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Sunday, 10 August 2014

If Scots Vote NO, Blame Alex Salmond.

There were numerous critics, many of them quite vociferous, of the early part of the opening ceremony of the Commonwealth Games, which was likened to a massive pantomime highlighted by "that kiss" by John Barrowman. The critics were summarily dismissed by the self-styled intelligentsia, who informed us they had missed the whole point of the exercise, which was to parody all the cliches associated with tartanalia, Brigadoon et al and it really was Glasgow humour at its best - edgy, off the wall and far too intelligent for ordinary plebs to take in. If a sizeable section of the Scottish public didn't understand the message being broadcast, what hope did the millions in the Commonwealth have, who had never heard of Brigadoon, had never visited Scotland and barely understood the accent, never mind the humour?

A similar approach is being used by SNP and Yes supporters who try to defend the obsession with a currency union that is on the point of destroying the independence campaign. With a degree in the subject, thirteen years of teaching and lecturing in it and thirty three years in the financial services industry, handling millions of other people's money, I do have some notion of what economics is about, what a currency union is, the advantages and disadvantages of currency unions, how currencies are managed and mismanaged and the various options an independent Scotland would have in handling its currency, in the event of a Yes vote. Despite all of that, I have to admit to being totally unable to understand Salmond's obsession with a currency union, because explanation there has been none.

In my 35 years inside the SNP, I never used the ad hominem approach in debate, it was never my style to attack individuals and since I left the party in December 1990 I have followed that course, despite being a regular critic of what I see as the party's lack of commitment to independence. Unfortunately, I am now going to make an exception to that rule and state quite bluntly, if Scots vote No in September, the person who will carry the blame will be Alex Salmond whose arrogance has now become unbearable. On the question of currency, under his leadership, the SNP has been up more blind alleys than the three blind mice, and no longer has any credibility left. Salmond claimed the pound sterling "was a millstone round our neck", wrote to Fred Goodwin to congratulate him on the takeover of ABN AMRO when wiser heads in the financial world were advising against it, and insisted Scotland should join the euro long after it was obvious to the world at large, let alone those dealing in finance, that the single currency was a disaster for half its members. Now he demands the rUK grant Scotland a currency union and London continues to control the Scottish economy, and we all agree to call it independence, more of which below.

Several of my critics on here tell me I fail to see the "wider picture", that the SNP has devised a ploy so clever, that the whole argument of demanding a currency union is simply a ploy that will leave the government of the rUK floundering in the negotiations that will follow the Yes vote. They tell me the negotiating position the SNP has devised has to remain a secret so that the government of the rUK will be caught out on the day. Of course, since it is a secret, my critics have no idea what it is, in fact, they have no idea if it actually exists, they simply claim it does. Who told them? They can't say, it is a secret, a bit like the "legal advice" that didn't exist. The problem with this scenario of course is, that now the Unionists know there is a crafty ploy to catch them off balance during negotiations, won't they be preparing for all the potential possibilities? We can't say because it is a secret. As a defense of the SNP's obsession with a currency union, it is absolute garbage and an insult to the intelligence of anyone with half a brain. It is also why Salmond's bluster and arrogance will not be enough to carry the argument. In fact, the ploy is so clever and opaque, it is likely to persuade the undecided to vote NO, caught up as they are in a maze of uncertainty.

The debate between Salmond and Darling was atrocious and there have been reams written about who "won", most of it as atrocious as the debate itself. There may be some doubt about who "won" but there is no doubt about who lost- the people of Scotland and the cause of independence. Salmond started at a disadvantage, having said for months he would debate with only the Prime Minister of the UK. On the night, he couldn't even manage the substitute, although Darling, for all the plaudits he has received, missed the golden opportunity to get the one answer to which we are all desperate to hear. So much tripe has been written and spoken about the currency union that people have lost sight of the most important question of all - INDEPENDENCE. The debate is now littered with dishonesty and distortion, none more so than in the relentless, monotonous mentions of the Fiscal Commission. This august body, with its two Nobel laureates has said a "currency union would be in the best interests of both Scotland and the rUK". The two massive caveats which accompanied that statement are NEVER quoted. They are, "in the immediate aftermath of independence" and "it will not give Scotland control of the economic levers". 

In other words, it is not independence. The Fiscal Commission had a great deal more to say on the agreements which would be necessary for a currency union to work, as I pointed out in my previous blog, "Will Scotland Be Independent In A Currency Union?" on 21/5/13, more than a year ago. One of the most important conditions was as follows, "a joint fiscal sustainability agreement is established to govern the level of borrowing and debt within the sterling zone". John Swinney, Finance Minister, is on record several times, as agreeing with the conditions laid out by the Fiscal Commission. None of this was brought up during the debate between Salmond and Darling. One can see why Salmond would want to avoid making mention of any of that at all costs, but what was Darling thinking about? Instead of hammering Salmond with, "What is your plan B Alex?" he should have said, "The Fiscal Commission laid out the following conditions for a currency union to work, conditions which your Finance Minister has accepted,
* The Bank of England will set Scotland's interest rates and control monetary policy, as it does now.
* The Bank of England will set the level of borrowing in Scotland, as it does now
* The Bank of England will set  Scotland's debt management, as it does now
* The rUK Government, as a consequence of the above, will have indirect control of Scotland's fiscal policy, as it does now.
Can you now tell this audience Mr Salmond, how, under these conditions of control of the Scottish economy, Scotland can possibly be independent, how you can fulfill the promises for change you have made, when your Scottish government will not control its own economy? How does that possibly mean independence?"

Not even the Nobel laureates would be able to answer that question and neither would Salmond.

54 comments:

  1. Jim surel you know the diffence between fical and monetary controls?

    God knows it has been explained many times.

    After independence we gain full fiscal autonomy with moentary policy being set as now by the BOE which is independent and in which we have no influence as of now. The BOE as has become blatantly obvious dances to the tune of the City and it's big banking beasts. Who themselves take their ques from what ever happens in the USA, and the EU. The EU is featuring more and more in monetary policy. Cameron knows that.

