sovereignty and consent of sovereign states. Consent is not a fungible good.

The gilts question is a bit of a red herring. Gilts are merely a mechanism whereby the UK government borrow money. Taking over liability for some of the gilts would merely be a practical mechanism whereby Scotland takes on some of the debt.

No. This is wrong. For really simple reasons. At the very heart of the risk, and therefore the premium, on borrowing, is the identity, the creditworthiness, of a borrower and the terms under which liability is accepted by the debtors. If Scotland takes a proportion of the gilts then the debtor's identity fundamentally changes. No longer are holders entitled to payment by the whole of the UK, they instead become entitled to payment by only one part of it. This is basic shit. Joint and several liability is a thing that alters the credit relationship. A bank would always rather it were able to enforce a debt against as many people as possible. They would rather, for example, give a loan for £1000 to two people jointly and severally guaranteed rather than two £500 loans to each individual. If one of the creditors defaults, they can still get all their money back off the other one because of the cautionary obligations that are inherent in that. If they are split into two separate loans, that's not the case.

This is specifically why the UK government undertook to honour all of the gilts in full. It knows that the markets consider an rUK, even without Scotland, as a more credible and viable debtor in respect of amounts falling due for repayment in the future, by dint of the fact that it is much larger, has a track record of repayment and the like. It knows that the uncertainty associated with what would happen to the gilts had the potential to damage the confidence of buyers of UK gilts, and so said that they would honour them in full, meaning that the markets would lend to them more cheaply than they otherwise would have done.

The salient point, however, is that a new bilateral debt obligation is the normal and more straightforward mechanism by which liabilities are apportioned in a secession event. It has the advantage of providing better security to creditors, protects the creditworthiness of the continuator state, and gives a clear and simple debt obligation for the secessionist state through which it can demonstrate to international bond markets that it is creditworthy and that therefore they should buy the gilts they issue for themselves from the point of independence.

The wider point about no currency union is what happens to the £ if the positive Scottish balance of payments after factoring in oil is removed from the Sterling zone? A collapse in the value of Sterling is in nobody's interest, most especially the City of London which is what the UK governments whole economic policy is about.

The Sterling won't collapse if you take out oil revenues from the balance of payments. That is just hyperbolic scaremongering. It would be marginally weaker, but it is worth pointing out that oil revenue accounts for a much much smaller percentage of the UK economy than it does the Scottish one.

[Confidemus]

Sorry I didn't respond earlier. I was on a train and Scotrail's wi-fi isn't the best...

First of all - "Nawbags". Seriously? Whoever posted that should grow up.

Secondly, you are not listening or debating if, every time someone tells you why they are voting No, you bring out a pre-prepared argument based on assertion and opinion and which those who read this sub forum regularly will have heard 200 times. It doesn't make it more convincing if you repeat it a lot or write in caps lock, by the way.

Anyone posting their own reasons for voting No in here (even where it doesn't criticize Yes) is immediately rounded upon by 5 or 6 of the regular Yes posters, all posting the same tired "yeah, but..." responses.

Almost as if the responses to No posters were co-ordinated.

If you want to know why we are Better Together, why don't you look up the BT website?

It's very informative.

I particularly agree with the references there to sharing a strong pound in the Union.

I fear, however, that it might be the case that you don't actually want to hear the case for the Union because you have already made your mind up and you were just looking for a disagreement so you could treat us instead, yet again, to your own opinion.

What a p***kly, defensive response. Whole lot of anger there. Wow.

3. International law clearly provides that Scotland would assume an equitable share of liabilities.

Thanks. Without a whole load of waffle, could you SPECIFICALLY link to or provide a quote showing the particular piece of International Law you refer to when you say we would assume an equitable share of the debt.

[welshbairn]

Ireland was required to undertake a pecuniary obligation to contribute towards the UK Treasury when it seceded in lieu of debts accumulated in consequence of its being part of that state previously. When it reneged on that agreement, the UK implemented trade sanctions against it.

Required by whom? This just looks like a tiff between two nations, and both sides taking unilateral action against the other. Where does international law come into it?

[DeeTillEhDeh]

Pretty much everything that you posted there is utter bollocks

Well done

Deluded.

[DeeTillEhDeh]

If thats in reply to my post then thats just poor. Saying that my post is poor and then coming out with the view that because I 'believe' (not sure about that but anyway) a different point of view is 'pathetic'.

Ignore him Chomp - he's playing pass the brain cell with Parp.

[DeeTillEhDeh]

Why would Scotland have a tarnished reputation from agreeing with the UK govs position that they are the continuing state?

They are the ones playing hardball here.

Let them sink. You think investors will give a shit?

Independent Scotland. A debt free, resource rich, export economy....what a gamble!

You truly are an economic illiterate if you think financial markets would happily let iScotland walk away from its share of the debt.

[DeeTillEhDeh]

Chomp - you will notice the NCC tactic of attacking any poster who makes even the most reasonable assertion they don't like.

[DeeTillEhDeh]

Sorry I didn't respond earlier. I was on a train and Scotrail's wi-fi isn't the best...

First of all - "Nawbags". Seriously? Whoever posted that should grow up.

Secondly, you are not listening or debating if, every time someone tells you why they are voting No, you bring out a pre-prepared argument based on assertion and opinion and which those who read this sub forum regularly will have heard 200 times. It doesn't make it more convincing if you repeat it a lot or write in caps lock, by the way.

Anyone posting their own reasons for voting No in here (even where it doesn't criticize Yes) is immediately rounded upon by 5 or 6 of the regular Yes posters, all posting the same tired "yeah, but..." responses.

Almost as if the responses to No posters were co-ordinated.

If you want to know why we are Better Together, why don't you look up the BT website?

It's very informative.

I particularly agree with the references there to sharing a strong pound in the Union.

I fear, however, that it might be the case that you don't actually want to hear the case for the Union because you have already made your mind up and you were just looking for a disagreement so you could treat us instead, yet again, to your own opinion.

They are coordinated - the brain cell is getting passed around them.

[H_B]

The clown bar really has been raised in the last few weeks.

The traditional morons have been added to by the likes of wirez and possibly the dumbest of all - the Haiku creature.

They make Parp look... well, still stupid, but almost. Nah, he's still a moron.

[Baxter Parp]

You truly are an economic illiterate if you think financial markets would happily let iScotland walk away from its share of the debt.

We don't have a share of the debt, it's all the UKs. Legally. If we take a share it'll be through a negotiated process.