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| Sir James said Scotland could continue to use the pound as legal tender inside the country if necessary, whatever London decides Photo: PA |
Yes campaign’s economist plots way ahead if Westminster refuses to share sterling
By Ambrose Evans-Pritchard
9:24PM BST 24 Aug 2014
An independent Scotland should walk away from its share of the UK’s national debt if Westminster continues to refuse a sterling union, one of the Yes campaign’s leading economic gurus has advised.
“Britain inherits the debt,” said Sir James Mirrlees, a Nobel Prize-winning economist and a prestigious figure on Scotland’s Council of Economic Advisers.
[WHAT DEBT? Its the debt of the City of London! They have been foreclosed upon! -AK]
“It is hard to see how Scotland can take on the debt unless there is a full currency union,” he told The Telegraph. “This is implied by the hard-line taken by Westminster. It is Scotland’s bargaining position.”
Crawford Beveridge, chairman of Scotland’s Fiscal Commission Working Group, warned last week that any such move would be “morally difficult” [Hahaha! Morally difficult? Don't you like how bankers speak of morals when it comes to debt? Hahaha!] and likely deemed a “default” by credit ratings agencies.
Not even the Baltic states entirely repudiated Soviet-era debts in the early 1990s, even though the Soviet occupation of their countries was never recognised by the West. It would be hard for Scotland to invoke the “doctrine of odious debts” – where debts run up by despotic regimes can legitimately be reneged on – under international law. [Note: the One People's Public Trust has already foreclosed on the creditors for operating systems of slavery. This would make them a despotic regime, since they are posing as the people's governments - via the Bank of England. There is no debt owed, except by the creditors to humanity! -AK] The Czech and Slovak republics divided the Czechoslovak debt on a pro-rata basis after their “velvet divorce”.
Sir James said Scotland could continue to use the pound as legal tender inside the country if necessary, whatever London decides. “No country has stopped its currency from being circulated in another state that I know of,” he said.
He suggested that Edinburgh could equally issue a Scottish pound that is pegged to sterling and backed by a currency board along the lines of Hong Kong’s model. But, in his opinion, neither option, if forced upon Scotland, would entail any obligation to take on UK debt.
Sir James said this clash can be avoided. He believes the common sense option for all involved is to agree on a co-operative union. The British themselves would enjoy a “non trivial” benefit from being able to use their own coin in Scotland. “The easiest transition would be to keep using sterling for five to 10 years,” he said.
All three parties in Westminster say they will oppose a currency union after independence, insisting that the eurozone crisis has revealed the perils of trying to share a currency with separate fiscal policies. Sir James played a central role in First Minister Alex Salmond’s Fiscal Commission earlier this year in drafting plans for a future currency. A former Cambridge professor, he is now professor-at-large at the Chinese University of Hong Kong.
He said the eurozone currency experiment has gone badly wrong – and has previously called for the weaker Club Med countries [I wonder if Club Med objects to be used as adjective of poor countries? I believe that name is a trade mark is it not? -AK] to withdraw – but insists that a UK-Scottish currency union would be a different animal. “The risks have been greatly exaggerated,” he said, speaking at the Nobel laureates’ gathering in Lindau, Germany.
Sir James said the English and Scottish economies are closely interwoven, like Germany and The Netherlands. There is little danger of an “asymmetric shock” for Scotland alone, though he acknowledged that declining oil revenues are a “little worrying” and might force fiscal cuts. However, he appeared to suggest that this would be outweighed by the benefits of eliminating the entire public debt, freeing up interest payments.
The National Institute of Economic and Social Research estimates Scotland’s share of the debt to be £143bn. The UK authorities have announced that they would stand behind these liabilities in order to reassure markets – and will even stand behind RBS and Scottish-based banks temporarily – but this is intended to be a holding action, not a settlement. [The UK Government own 64% of RBS - of course they will offer to stand behind RBS...Its "Scottish" in name only... - AK]
“It is hard to see how Scotland can take on the debt unless there is a full currency union,” he told The Telegraph. “This is implied by the hard-line taken by Westminster. It is Scotland’s bargaining position.”