    With independence we gain FFA, Full Fiscal Autonomy, which we do not have and which Westminster are bending over backwards to stop us having. With FFA and only with FFA we can start to rebalance the Scottish economy and begin to attract immigration to Scotland of people with skills we require in that rebalancing. These very same people who will contribute to the larger tax base and increased economic activity we require to support our services. That is stated in the White Paper and is a long standing ambition. The much trumpeted race to the bottom has not taken place in the EU or the USA, both entities have dozens of various tax rates across their states. It is simply more white noise to try and keep Scotland scared and cached.

    The monetrary policy which London controls as now will be shaped as now to benefit London. Scotland will never prevent that, due to the economics of size. What FFA will allow us to do is to shape our FFA policy that will mitigate any detrimental effects of Londons monetary policy to us. It is highly unlikely that the city would be so petty as we see out politicians being as to seek to damage Scotland who is a very important trading partner. In fact they have said so.


    Jim your heart is n the right place but your continual sniping at the SNP and Alex Salmond is not helping to get the ball over the line. Once we get that Yes vote then we can go ahead and get rid of those we think are a lost cause to Scotland. We can vote for parties who put those ideas forward we find agreeable. That is the golden prize Jim. Our elections giving us the people we vote for.

    It is my belief that Alex Salmond is the best person to deliver that. I saw and you should ahve the digracefull rigging of the STV debate to cause the atmosphere thast created the sneerfest the unionst owed MSM induldged in. They had to claim Darling as winner they absolutely had to trumpete that from the roof tops. The NO camp are very worried as thye know the history. The SNP are very strong finishers and they are almost there. only a fool would bet against them. Put your shoulder to the wheel Jim and lets get this thing done, stop sniping.

    Yours sincerely Hen Broon.

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    1. Thanks for taking the time to reply Hen but I wonder if you actually read the blog before you did, particularly the part about my experience in the field of economics. I think I know the difference between fiscal and monetary policy well enough to know that with a currency union we would have nothing like the full fiscal autonomy you think is so important. I also wrote a blog in May 2013 on whether or not we would be independent in a currency union and I suggest you read that, as well as the one above, both of which quote widely from the Fiscal Commission, which states bluntly we would NOT have fiscal control. Both John Swinney and Alex Salmond claim to agree with the Commission, so they obviously don't think we would have fiscal control.

      It is 24 years since I left the SNP and this is the first time I have attacked Salmond by name, despite countless critical pieces of SNP policy. If to criticise policy is to be accused of "sniping", does that mean the party is above criticism or is it just we are not supposed to criticise, whether or not we are party members, supporters or just disagree with them? Their policy on currency union is garbage Hen and it would deny us independence, whether or not you like it being said. To me, it is more important that Scots realise there are Nationalists who do know something about how the economic system works, that are not just clones or sheep to dance to whatever tune Salmond and the SNP is playing today.

      I listened to the debate, heard what Salmond said and did not need to have the STV rig anything to know he was talking rubbish on the currency, unfortunately not for the first time. Salmond nor anything else will stop me voting Yes, but I am afraid he wil stop a great many others

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  2. I do not doubt, and would not dream of questioning, your knowledge and experience in the field of economics. It might be wise for you to extend a similar courtesy to Alex Salmond when it comes to the realm of politics - an area where understanding appears to elude you altogether and where Mr Salmond has a proven track record such as very few politicians can boast of. It may be too much to ask that you explicitly defer to the First Minister in matters of political manoeuvring, but it surely makes sense to at least avoid leaping to the conclusion that he hasn't a clue what he is doing simply because the political reasoning behind his actions is not immediately obvious to you.

    Analytical thinking requires, above all else, a readiness to question ones own assumptions and expectations. If things aren't happening the way you assumed they would or should, you should first ask yourself whether you were justified in expecting that they would happen in the way you assumed they would.

    Ask yourself if you were justified in expecting that Alex Salmond would be the one to propose the abolition of the currency union. Look at the various currency options and ask yourself, not which you prefer as an economist, but which is the easiest to defend in the political arena.

    Put away your calculator for a moment and use your imagination to reflect upon what would have been the unionist response if the Scottish Government had announced that its favoured course of action was to end the currency union and launch an independent currency. Is it not clear that such a position would have been massively more vulnerable to reasoned attack from unionists than the plan to retain the currency union as part of a negotiated deal on the sharing of assets and liabilities?

    Is it not apparent, at least to the politically aware, that the unionists have no reasonable argument against the plan to retain the currency union and share the cost of servicing debt for the simple reason that it is a perfectly reasonable plan? Is it not obvious that this inability to mount a rational argument against the Scottish Government's proposal is the reason why they have resorted to the diversionary tactic of obsessing about a "Plan B"?

    Is it not clear, on sober reflection, that Osborne and his cronies are totally unable to defend their threat to abolish the currency union? Does it not occur to you that, if unionists are unable to defend this policy, then it would have been even more difficult for Alex Salmond to do so?

    Salmond will have anticipated the objections from yourself and others in the pro-independence camp. But those objections fall over on one crucial point. Independence gives us the power to choose the currency arrangement which best suits our needs. Salmond and his team will go into negotiations following a Yes vote with and eminently reasonable proposal but with all other options open. Options being the most valuable commodity one cam have in such negotiations.

    continued/

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  3. /continued

    Salmond will also be aware that there will come a point where the threat to abolish the currency union will start to unravel. Return to the imagined scenario where it was the Scottish Government proposing to end the currency union and think about all the ways in which this would have been attacked by the unionists and British nationalist commentators in the media. At some point it will occur to somebody to challenge the British parties' threat in the same terms. Somebody will ask the awkward questions about the impact on the rUK economy of ending the currency union. Professor Anton Muscatelli has already provided some ammunition for this attack.

    If the UK Government and the British parties don't back down on this threat before the referendum then they will almost certainly do a U-turn shortly after a Yes vote. This makes them look weak and so, in political terms, makes Salmond look stronger. This matters every bit as much as the cold calculations of bean-counters.

