CLPete wrote:Trigger_Andy wrote:Why would someone lend money to someone who has defaulted on debt in the past, to put it simply.
Scotland would not be defaulting on its loan though. If Scotland does not get a share of the financial assets then it would be under no obligation to share the debt either. The debit is not owned by Scotland it is owned and guaranteed by the Consolidated Fund ( the Treasury).
I think the below article is the most balanced Ive seen and basically says nobody knows,lol.
There is very little mention of what Scotland would be entitled to either, ie Armed forces and Gold for an example. If Westminster refuse to asset share then why would Scotland only accept the bad parts of the deal?
http://www.telegraph.co.uk/news/uknews/ ... debts.html
Hi Andy,
I did see that article (& the other coverage) at the time.
I did think it was a shame that an attempt by the current UK as a whole to reassure investors that the money that they were lending to the “whole” as it were would be paid back, no matter the outcome (& thus ensuring that the “whole” could continue to borrow and function as a sovereign state) was used as a political tool.
The downsides of the treasury not taking that action would not only have impacted on the rUK but on Scotland – in real time, not after the vote. Simply put, they had no choice to say what they did, and it was poor of Mr Salmond to use it as a political tool (as he’d have paid the price along with the rest of us in an economic crisis had it not been done).
Trigger_Andy wrote:… Scotland would not be defaulting on its loan though. If Scotland does not get a share of the financial assets then it would be under no obligation to share the debt either. The debit is not owned by Scotland it is owned and guaranteed by the Consolidated Fund ( the Treasury).
…
Scotland does own the debt in so far as Scotland owns a share of the Consolidated Fund (The Treasury) along with the rUK. We are all jointly the backers of this debt (when it was taken out)
As I said earlier, if Scotland becomes a Sovereign State (a separate nation), it doesn’t
have to listen to anyone else.
An extreme example of that policy is North Korea – it listens to no-one, but still exists and functions (after a fashion).
However, the point I was trying to make is that debts are run up currently as a union.
Rather like a marriage. If one partner in the marriage happens to say “I’ll pay back the cash, no matter what happens to the marriage” (so as to obtain good rates on credit etc for them both), it doesn’t follow that the debt is in the name of that person only. Both could be on the paperwork as an “entity”.
“Scotland” as an independent sovereign state doesn’t exist at the moment, so can’t default on a loan – as it can’t have one. However, it is part of a union that has taken on the debt (for better or worse).
It could say “debt isn’t my issue”. Of course, how the international markets take that is up for debate. My own opinion is “not well”.
I think the issue of shared assets and debt are not linked, in terms of international finance. What does a large cash-rich bank care about the negotiations in terms of who owns how much of British Rail, for example? All they will care about is “will I get paid back”.
And, why wouldn’t Scotland get a share of the assets? It should be due their fair share, after all. This would of course include things right down to the local park bins. After all, they are owned by a local authority which forms part of a political unit with ownership ultimately ending in the hands of the UK as it stands at the moment.
I think three issues are getting muddled together here (in my opinion only, of course!).
1. Assets – I feel should be shared (but the exact formula for sharing will be fun! Rarely in a divorce does one party calculate their share in such a way that
reduces their share!)
2. Debt – An independent Scotland
could walk away (as I’ve discussed above), but I don’t think this is practical for
either party, not just “rUK would go broke if we walk away”.
3. Currency Union – I don’t feel this is an automatic outcome or even a “right” of a separation.
Simply put, point one is a “right” for Scotland, Point Two is a commercial reality, and Point Three something that
could be negotiated but isn’t a right.
Sorry for the long post – I do get carried away sometimes!
