Britain and Scotland disagree over Scottish Currency in an Independent Scotland

Posted by PITHOCRATES - February 16th, 2014

Week in Review

The Eurozone was a grand idea to make an economic zone that could compete against the United States.  A United States of Europe, if you will.  But the Eurozone has suffered a sovereign debt crisis that was unavoidable.  As many analysts have identified the problem causing the Eurozone all its sovereign debt woes.  The lack of a political union.

The solution they say is for member states to give up some of their sovereignty and allow a Eurozone government have more control.  Like the United States of America has.  Which means putting even stricter controls on member states when it comes to their spending.  Which, in turn, would limit their deficits.  And their borrowing needs.  Which brought on the sovereign debt crisis in the first place.  Excessive spending beyond their ability to pay for with taxes.  Normally not a problem for other countries when another country spends itself into oblivion.  Unless, of course, there is a currency union with that country.  Which makes their problems your problems.  Problems that are impossible to solve without a political union.

The Eurozone sovereign debt crisis illustrates that a currency union without a political union will not work.  Which makes the movement for Scottish independence very interesting (see Britain warns Scotland: Forget the pound if you walk away by Belinda Goldsmith, Reuters, posted 2/13/2014 on Yahoo! News).

Britain warned Scotland on Thursday it would have to give up the pound if Scots voted to end the 307-year-old union with England, declaring the currency could not be divided up “as if it were a CD collection” after a messy divorce…

The message was aimed at undermining the economic case for independence and one of the Scottish National Party’s (SNP) key proposals – that an independent Scotland would keep the pound…

The debate has intensified in recent weeks with Bank of England chief Mark Carney cautioning that a currency union would entail a surrender of some sovereignty…

The SNP [Scottish National Party] has indicated that if London prevented a currency union, an independent Scotland could refuse to take on a share of the UK’s 1.2 trillion pounds ($1.99 trillion) of government debt which Britain has promised to honor…

Osborne said the nationalist threat to walk away from its share of UK debt would mean punitively high interest rates for an independent Scotland and was an “empty threat”.

“In that scenario, international lenders would look at Scotland and see a fledgling country whose only credit history was one gigantic default,” Osborne said.

Currently there is a political union between Scotland and England.  The United Kingdom (UK).  And Scottish independence would go contrary to what some analysts say is needed to save the Eurozone.  Political unity.  The problem in the Eurozone is that no one nation wants to give up any of their sovereignty and have some distant power tell them what they can and cannot do.  The way some in Scotland feel about London.  That distant power that governs the United Kingdom.

The British pound is one of the world’s strongest currencies.  A product of the powers in London.  Because they have political control across the UK.  If they lose their political control over Scotland will it damage the British pound?  If the Eurozone is any measure of a currency union without a political union, yes.  So it will be interesting to see what happens between these two great nations.  Whose people made the world a better place.  People like the great Scotsman Adam Smith.  And the great Englishman John Locke.  To name just two.  So whatever happens let’s hope it’s in the best interest of both countries.  For countries everywhere enjoying economic freedom and human rights can thank these two countries for their contributions to the British Empire.  Which helped spread the best of Western Civilization around the world from the United States to Canada to Australia to Hong Kong.  And beyond.

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The Scottish National Party is talking about Independence from the United Kingdom

Posted by PITHOCRATES - January 8th, 2012

Week in Review

Scotland is part of the United Kingdom.  It has been for some 300 years.  But that may change (see UK to say if Scots’ independence vote result binding by Adrian Croft posted 1/8/2012 on Reuters).

The pro-independence Scottish National Party (SNP) won a majority in Scotland’s devolved parliament in an election last May – 304 years after the English and Scottish parliaments were united – and pledged to hold a referendum on independence within five years.

Some great people came from Scotland.  And great thinking.  Which greatly influenced and shaped the United States.  Just look at some of these Scots.  Adam Smith who influenced modern politics and economics.  Robert Dinwiddie, Lieutenant-Governor of Virginia, who helped a young George Washington to prominence.   James Watt who improved the steam engine that launched the Industrial Revolution.  And Andrew Carnegie who’s steel empire built America.  To name just a few.

That said independence may not be in Scotland’s best interest.  As the Eurozone clearly demonstrates.  An economic union does not work without a political union.  The point of the Eurozone was to produce a large economic zone.  Like the United States.  Which has survived for 235 years and counting.  Whereas the Eurozone is barely 12 years old and desperately struggling to survive.  In large part because there is no political union.

Economically speaking, being part of the United Kingdom will probably benefit Scots better than independence.  At least, based on what’s happening in the Eurozone.

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