    The Scottish Government can live with a deal to keep the currency union because they know that, as things stand, the kind of monetary constraints that might be imposed across the sterling zone by the Bank of England would be little different from those which would be imposed by an independent Scottish central bank. The BoE could not make separate and particularly onerous rules for Scotland because this, by definition would not constitute a currency union. Should such a thing be attempted, the Scottish negotiating team would be perfectly justified in claiming that this was de facto abolition of the currency union and, therefore, not acceptable as a quid pro quo for Scotland continuing to contribute to the cost of servicing UK debt.

    And even if they go into negotiations insisting that there can be no currency union, the Scottish negotiating team will have a perfectly comfortable fall-back position. Salmond will be able to say, "Well, we tried to carve out a deal that would allow us to continue contributing to the cost of servicing UK debt, but the other side simply refused to even talk about it."

    As an astute political operator, Salmond knows that proposing to retain the currency union puts him and his team in a relatively much stronger negotiating position. That's politics, not economics. I respectfully suggest that that's an area where Alex Salmond has a considerable edge over you.

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    1. Superb Peter Bell.

      Brilliant analysis .

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    2. Peter, you paid me the respect of treating the blog seriously, therefore I will pay you the same respect and give your reply the time and effort it deserves, as I believe that is the way debates about the referendum should be handled. Unfortunately, I may be tied up this afternoon for some time, therefore the reply will not come until later today, but rest assured it will come.

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    3. I look forward to your response.

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    4. So you are basically saying that rUK will completely ignore all fiscal and economic common sense and do as its told simply because Mr Salmond is so wonderful at politics?

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    5. I apologise for the delay, which I am afraid was unavoidable, but I see you have had plenty to occupy your mind. Let me say from the outset that I look at every policy issue, whether economic or political, in terms of how it impacts on independence. I will oppose any policy, economic or political, if the short or long term consequences, harm the cause of independence or hinder the setting up of the renewed independent Scottish nation state.

      History is littered with policy decisions which appear to be based on economics but which have huge political consequences and vice versa. This does not stop people from arguing as if the two operate in their own vacuum, that the application of one has no impact on, or consequence for the other. The European Economic Coal and Steel Community (ECSC) an economic measure, was set up to "control the sinews of war" and stop German aggression and ability to make war (political). The European Monetary System (EMS) leading to the Exchange Rate Mechanism (ERM) an economic tool, has been used to further political ends, viz the political unification of Europe. The rise of the Right in the EU, is a direct consequence of the mismanagement of economic policies. The opposition of the Unionists to a currency union, is a direct consequence of the EU debacle, something Alex Salmond and the SNP cannot seem to take on board. Of course they did not anticipate the success of UKIP and even contributed to it.

      In the same way, people regularly argue that monetary policy has no impact on fiscal policy, when the reality is that it is unavoidable that each will impact on the other and every sensible government will ensure that they are applied to complement each other. Despite this, Alex Salmond is on record as saying several times, that "in the modern world, fiscal policy is what is important", hence the approach of the SNP that it matters little if London continues to set Scotland's interest rates " because we will control our fiscal policy which will allow us to generate growth in our economy." In the 1980s, with Alex Salmond at its head, the '79 Group's inability to tell the difference between internationalism and supranationalism, caused them to persuade the SNP to support the EMS "in the interests of internationalism". Their economic ability was no better than than their political acumen as the system collapsed two years later. You accuse me of being unable to tell the political woods from the economic trees but I would contend that that charge is better laid at Alex Salmond's door. In all the years I have known him, there have been several examples of his inability to see the long-term and/or economic consequences of his political decisions. His support for the above are only two examples and neither his support for the euro nor his support for London's continued control of Scotland's monetary policy, do anything to further the cause of Scotland as an independent nation state. He has shown little ability to recognise the political consequences of his support for those economic policies. That assumes of course, his aim is the rebirth of the Scottish nation state.
      Continued

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    6. Continued

      That takes me to your criticism of my blog. You suggest I, "Look at the various currency options and ask myself, not which one I prefer as an economist but which is easiest to defend in the political arena." My priority is neither, but which one will further the cause of independence, an issue which you barely mention. The choice has to be a Scottish currency, which is not only the most natural choice for any state but is also easiest defended. I have hammered the issue, almost as a lone voice, for several years but in April 2013, under the auspices of Options for Scotland, I published a paper calling for a Scottish currency. Suddenly the debate opened up and in little more than a year, more and more serious economists, senior figures in the independence movement as well as political and economic commentators, found their voices and supported the idea of a Scottish currency. It is not only the natural policy position there are already examples of successful independent countries with their own currencies, which they manage very well both domestically and internationally, such as Norway, Denmark, Czech Republic, Poland etc. Only Norway has the natural resources and financial history and structure of Scotland. As the idea gathers momentum, the easier it will be seen as an acceptable alternative

      Where are the examples of the kind of currency union trumpeted by the SNP, where one so-called "independent" country has its economy controlled by its neighbour? Are you seriously suggesting the idea has been easily defended? It is the one, single issue that has caused the independence movement most difficulty because the position adopted by Alex Salmond and the SNP is both a political and economic nonsense.

      You say, "the Scottish government could live with the deal to keep the monetary union because the kind of constraints imposed by the Bank of England would be little different from those imposed by an independent Scottish central bank." Have you any idea how ludicrous that is as an argument for a currency union, although it is just part of the SNP mantra. The whole idea of independence is supposed to be to break away from the stultifying London economic polices that have held us back for generations, not to continue to watch helplessly while thousands of our people are forced to stand in line to be given second hand food? Serious economic analysis has suggested these polices will continue for some time and the SNP's currency union will force us to follow on. Of course, you also imply Alex Salmond has a hidden ace up his sleeve, which will be produced at the appropriate time, assuming he has convinced a majority of Scots to vote Yes. You may think that is being an astute political operator, but there are fewer and fewer who agree with you.

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  4. Peter: you assume that the Currency will form part of the negotiations. That would only be the case if rUK were considering a CU, but why would they? It would only be in their interest if t CU were to permanent , but the SNP have made it clear that this is not the case,hence there is no incentive for rUK to even consider a CU. My prediction would be the rUK negotitors saying "CU is not on offer,what you do about currency is your own affair, now about the debt that you intend to renege on.

