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

[Baxter Parp]

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

Something the likes of H_B and Reynard, et al would never do.

Fucksake.

[DeeTillEhDeh]

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.

There is a fifth dimension beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man's fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call the Parpian Zone.

[strichener]

Those variables in the case of the kilogram are constant

Read that back to yourself and when you comprehend the idiocy of what you are posting then feel free to post again.

[AUFC90]

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.

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.

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 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.

All that wind and pish when you could've just said " there isn't any law".

[AUFC90]

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

Perhaps you could show us a relevant law then ? Maybe even a precedent that a non successor state not taking on any debt has been looked down upon by the markets ? I won't get my hopes up.

[H_B]

Maybe even a precedent that a non successor state not taking on any debt has been looked down upon by the markets ?

There isn't one because no seceding state has ever done this.

Because it's an absolutely insane thing to attempt.

It's a laughable threat, which everyone knows, including the Scottish government.

[DeeTillEhDeh]

Perhaps you could show us a relevant law then ? Maybe even a precedent that a non successor state not taking on any debt has been looked down upon by the markets ? I won't get my hopes up.

You need to ask Ad Lib about laws.

I made no mention of laws - if iScotland tried to walk away from the debt it would be treated like a pariah state by the financial markets.

[AUFC90]

You need to ask Ad Lib about laws.

I made no mention of laws - if iScotland tried to walk away from the debt it would be treated like a pariah state by the financial markets.

Do you have any precedents or examples that have made you come to such a conclusion ?

Seems like you've just read someone else's opinion unless you have reasons.

[DeeTillEhDeh]

Do you have any precedents or examples that have made you come to such a conclusion ?

Seems like you've just read someone else's opinion unless you have reasons.

A degree in economics and teaching economics for the past 20 years. There are no examples of it happening because the consequences of doing so are dire - it would be the equivalent of a bankrupt trying to get credit - he could get it but would have to pay exorbitant rates of interest to do so.

The financial markets are the ones who buy UK gilts/bonds - renege on the debt but expect the same financial market to buy iScotland gilts/bonds? They won't unless there is a premium ie a higher return on borrowing.

[strichener]

A degree in economics and teaching economics for the past 20 years. There are no examples of it happening because the consequences of doing so are dire - it would be the equivalent of a bankrupt trying to get credit - he could get it but would have to pay exorbitant rates of interest to do so.

The financial markets are the ones who buy UK gilts/bonds - renege on the debt but expect the same financial market to buy iScotland gilts/bonds? They won't unless there is a premium ie a higher return on borrowing.

So with your degree in economics, can you show how this would be to the detriment of Scotland? Given Scotland's annual borrowing requirements and typical interest rates for defaulters (why not use Greece as an example) then subtract the savings made on rUK debt and what position would we be in economically?

This higher interest rate claim isn't all that it is cracked up to be.

[Tonsilitis]

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.

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.

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 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.

1) International law is a hazy subject and what you are referring to are international conventions. There is something called the Vienna Convention setting down guidelines for what happens on secession but not all countries, including the UK are party to it. The clue though is in the title - "Convention" There are, however, international norms in these situations and what they talk about is an "equitable" division of of both assets and liabilities. These though are far from firm as you describe and every situation is different - the closest example I can think of might have been Quebec had they voted yes. Peaceful splits are far and few between. All that Scotland has to down is be seen to take a reasonable position to satisfy international law and where there are genuine disputes no other country is going to intervene. The issue is more one of perceptions and how international money markets will see things.

I also accept that a more likely problem would be rUK throwing their toys out and taking measures like voting against Scottish EU membership and spiteful nature of what we have seen so far from Westminster suggests that is a possibility. I also accept that negotiations are likely to be complex and there are numerous areas of doubt eg:

• The value of UK assets and attaching liabilities in relation Scotlands geography e.g. what liabilities does the UK have in relation to North Sea investments?
• What happens to rUKs costs in relation to the split which they would not have otherwise had without it such as relocating Trident or setting up Government departments currently based in Scotland?

I don't see any of the above as a good reason not to vote for Independence, given the medium/longer and even possibly some short term benefits.

