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I suppose and in often strange ways, we sometimes discover “the fatal flaw” in most ideas. Having started my commercial life as a designer concerned with engineering and production, there was a very amusing story about a “new mousetrap”, I will not bore you with the tale but the ‘punch line’ was quite simple:

The basic concept behind the design was obviously flawed and when called upon to deal with this, the designer instead of having a total rethink, just “improved” upon or refined his own flawed original concept. To engineers, this was all very amusing because it was something that we had to deal with on a daily basis and knew that it was far too easy to be led astray. I have an awful feeling that Scottish independence is the same…

It is an Oddity…

Although it was started by an article in the Telegraph I suddenly realised and one might well question just why it took me so long to do so, the actual currency that an independent Scotland might use after separating from the Union was most likely the “rock” on which the whole idea would flounder.

What the UK has and has had for centuries is a common currency and a transfer union where money flows from the prosperous to the less prosperous parts of the UK without any political issue or a voice raised over it. If the Eurozone had this and money flowed from Germany (the EU equivalent to SE England), to the peripheral States there would not be a Eurozone Crisis today.

An independent Scotland that retained Sterling would have its monetary policy being set in London but without the Scottish Parliament having any influence on that policy in anyway. The alternative for an independent Scotland might be for them to join the Euro , if accepted which would be even more restrictive. Has anyone in the SNP ever thought just why the UK hasn’t and won’t join the Euro ?

Control of your own money is crucial to being an independent nation, this Alex Salmond chap has a curious concept of what independence means, it would seem. Politicians are really strange creatures it seems to me…

The Euro Crisis

The following is an extract from an article written by Jeremy Warner in the Telegraph on the current Euro Crisis and the obduracy of EU politicians in refusing to face the realities.

http://www.telegraph.co.uk/finance/comment/jeremy-warner/9018651/When-oh-when-will-Europe-face-the-truth.html

“As Citigroup’s Michael Saunders points out, the UK taxpayer is far less exposed than his French counterparts both to the risk of having to backstop banks against sovereign risk and having to bail out other sovereigns.

The UK has also committed itself to a detailed and multi-faceted deficit reduction programme which has been pursuing, thus far at least, with military discipline. There is every chance that this will continue.

It is sometimes said that in studying democratic models to see which one they might eventually want to adopt, the Chinese have identified Britain as the most compatible because it allows for still fairly effective executive decision making from the centre.

There is no way of determining the veracity of this story; on democracy more so than anything, the Chinese leadership remains utterly inscrutable. Yet it’s got a ring of truth about it. Compared to Europe, or even the US, Britain has shown itself to be almost totalitarian in its decisiveness.”

What Is It About ?

It is in this context that whilst I think it totally up to the Scottish people to decide whether they want full independence or not, this question over their continued use of Sterling does raise an interesting issue which of itself, calls into question just how “Independent” a Scottish Parliament might be regardless of what currency they used. This question in my mind, was raised by the following article in the Telegraph: http://www.telegraph.co.uk/news/uknews/scotland/9016159/Independent-Scotland-could-keep-pound.html

I am no expert in this but I suspect that the “currency union” would end with the political union between England and Scotland and because as the Euro has demonstrated only too well, a currency union without a political union is a nonsense.

Oil and gas is priced in $ and the Scots will have no influence over the price of the $, all monetary policy is set in Washington and wholly in US interests. If Scotland were to use Sterling, then monetary policy will still be set in London in the interests of the United Kingdom and having lost their seat at the table, Edinburgh will have no influence over that either. Joining the Euro, if allowed by the EU, is likely to be only on fully integrated terms with budgets needing prior approval in Brussels so Scotland will have no influence over the Euro either.

This means that interest rates and monetary policy will not be in the hands of the Scottish Parliament, Brussels will be controlling Scottish money supply and interest rates which as a “peripheral EU country” may means that like Ireland, Portugal, Greece, Spain and Italy in the past, “what suits Germany” in these areas, may well not suit Scotland. If the motivation is “Freedom from being in servitude to London” as the reason for wanting full independence then all that is on offer by Mr Salmond is servitude to Brussels which I suspect is not a better deal for Scotland and the Scottish people.