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  5. None of what you say changes anything. The Scottish Government still has to go into the negotiations holding its position on currency. If the currency union is to be abolished then it must be absolutely clear to everybody that it is the UK/rUK Government that is doing this.

    You can't renege on somebody else's debt. I wonder how many times this has to be pointed out. The Scottish Government CANNOT continue to contribute to the cost of servicing the UK debt in the absence of an acceptable quid pro quo. That quid pro quo has to be stated. There are two sides to this negotiation. The UK/rUK side doesn't get to have things all its own way. The idea that they can dictate terms is nonsense.

    It probably won't come to this anyway. It is highly likely that the UK/rUK side will back down. It may well be that they can refuse a currency arrangement that is acceptable to the Scottish Government. But, by the same token, the Scottish Government can refuse a debt-sharing arrangement.

    And you can forget this nonsense about the credit rating agencies punishing Scotland for "reneging" on this mythical "fair share" of debt. They are not in the slightest bit interested in "moral obligations". They care only about legal liability. That and the fact that Scotland will be a wealthy nation free of debt.

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    1. Peter,

      Are you arguing that by "independence" the SNP only means fiscal autonomy? If so, that is an abuse of the word "independence". "Full fiscal autonomy" is merely devo-max under a different name. If this is what he means by "independence", Salmond has lied to the Scottish people. Frankly they deserve better.

      Independence means the freedom to govern your own affairs, which must include monetary policy. To that extent, the members of the Euro cannot be said to be truly independent, and neither could Scotland in a currency union with the UK. One of the things that the Euro members are belatedly beginning to grapple with now is the fact that in a currency union there cannot be full fiscal autonomy - a fact recognised by the Nobel laureates advising the Scottish government. So it is not just that Salmond has lied to the Scottish people about independence, he has lied to them about full fiscal autonomy, too. And you apparently believe his lies.

      If Scotland leaves the Union, it leaves the Union - all of it. There is no question of it "remaining" in a currency union. And as the rUK has no vote, if the result of this referendum is "YES" then the Scottish people, not the rUK, will have chosen to end the existing currency union. If a currency union were established after independence, it would be a new form of Union and both sides would have to agree to it. At the moment, the rUK - though admittedly without a popular vote - is saying pretty clearly that it does not want such a union post-independence.

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    2. By what authority do you seek to impose a rigid definition of independence? Where is it written that your absolutist notion of independence is the only valid one?

      In an interconnected world, a much more reasonable and realistic definition of independence would be the capacity to freely negotiate the terms on which a nation engages with the rest of the world. Under such a pragmatic definition, a freely negotiated currency union would not impinge on "true" independence at all.

      In your haste to attack Alex Salmond the essential difference between independence and "devo-whatever" eludes you. Under any devolution arrangement the ultimate arbiter of the form of that arrangement is the British state. British politicians sitting in Westminster will decide the terms on which Scotland engages with the world. British politicians in London will determine the powers of the Scottish Parliament.

      Only with independence can the people of Scotland exercise their rightful, sovereign authority over their own parliament. Only the people of Scotland have the right to determine the powers of the Scottish Parliament. Only independence allows them to do so.

      Only independence empowers the duly elected parliament and government of Scotland to freely negotiate the terms upon which Scotland associates with other nations.

      So, to say that independence is no different from "devo-whatever" is not only wrong, it is profoundly foolish.

      Your final paragraph is simply a restatement of the position that the UK Government and the British parties appear to be taking. Namely, that the rest of the UK (rUK) is the sole continuator state and, therefore, the only legitimate inheritor of all UK assets AND liabilities. I say that this is the line British nationalists APPEAR to be taking because they actually seem very confused about it. They want to be the sole continuator state in relation to UK assets, but when it comes to UK liabilities their enthusiasm for the idea diminishes considerably and they start to insist that Scotland is, in certain selected areas, a joint continuator state.

      Moreover, these British nationalists demand for the British state the right to be the sole arbiter of the circumstances in which Scotland must accept shared responsibility.

      This may seem to you like an acceptable way to behave, but I doubt that many dispassionate observers would agree.

      You are quite correct on one point. The UK/rUK Government is perfectly entitled to refuse to negotiate a mutually acceptable currency arrangement with Scotland. But if they insist, as you do, that Scotland has left all of the UK then it logically follows that Scotland must also have left the indebtedness of the UK.

      Like anybody else, the rUK must accept the consequences of the choices it makes. My objection to the British parties' threat to abolish the currency union is, not the fact that they have made this choice on behalf of the people of the rest of the UK, but they have done so recklessly, as a political ploy, without even considering the implications far less being open and honest with those who will be affected by the decision.

      In their arrogance, the British nationalist imagine that they can act with impunity. That is not the way the world works. The people of England will have to live with the cost of the British establishment's hubris.

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  6. I can only defer to your evidently sounder grasp of economics than myself, but the premise that somehow we can ride off into the sunset debt free with no consequences is lunacy. Just for starters

    No debt surely means no assets
    Who'll collect taxes
    Definitely no access to eu as ruk can simply veto
    The vast majority of trade from Scotland is with ruk. Just imagine the backlash

    I've always thought salmonds' no debt threat was designed to appeal to the
    Less cerebral in society but didn't possibly countenance that evidently intelligent people would swallow such palpable guff!

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    1. I got as far as the bit about taxes before I was overcome by hilarity.

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    2. Read and learn.

      http://www.newstatesman.com/politics/2014/02/flaw-osbornes-pre-emptive-strike-against-currency-union

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    3. I'm sorry but though i fully accept your supposition that we could theoretically be debt free, the realities of it are in my opinion not feasible.

      With no debt acceptance we cannot surely expect any assets can we?
      The White paper has stipulated that HMRC will be responsible for tax collection until we have the required systems in place or am i mistaken
      The UK would feel morally correct when simply vetoing any access to the EU
      I work all over the UK and most English are ambivalent as they they think we get a better deal than them and overwhelmingly they believe "go if you want but you're on your own"

      Your link to the newstatesman is in my opinion a triumph of theory over the realities of politics. The latter is the other reason we will get no currency union either as the Ruk public will not countenance it.