2) I am a chartered accountant specialising in insolvency and so I am more aware of the meaning of joint and several liability than most. I was not implying that Scotland would physically take liability for UK gilts by formal assignation, merely that we would acknowledge our liability to the rUK to pay a share of these. Gilts are simply a method whereby Governments borrow money and insofar as they therefore comprise part of the UK's overall borrowing, we would take an equitable share.

You talk about risk though and I fail to see why a country with the resources we would have and with possibly a current account surplus, would not command a good credit rating. Both Standard and Poors and Moody's say Scotland would merit an "invest" rating - S & P rating us higher than the present UK and Moody's just slightly below.

3) I am not talking about taking just Oil out of the UK balance of payments rather the total of Scottish exports. I accept that we have a trade deficit in terms our trade with rUK but most economists seem to believe we would have an overall current account surplus when oil is factored in. If we would have a current account surplus, but a deficit on trade with rUK, it follows that we would have a large surplus on "foreign" trade. if you take that out of rUK, there would be an increase in their deficit, more than you estimate. The precise figures are hard to establish because of UK methods of accounting e.g. the continental shelf is treated as a separate UK region and so Scotland presently "exports" services to the North Sea but "imports" oil.

[Baxter Parp]

There is a fifth dimension beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man's fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call the Parpian Zone.

Answer was there none.

[Baxter Parp]

There isn't one because no seceding state has ever done this.

Because it's an absolutely insane thing to attempt.

It's a laughable threat, which everyone knows, including the Scottish government.

"When the Soviet Union broke up, Whitehall officials argued long and hard about how best to deal with the USSR's international debt. It was not fair to put the whole Soviet burden on Russia. On the other hand, the hassle involved in trying to share it out among the 15 republics would be horrible, plus Russia seemed more likely do pay back the debt. Eventually Russia did take on the whole debt, and in August 2006 finally paid it all off -- an impressive achievement. This simplification of the problem made it much easier for the other new countries to launch themselves on international financial markets and set up their own new currencies."

http://www.thecommentator.com/article/910/scottish_independence_consider_the_break_up_of_the_ussr_and_yugoslavia_for_some_lessons

Hmmmm.

[Baxter Parp]

A degree in economics and teaching economics for the past 20 years. There are no examples of it happening because the consequences of doing so are dire - it would be the equivalent of a bankrupt trying to get credit - he could get it but would have to pay exorbitant rates of interest to do so.

The financial markets are the ones who buy UK gilts/bonds - renege on the debt but expect the same financial market to buy iScotland gilts/bonds? They won't unless there is a premium ie a higher return on borrowing.

For the nth time, we can't renege on debt we aren't responsible for.

[AUFC90]

A degree in economics and teaching economics for the past 20 years. There are no examples of it happening because the consequences of doing so are dire - it would be the equivalent of a bankrupt trying to get credit - he could get it but would have to pay exorbitant rates of interest to do so.

The financial markets are the ones who buy UK gilts/bonds - renege on the debt but expect the same financial market to buy iScotland gilts/bonds? They won't unless there is a premium ie a higher return on borrowing.

The debt isn't being reneged on though. The only way the debt will be defaulted on is if the UK defaults. Money markets only care about money getting paid. So again... Examples or precedents would be nice on how debt that isn't being reneged can adversely affect a credit rating.

I'd go as far to say that a debt free Scotland would be very attractive to lenders.

[DeeTillEhDeh]

For the nth time, we can't renege on debt we aren't responsible for.

Explain how we are not responsible for it?

Like it or not the debt was built up in the name of the whole if the UK not the rUK.

Equally, if there is a share of debt to be taken then there will be a share of assets to be taken too.

[AUFC90]

For the nth time, we can't renege on debt we aren't responsible for.

And that's the crux. No amount of pish or spin can change that.

[DeeTillEhDeh]

The debt isn't being reneged on though. The only way the debt will be defaulted on is if the UK defaults. Money markets only care about money getting paid. So again... Examples or precedents would be nice on how debt that isn't being reneged can adversely affect a credit rating.

I'd go as far to say that a debt free Scotland would be very attractive to lenders.

My brother should gave tried that with his first wife - it's her debt debt not mine.

[DeeTillEhDeh]

The NCC in full fuqwit mode today.

[AUFC90]

My brother should gave tried that with his first wife - it's her debt debt not mine.

Yep. As I thought. You have no answers. Game set and match.