Crawford Beveridge, chairman of Scotland’s Fiscal Commission Working Group, warned last week that any such move would be “morally difficult” [Hahaha! Morally difficult? Don't you like how bankers speak of morals when it comes to debt? Hahaha!] and likely deemed a “default” by credit ratings agencies.
Not even the Baltic states entirely repudiated Soviet-era debts in the early 1990s, even though the Soviet occupation of their countries was never recognised by the West. It would be hard for Scotland to invoke the “doctrine of odious debts” – where debts run up by despotic regimes can legitimately be reneged on – under international law. [Note: the One People's Public Trust has already foreclosed on the creditors for operating systems of slavery. This would make them a despotic regime, since they are posing as the people's governments - via the Bank of England. There is no debt owed, except by the creditors to humanity! -AK] The Czech and Slovak republics divided the Czechoslovak debt on a pro-rata basis after their “velvet divorce”.
Sir James said Scotland could continue to use the pound as legal tender inside the country if necessary, whatever London decides. “No country has stopped its currency from being circulated in another state that I know of,” he said.
He suggested that Edinburgh could equally issue a Scottish pound that is pegged to sterling and backed by a currency board along the lines of Hong Kong’s model. But, in his opinion, neither option, if forced upon Scotland, would entail any obligation to take on UK debt.
Sir James said this clash can be avoided. He believes the common sense option for all involved is to agree on a co-operative union. The British themselves would enjoy a “non trivial” benefit from being able to use their own coin in Scotland. “The easiest transition would be to keep using sterling for five to 10 years,” he said.
All three parties in Westminster say they will oppose a currency union after independence, insisting that the eurozone crisis has revealed the perils of trying to share a currency with separate fiscal policies. Sir James played a central role in First Minister Alex Salmond’s Fiscal Commission earlier this year in drafting plans for a future currency. A former Cambridge professor, he is now professor-at-large at the Chinese University of Hong Kong.
He said the eurozone currency experiment has gone badly wrong – and has previously called for the weaker Club Med countries [I wonder if Club Med objects to be used as adjective of poor countries? I believe that name is a trade mark is it not? -AK] to withdraw – but insists that a UK-Scottish currency union would be a different animal. “The risks have been greatly exaggerated,” he said, speaking at the Nobel laureates’ gathering in Lindau, Germany.
Sir James said the English and Scottish economies are closely interwoven, like Germany and The Netherlands. There is little danger of an “asymmetric shock” for Scotland alone, though he acknowledged that declining oil revenues are a “little worrying” and might force fiscal cuts. However, he appeared to suggest that this would be outweighed by the benefits of eliminating the entire public debt, freeing up interest payments.
The National Institute of Economic and Social Research estimates Scotland’s share of the debt to be £143bn. The UK authorities have announced that they would stand behind these liabilities in order to reassure markets – and will even stand behind RBS and Scottish-based banks temporarily – but this is intended to be a holding action, not a settlement. [The UK Government own 64% of RBS - of course they will offer to stand behind RBS...Its "Scottish" in name only... - AK]
Debt repudiation would cause the UK’s gross debt ratio to jump by seven points to 98pc of GDP on the Eurostat gauge. Critics say it would be an inglorious way for Scotland to begin its life as a sovereign nation, poisoning relations with its chief economic partner. [No more inglorious than the way they lost sovereignty! -AK]
Use of sterling in the face of British opposition would leave Scotland without a lender-of-last resort in a crisis. Sir James said this is manageable if bank support is restricted to high street operations, excluding the global arm of banks such as RBS.
Sir James has equally radical views on taxation, though they are not specifically aimed at Scotland. He proposes “negative taxation” or subsidies for the West’s poorest workers to shield them from low-wage competition from Asia. He also endorses a top marginal tax rate of 100pc for “very high incomes” [ahem---why would anyone work at all -- even tennis players when 100% of their income is taken? Is Sir James brain dead? - AK] on the grounds that some people will continue to work regardless, specifically citing tennis players. This may come as a surprise to Scottish tennis star Andy Murray.