      I can only hope that all this is conjecture and we see through the wholly inadequate economic measures and vote no.

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    4. Peter:
      The person who wrote the New Statesman article seems blissfully unaware that independence cannot take place unless approved by the UK Parliament. e.g. There's no way that Trident will be out of Faslane before Independence day, unless iDay is in 2024.

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  7. politics of fear as usual "just emagine the backlash" awa an boil yer heid an are ye feart tae identity yersel too.?twa can play at that game.

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  8. I think its great. The curse of our now divided nation, the nationalists, arguing like cats and dogs.

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    1. While supporters of independence come from across the political spectrum and are happy to work with each other and share ideas, British nationalists must toe the propaganda line fed to them by their political masters.

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  9. Salmond is obsessed with currency union because he doesn't want idependence; he wants devo-max. But although that's what he wants he can't say so out loud without an enormous loss of faith. What he can do, however, is campaign for independence, and then hand control over the economy straight back to the UK Government.

    Why doesn't he want independence? Because, in spite of all his bluster, he prefers responsibility for the economy to rest upon the shoulders of somebody other than himself.

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    1. Complete nonsense from beginning to end.

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    2. Nonsense is it? Why else does he want to have the UK Government laying down tax and spending plans for Scotland? Because that would certainly be their price for agreeing a currency union. No way would they give a Scottish Government a blank cheque to tax and spend as it liked, whilst they were left to pick up the pieces if it got itself into a mess.

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    3. You seem to think that the British state is omnipotent while Scotland's negotiators bring nothing to the table at all. You are comically wrong, of course. But I realise the folly of trying to use reason to move a person from a position that they did not arrive at by reason. I have not the slightest doubt that you will cling to your quasi-religious beliefs regardless of what goes on in the real world.

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    4. The rUK economy is ten times the size of the Scottish economy, so who exactly is it that would be baling out whom if things went belly up?

      From Alex Salmond's point of view, having Westminster underwrite the Scottish economy post independence might make perfect sense, but, from the point of view of the UK Government, it would make no sense at all.

      Salmond could go ahead and use the pound regardless, and, without a currency union, the UK Government probably wouldn't be able to care less about that, but it would leave Scottish Banks without a lender of last resort. Should they individually decide that they wanted their activities to be underwritten by the Bank of England, then they would be invited to move south of the border, and subject themselves to UK regulation.

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    5. Peter I think you need to understand that the way the debate has gone down here in England it would now be politically impossible for a rUK Government to sell a currency union to the Electorate so Politics will be the driver in that decision and there will be no currency union.

      If Scotland votes for separation from the UK then it has to accept the logic of separation which includes separate armed forces, separate diplomatic embassies etc, and a separate currency. In return an independent Scotland would be entitled to a fair share of the military assets of the Army, Royal Navy and RAF a fair proportion of assets of the BBC, Foreign Office etc and a fair proportion of the gold and currency reserves of the Bank of England. In return Scotland would be expected to accept a fair proportion of the National Debt of the UK at the time of separation.

      If Scotland chooses to separate from the UK then it must have a separate currency, what is unfair or unreasonable about that ? The pound is not an asset it is a measure of value of the assets and even if the pound was, for the sake of the argument, an asset it is no more an asset than any any other asset of the UK so on what basis would refusal to share this one single asset of the UK justify refusing to accept responsibility for the entire share of the UK debt ?

      Finally how do you think the other states of the EU, let alone the money markets, would view the idea that Scotland could simply walk away from its share of the UK debt ? No country in the EU, especially not Spain, is going to want to create a precedent that part of an EU state can secede from a member state and can also repudiate any obligation towards the State National debt.

      I am not a supporter of the SNP but in the past I have always had a respect for Mr Salmond and regarded the aspirations of the SNP as legitimate and honourable. When I first heard on the news that the SNP had threatened to repudiate its share of the UK debt if a currency union was refused I assumed the reporter had misheard or it was a rogue SNP minister. I was therefore shocked when the threat was restated by Mr Salmond and other senior SNP ministers because it destroyed the respect that I did have for him and the SNP up to that point. I consider the suggestion fundamentally dishonourable and unworthy of Scotland and the Scottish nation.

      Frankly I am astonished that the SNP have backed themselves into this corner over the currency, all they had to do was to state that there would be a separate Scottish pound but for practical reasons they would seek to keep the value of the Scottish pound at par 1 - 1 with the UK pound sterling. That would have been a perfectly rational policy and had they announced that then the Independence debate could have concentrated on the other real issues.

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    6. Prior to the massive British nationalist-inspired propaganda campaign in the mainstream media polls showed voters in England to be massively in favour of retaining the currency union after what you tellingly insist on calling "separation".

      It is only British nationalists who see independence as isolation. From my perspective as one who seeks the restoration of Scotland's rightful constitutional status, independence is the capacity to freely negotiate the terms on which a nation engages with the world.

      Only British nationalists think of independence as a severing of all relationships and associations. More thoughtful people, aware of the nature of the world in which we live, regard independence as a redefining and reforming of relationships and associations.

      It is only British nationalists who talk of putting up barriers between Scotland and England. Those who approach the issue with less emotion and more rationality see no reason for such things.

      Only British nationalists think of the debate over Scotland's constitutional future as a destructive, divisive process. On the Yes side, we view it a creative process that has brought people together in common engagement with a worthy cause in a way that has seldom been seen before. We are seeking to create a better politics, a better society and, whether you accept it or not, a better relationship with our neighbours to the south.

      In all of this, currency is a trivial issue. It is pitiful to see the Pavlovian response to the British nationalist propaganda campaign. Scotland has, and will continue to have, a strong, diverse economy. Scotland has, and will continue to have, a fully functional currency - no matter how much spittle-flecked bluster we get from unionists between now and the 18 September.

      The sky is not going to fall.

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    8. Peter I notice you didn't reply to any of my substantive points in your reply.

