Wednesday, 12 February 2014

No more banging my head against a brick wall

The London media and the BBC are trailing Osbourne's speech tomorrow as the end of any chance of a Sterling currency union on Scottish independence.

Over on the Guardian thread this story is collecting sequential sneering posts about how the 'Sweaty Jocks' are being put in their place and any attempts to suggest maybe it is Osbourne who is the one in trouble because without a currency union Sterling is in the thick and steaming, losing over 25% of its foreign currency earnings, falls on arrogantly deaf ears. Pointing out the many tens of billions of pounds in different taxes Sterling will no longer see hide nor hair of, falls into a black hole, so convinced are Guardian's punters that Sterling can not fail. It is not so much they do not want to see, it is simply they can not see; so wrapped up in their self certain arrogance and ignorance.

The English of London and the SE do not wish to comprehend just what a tightrope they are walking, just how close to another City of London financial crash the UK is currently running and how the lack of a currency union will rapidly tip the rUK into collapse and with it Sterling. The talk is how England will not miss Scotland and that the loss of over 10% of GDP along with 25% of foreign exchange earnings will have no impact on London. No one has told them about the UK Treasury analysis on the impact of the ending of the currency union:
  • A rapidly devaluing pound Sterling
  • Increase in interest charges on rUK debt
  • Run on Sterling as a reserve currency
  • A support or bail out package being required from the IMF to deal with core and unsustainable rUK government debt
The City of London knows the high risk the failure to agree a currency union brings, they made it clear in the FT article reviewing the IFS report of an independent Scotland's economy which in most major findings reflects the McCrone Report of 1974. Nothing has changed. Scotland can afford its welfare and health spend with ease, a free Scottish currency will rise in value against Sterling, the Scottish current account will quickly have a surplus, even taking on the 10% of the UK's debt burden, the Scottish economy will have amongst the lowest GDP to debt ratios in Europe. The figures in the IFS report roll on and on demonstrating just how strong an independent Scotland's economy is and how affordable current, fiscal, public service drawings down will be.

The City of London is saying to the world markets:
  • There are few sizable risks in an independent Scotland's economy
  • We believe a currency union is in the best interests of Sterling
Yet we are being lead to believe an Oxford History Graduate, a man who has never done a day's hard work in his life, knows better than the world of finance, his career as a politician is highly dependent on, and will categorically paint himself and rUK into a corner by stating a categorical 'No' to a currency union. Even the Gideot must know that such a categorical statement will begin a major shift away from Sterling as folk with massive Sterling holdings get out while the going's good leaving a hollowed out and almost valueless currency behind them. Osbourne's stance of 'No to a currency union' will turn the rUK after a 'yes vote on the 18th of September into a Sterling currency train crash of Wiemar or Mugabwe size proportions with hyper-inflation to go along with a rapidly devaluing currency. In this situation the only salvation for Sterling will be an IMF take over of the Bank of England and a move to meet Euro entry requirements for a battered and weakened Sterling.

The Tories must have a death wish if they really think this is not the most likely outcome. Cameron the man who killed the UK Union and Osbourne the Chancellor who killed Sterling all because they thought themselves superior to the 'Sweaty Jocks' and could teach us a lesson. Ultimately this line of action could end the Tory Party itself as it rips itself to bits in the aftermath of a loss in May 2015 and the humiliations heaped on it by Cameron and Osbourne.

If you hear a low rumble, that will be the sound of 400 years of Tory Grandees beginning to spin in their graves. Time to give up banging my head against a brick wall of Better Together ignorance and indifference masquerading as London media comment and just relax and watch this particular foundation-less wall collapse of its own accord, pushed over by its own over eager support, on top of themselves.


  1. Thanks Peter.
    I wonder why Osborne has decided to make this statement now?
    Maybe their polling data is showing a big shift to Yes and they are trying to stop this momentum.
    Some Scots will be frightened by this but most,I suspect,will not take kindly to being bullied by an unelected Tory minister.
    Osborne has only highlighted the lack of accountability Westminster has to Scotland and how worried they are about their future prospects as an English state.
    They are sticking to the story that the UK will continue after independence and that for them,nothing will change,at least,that is the public message for the Daily Mail readers.

  2. The "Edinburgh Agreement" only applies to Scotland :(