"Scotland is not flourishing. We have the lowest long-term growth in the EU and that is because we do not have the financial flexibility to give Scotland a
competitive edge. Ireland, Norway and Iceland - our three neighbours and all in
the top six wealthiest in the world - are no more talented or entrepreneurial,
they have no advantage in terms of skills, geography or people. They do have the
ability to choose their own direction and work to their strengths - an option
denied Scotland while London has remote control of the main economic levers."
So with Iceland's economy on the verge of possible bankruptcy, Ireland's shored up with Government guarantees, sees HBOS and RBS both facing tough times about to be bailed out along with other UK Banks by the UK Chancellor. Alex Salmond, that expert had earlier claimed that £100 million would have been ordered by him, if independent to shore up the Bank of Scotland. Yet both the Scottish Banks (and partner), plus Lloyds-TSB and Barclays are apparently receiving a cash injection of only half that, or shared out about one eighth each of what Alex thought was necessary.
Now I know we are facing a really tough time in the financial sector but you have to wonder how much tougher it may have been for Scotland had we followed an Icelandic example. Alex Salmond has pointed out that they worked to their strengths which no doubt at the time he would have looked to their financial sector, something that Scotland can be similarly proud of, as one of those areas that was having far reaching effects.
How far would a SNP bail out for both the Bank of Scotland and then less than a fortnight later the RBS have affected a Scottish exchequer? Would after an audacious bid to save the BoS first enabled a Scottish Chancellor to then be able to save RBS as it floundered this week?
We are living in tough times, when the financial sector is learning tough lessons. Even old boys from that world like Alex Salmond must be learning tough lessons. It is a time that calls for calm minds, tough decisions and cool judgement. Yesterday while meeting with other European Finance Ministers Alistair Darling became aware that a crisis was about to hit back home. He said he'd been working with the Bank of England to try and aid the markets as best they could, before a decision had to be made for more direct action. It isn't just a matter or awaiting the last moment it was seeing if the independence of the Banks could be maintained long enough for them to see out this storm, but the waves are about to swamp so the lifeboat is about to be launched from Number 11 Downing Street.
10 comments:
Have you heard many Icelanders begging to be re-admitted to a Greater Scandinavia yet?
Well apparentlythe governments of Sweden, Norway and Denmark would back Iceland in an emergency so it looks like negotiations have been going on.
The banking bailout is a headline £50 billion (not million) which is many, many, many times more than an independent Scotland could afford. HBOS and RBS would simply be too big too save.
With Salmond Scotland would be even worse off than Iceland.
In exchange for a surrender of sovereignty? Hardly.
I had a similar thought the other day - http://loveandgarbage.livejournal.com/298368.html . Salmond's comparisons with Iceland are all there in speeches and comments made on the Scottish Executive website - and continued to be made long after Channel 4 news (in March) and the Economist (in April) warned that Iceland's economy was about to go belly up.
If this is the model we were due to follow where would we be now?
Isn't it odd that an economic downturn in small, independent Iceland means that Scotland should stay in the Union, yet an economic downturn in large, centralised Britain also means that Scotland should stay in the Union?
The present economic difficulties are a result of poor financial management and regulation. In Iceland, people wish their government had acted sooner to prevent the problem arising. But at least their government can now react exclusively in the best interests of Iceland. Scotland's government can't, because it's hands are tied by people for whom Scotland's best interests inevitably come way down the list of priorities. Still no sign of Icelanders wanting to loose their political independence.
Let's see Iceland on the verge of Bankruptcy up to 4 times the GDP of the country on the line. UK worse case scenario even covering some deposits outwith their national banking system only one quarter of GDP. That is a 16 times more secure than Iceland is right now.
I'll guess I'll have to get the figure on how a independent Scotland following the example of Iceland would fair, but I doubt it would be as well as the UK though it could be as bad as the Icelanders.
Agentmancuso
Speaking as an Englishman I am actually fairly agnostic about the possibility of an independent Scotland. Certainly the UK has had seriously dysfunctional governments for many decades now so it's easy to see why many Scots may see bailing out as a good plan.
Many in the North of England are not far behind but handicapped by lack of a historical identity/legacy.
The point about HBOS and RBS for me is that they would simply be too big to reside safely in an independent Scotland.
I don't follow Scottish politics but I would hazard a guess (and it is only a guess) that Salmond has been going around boasting of Edinburgh's financial muscle. (Am I right?) If so he is sadly mistaken.
For what it's worth, and despite Lloyds proposed marriage to HBOS, I think one of the things to come out of this should be a limit on the size of banks worldwide.
Gordon,
absolutely right - monopolies are as much a danger in banking as anywhere else. Also, fractional reserve banking is I guess in practice too well established to be abolished altogether, but restrictions should be put in place to limit the percentage of assets beyond which banks can lend.
Stephen,
so Iceland is in 16 times more of mess than us and still nobody there thinks it a good reason to give up the power to run their own affairs. The lumpen unionist argument that Scotland is too poor/stupid/incompetent to run it's own affairs is wearying - surely the Liberal Democrats have more to offer than that?
Now, now Agent M I did not say poor, stupid or incompotent. However, the last two seem to apply to most countries financial sectors along with over reaching.
However, as far as Iceland maybe just not yet but people are getting angrier with actions in the past by the ruling Independence Party. Whose rule since 1991 the Nats were looking to base Scotland's own independence on.
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