      I use the word "separation" because Scotland is not a colony and is not a conquered territory it is a country in Union with others seeking to end that Union and therefore the word separation is in my view more appropriate than Independence.

      As for "spittle-flecked bluster" I think Peter that you ought to read your own writings more before levelling that accusation at others

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  10. You may wish to consider changing the subtitle of your blog to "A discussion of the case for independence and an examination of the flaws in the SNP's argument for separation from the UK."

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    1. No thanks, the subtitle is fine. Despite my criticism of the SNP, there are far, far more flaws in the arguments by the Unionists, many of which I have written about over the years.

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  11. Peter can I pick up on one of the other points that you made above since it appears in one form or another to have been repeated ad-infinitum by SNP supporters. You said

    "You can't renege on somebody else's debt. I wonder how many times this has to be pointed out......And you can forget this nonsense about the credit rating agencies punishing Scotland for "reneging" on this mythical "fair share" of debt. They are not in the slightest bit interested in "moral obligations". They care only about legal liability. That and the fact that Scotland will be a wealthy nation free of debt."

    Sorry it is also Scotlands debt because Scotland was a part of the UK when the debt was incurred. Let me try and a simple comparison to ordinary business

    "A,B, C, D form a partnership OK Plumbers. Eventually A decides to leave the partnership but the others carry on the partnership under the same name. The partnership OK Plumbers, minus A, continue to be liable for all the debts of the partnership but A is liable to pay OK Plumbers his fair share of the debts incurred before he left the partnership.

    Scotland would be in the same situation towards the UK. If it reneged then not merely would it be acting dishonourably, and that would certainly affect its international credit rating, but Scotland would also undoubtedly be pursued for the money though every available national and international Court. Whilst that was going on the International money lenders would have to factor into their rates the fact that Scotland had this potential legal liability hanging over its head which would mean higher Interest rates as well as potential trade sanctions by the UK and a veto of Scotlands application to join the EU.

    The suggestion that Scotland could simply walk away "scot free" from its share of UK debt is simply legally and morally indefensible

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    1. There is no doubt Neil, Scotland has a share of the UK's debt but it is far less than is generally recognised because of the gross underspend of government spending in Scotland over generations, not just years. This is something of which the UK government will be reminded, if not by the SNP during the early negotiations, certainly by succeeding Scottish governments and the Scottish people.

      Scotland has been shortchanged for generations, as the McCrone Report highlighted in 1975, although the fact was kept secret from the Scotish people for over thirty years, until the SNP unearthed it under Freedom of Information a few years ago. Billions, which should have been spent in Scotland, as its population share, were spent in London and the South East of England or in re-structuring the English economy, while the problems associated with the need for modernisation in Scotland, were virtually ignored. That is well documented.

      Another area, which receives great attention in England, is defence spending, of which Scotland has never had its fair share. Between 2007-2008 and 2011-2012 alone, Scotland received £1.9 billion less than its population share of spending and between 1997 and 2010 there was a loss of 10,500 jobs, although Hammond and other Defence Ministers like to threaten us with defence cuts. What the hell do they think we have been having?

      The Strategic Defence & Security Review showed that between 2002 and 2008, Scotland suffered a £5.6 billion underspend and a 38% population shortfall. South East of England got 172% population share, South West got 247% population share and those two areas, together with London, get 50% of Defence spending but have only 37% of the UK population. Exclude London and the other two regions take up 45% of total spending with only 22.1% of total UK population. Once those figures, as well as many others, are taken into account, we can then start talking about Scotland's share of debt.

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    2. The British Treasury has stated that, in the circumstance where rUk is the sole continuator state, Scotland has no liability for UK debt. It further stated that any arrangement by which Scotland continued to contribute to the cost of servicing UK debt would have to be subject to negotiation. Here in the real world, it is the UK Government that has walked away from any debt-sharing agreement by refusing to take part in the negotiations which the British Treasury said would be required.

      You really need to start questioning the stuff you are being fed by the anti-independence mob and their cronies in the mainstream media.

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    3. Jim I agree that the exact share of debt for Scotland would be a matter for negotiation however I question whether we can realistically do so by arguing over who has paid or contributed the most in the course of over 300 years, I can understand your argument but others will put forward alternative figures saying that Scotland has received more than other parts of the UK, it is frankly an unwinnable argument on both sides going all the way back to 1707.

      The only realistic and fair basis for apportionment would appear to be on a per capita basis dependent on population size.

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    4. Peter the UK Treasury has not stated that Scotland has no liability for UK debt what it has said is that it has guaranteed that the UK will repay all the existing National Debt to the creditors of the UK ie it is not going to say "Oh you'll have to ask Scotland to pay the last 10% of your loan"

      However a separate Scottish state if one is formed will have a legal and moral obligation to pay to the UK a fair percentage of the costs of the UK debt at the date of separation. The UK Government has not "walked away" from any debt sharing arrangement it has merely said that in the event of Scottish separation the rUK will not enter into a Currency Union with Scotland.

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    5. Neil I am not suggesting that we go back 300 years, England could not afford it. But seriously, there are well documented shortfalls over more recent years, including the few examples I listed above, that could very easily be calculated, with the McCrone report being a useful starting point. I don't think Scotland can afford to let this matter drop, particularly in light of the way we have been treated over the years, as if we make no contribution to the UK and live off continuous subsidy from England. I realise it is not the view taken by a great many English people, the vast majority of whom is by and large totally indifferent, which is in itself, very insulting. However, it is very much the attitude of the London Metropolitan elite, who are very much the ones who make the important decisions. It is high time the Kelvin McKenzies of this world were made to realise just who contributes what, in this very unequal so-called Union. Now, would be a very good time to start.

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    6. Pete, I am more than a little disappointed you have chosen to ignore my response to your criticisms of my blog. I have given several examples of Alex Salmond's failure to recognise or anticipate the consequences of his political decisions, particularly anent the SNP's various changes in policy on currency. The argument that"when circumstances change I change my mind" simply won't wash, because there have been no changes in overall aims and objectives, particularly where the Common Market, European Economic Community and European Union is concerned. I am particularly interested why the change from, "a millstone round our necks" to the euro to "it's our pound and we're keeping it" has become such a deal breaker.

      I am even more interested to hear from you particularly, since you appear to be party to Alex Salmond's innermost political thoughts and reasoning, HOW a currency union will give Scotland control of the economic levers which the SNP, quite rightly, claims to be absolutely necessary in order to make the economic changes needed to create the "fairer, juster country" we all want to see. The Fiscal Commission states it won't give Scotland the economic controls it needs; numerous economists, who have campaigned for independence their whole lives, say it won't. Will you explain why Alex Salmond says it will and much more importantly, explain HOW it will?

      That was the original point of my blog, which you criticised and to which criticism I replied. Have you more to add by way of explanation, or is this the discussion at at end?

      NB. At this point I am generally reminded that Alex Salmond has taken the SNP much further than ever I did. This is perfectly true but, ignoring the part played by proportional representation etc. the electoral success of the SNP is NOT the same as support for independence. True, we have a referendum, which we have yet to win, BUT what is on offer by the SNP, is still not independence and as long as a currency union is the deal breaker that Salmond has made it, it never will be. The question in the referendum, is the one thing that makes the whole exercise worthwhile, "Do you believe Scotland should be an independent country?" is the only honest part of the entire charade.

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    7. I am not ignoring your response. I have simply been too busy to afford it the time and attention it deserves.

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    8. Jim I have never been one of those who see Scots as subsidised by the UK but similarly I am not one of those who considers Scotland has been unfairly treated I think in overall terms it breaks even. I made the point about 300 years because otherwise how do you decide who has gained or lost the most ? Picking any date other than 1707 is ultimately arbitrary and can be questioned as to "why that date". Per capita is the fairest way to allocate the debt and frankly the only practical way however I accept that we will never agree on the point.

      Other than that I certainly agree with your general blog, I am flabergasted that this issue of the currency has been allowed to become the decisive issue it now is. Independence should surely imply an independent currency and if Alex Salmond has simply put that proposal forward the only issue would have been transitional arrangements which would not be too difficult to organise.

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  12. Neil

    I have the advantage of having read the British Treasury's note. For your benefit I shall reproduce the detail here.

    "The Treasury has today set out detail on government debt in the event of Scottish independence. The technical note makes clear that the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government. An independent Scottish state would become responsible for a fair and proportionate share of the UK’s current liabilities.

    An entirely separate contract between the continuing UK Government and an independent Scottish state’s Government would need to be established. The respective shares of debt and the terms of repayment would be subject to negotiation."

    The first paragraph clearly states that the rUK government will be responsible for all UK debt. There can be no legal obligation where there is no legal liability.

    The first paragraph also asserts , in apparent contradiction of the initial statement, that Scotland would become responsible for a share of UK debt. Those of us who are not beset by a quasi-religious belief in the omniscient righteousness of the British state would immediately ask by what authority the British Treasury makes such an assertion. The British Treasury does not make decisions on behalf of the governments of any sovereign nations other than the UK. After independence, Scotland will no longer be part of the UK.

    The second paragraph brings some clarity. It makes clear that any arrangement under which Scotland would assume a share of the cost of servicing UK debt must be subject to negotiation. That would be the negotiations which the UK Government has effectively scuppered. In the absence of a contractual arrangement, there can be neither legal nor moral obligation on Scotland.

    I suspect that you have fallen for yet more unionist propaganda. The reality which this propaganda seeks to conceal is that the Scottish Government IS NOT THREATENING DEFAULT. As has been explained, there can be no default where there is no liability. The truth is that the Scottish Government has declared itself willing and eager to take on a share of the cost of servicing UK debt AS PART OF THE VERY AGREEMENT WHICH THE BRITISH TREASURY SAYS IS REQUIRED. It is the UK Government which is blocking such an agreement, NOT THE SCOTTISH GOVERNMENT.

    Given this reality, it is difficult to understand by what perversion of logic the Scottish Government can be held to be blameworthy or morally derelict.

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    1. Peter With respect you are clearly not understanding the issue.

      The rUk has the legal obligation to repay the entire National debt to the creditors who hold the debt but an Independent Scotland would have a corresponding legal obligation to to pay a reasonable ie negotiated amount to the rUK as payment for Scotlands proportion of the National debt.

      In any event the issue is academic since in order for Scotland to become legally independent it will be necessary for the UK Parliament to repeal the Act of Union and that will not be done unless there is an agreement for Scotland to pay its fair share of the National debt. Personally I do not see the problem arising despite Mr Salmonds rather unsubtle attempt at blackmail because unlike Mr Salmond I believe in the basic decency honesty and sense of honour of the Scottish people. I do not believe that any Scottish government would be allowed by its electorate to act in so dishonourable and foolish a way as to attempt to escape from its moral as well as legal obligations

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    2. The dishonourable folly of the UK Government, however, is something we must simply accept as part of the natural order of things. The notion of British exceptionalism is one of the more pernicious and distasteful aspects of British nationalism. As is the kind of doublethink which allows British nationalists to be so comfortable with turning reality on its head. You seem blissfully oblivious to the fact that it is the Scottish Government which is actively seeking an agreement under which Scotland would continue to contribute towards the cost of servicing UK debt. Just as you are you have elided from your mind the fact that it is the UK Government and the British parties which are refusing to negotiate such an agreement and belabouring us with all manner of threats.

      Have you heard of the fictional planet Htrea? A wee lierary allusion would be apt at this point.

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  13. Neil, unfortunately I will be unavailable for next two weeks. Will have to take this up with you then. Until then Best Wishes

    Jim

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    1. Best Wishes to you too Jim its been fascinating to read the Blog. One thing we can both agree on is that whichever side of the argument we are the vote in September involves a fundamental decision of principle for Scotland and for the rest of the UK

      Personally I hope for a No vote but whichever way it goes I want for a decisive vote which settles the issue. The worst thing would be a very close vote which doesn't really settle anything

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    2. A No vote of any size can never "settle the issue". For reasons which wouldn't need to be explained to anybody who actually understands the nature of Scotland's independence movement. Or even the nature of politics.

      Think about it for a moment. Supposing there is a No vote, something close to half those who vote will have voted for independence. And surveys tell us that somewhere between two-thirds and three-quarters of the electorate are dissatisfied with the current constitutional arrangements.

      I realise that it is in the tradition of British politics that the "losers" should simply be totally discounted and treated with contempt. But that significant minority - if not more - of the population is not going to simply disappear if the vote is No. Nor are the masses who have now become engaged by the independence movement going to go back to their couches and their TVs for the convenience of the British state.

      A No vote will merely delay the inevitable. Unfortunately, it will delay the inevitable until a time when circumstances may be somewhat less propitious than they are at the moment. It will also delay independence long enough for a groundswell of bitterness and resentment to grow among No voters as they realise just how much they have been lied to and deceived by British nationalists. They are going to be very angry.

      I put this very point to a No campaigner I encountered lying to passers-by in the street. A councillor for one of the British parties - Tory or LibDem, it really doesn't matter which. I pointed out to this individual that, regardless how the vote goes, he and the other politicians who have been part of the British nationalist propaganda effort will be facing some serious questions from voters. Questions for which they will have no satisfactory answers. They will be exposed as liars. This was obviously something this person had not considered. The realisation caused them some evident discomfort.

      If there is a No vote, the campaign for a new referendum begins immediately. And some of the loudest voices demanding that new referendum will be those who were duped into voting No on 18 September 2014.

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    3. Thank you Peter for a most revealing insight. Clearly for you respect for the "Sovereign will of the Scottish people" is dependent on the Scottish people agreeing with you,

      Saying that those who vote differently to you have been "duped" and those on the opposing side are "liars" shows a worryingly contemptuous attitude both to democracy and the intelligence of your fellow citizens.

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    4. That unionists are lying to the people is Scotland is a matter of established fact, not mere prejudice. Just the other day, Conservative MSP John Scott was on BBC Radio Scotland’s “Big Debate” telling people that independence would result in people in Scotland being denied access to blood supplies, transplant organs and other medical facilities in the rest of the UK. He told this lie knowing that such claims have been refuted by NHS Blood And Transplant and every other organisation involved in the four independent health services in these islands.

      This is but one example. I could easily list numerous other lies that have been told, and continue to be told, by the anti-independence mob. We know as absolute fact, for instance, that the UK Government lied about the cost of setting up new administrative infrastructure after independence. We know this because they admitted as much.

      It is disappointing that you seem happy to turn a blind eye to such blatant dishonesty. If people are voting No on the basis of such lies then, by definition, they have been duped.

      You might want to stop and examine the essence of your argument here. You are arguing that the decisions made by one generation should be absolutely biding on all future generations. You are arguing that no account must be taken of changing circumstances.

      Taken to its logical conclusion, your argument implies that we should only ever have one election. That's not my idea of democracy.

      No matter how fervently British nationalists might wish it were not so, the fundamental democratic right of self-determination is not snuffed out by a No vote. I have not the slightest doubt that British nationalist will do everything in their power to try and prevent the people of Scotland having a say on the constitutional question - just as they have in the past. Their anti-democratic efforts were thwarted by the will of the people then, and will be again.

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    5. But according to you these "lies" as you describe them have been shown to be untrue and have been refuted so therefore people have not been duped by them.

      You say that a particular minister who talks about blood supplies
      after separation has been refuted by the separate NHS authorities in the rest of the UK but are happy to ignore the fact that Alex Salmonds suggestion that there will be a Currency Union after a Yes vote has been refuted by the 3 main parties in the rest of the

      You say "I have not the slightest doubt that British nationalist will do everything in their power to try and prevent the people of Scotland having a say on the constitutional question - just as they have in the past. " which is a ridiculous thing to say when the Scottish people are in the throws of a referendum about their Constitutional future. Nobody has prevented this referendum so your argument really does ignore reality

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    6. Did you not bother to read my comment? These lies are still being promulgated by British nationalists. They are still purveying these lies through the mainstream media. The rebuttals and refutations, on the other hand, are rarely if ever mentioned by the mainstream media. So people are still being lied to. They are still being duped. And you continue to condone this dishonesty.

      There is, as I suspect you know full well, no comparison with the Scottish Government's position on currency. Because it is a position, not an assertion. Stating as a considered opinion that retaining the currency union is the best option and that this fact is all but certain to be recognised following a Yes vote cannot possibly be a lie because it is not a claim of fact. That it is misrepresented as such is yet another example of the dishonesty of the British nationalist campaign to deny the sovereignty of Scotland's people.

      When Alistair Darling states as fact that an independent Scotland would have been liable for the full cost of the bank bail-out, that is is a lie. It is a lie because it is untrue and he knows it to be untrue. But, being a British nationalist, he believes that it is perfectly acceptable to lie in defence of the ruling elites of the British state.

      All of these lies will be fully exposed. How do you imagine No voters will feel when, following a Yes vote, the British parties do a U-turn on currency union? Are they not going to feel that they have been duped?

      How do you imagine No voters will feel if they prevail only to find that the British parties renege on their jam tomorrow promises of "more powers"? Will they not feel duped?

      British nationalist politicians are sowing the wind and shall reap the whirlwind of anger and resentment. They either haven't thought it through, or they assume that they will be in a position to crush the upsurge of powerful feelings that will ensue when people realise the extent to which they have been deceived. As I say, it is disenchanted No voters who will lead demands for a new referendum - quite possibly in the next parliament. That referendum will result in a landslide for independence.

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    7. Peter I have read all your comments before commenting myself merely because I disagree with you does not mean I have not read and thought about what you say.

      However I feel this conversation has now reached its natural end. So far as I can see according to you everyone who disagrees with you and the Yes campaign is either a liar or a fool which is hardly a basis for any form of rational discussion

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    8. Still you choose to turn a blind eye to the PROVEN dishonesty of the anti-independence mob. It is almost as if you are happy to be lied to. And content that the people of Scotland should be deceived.

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