Thursday, September 18, 2014

I See Scotland’s Economy Collapsing And Scotsmen Cleaning The Streets Of London!



Scotland is heading for economic suicide! Why in Pete’s sake do they want to secede from the U.K? Those beating the drums of secession are doing the Scots a big disfavour and here’s why? Please note I have nothing against the Scots but just feel or know that a secession will be the undoing of them.


The Scottish economy is so intertwined with that of England or the U.K that any secession will be extremely painful.


Let me steal a verse in the bible where the Apostle Paul says the body is harmoniously joined together. The leg cannot say I do not need the arm neither can the eye say I do not need the nose. I know it goes something like that.


That’s the way it is with Scotland. It’s harmoniously joined together with the U.K.  It’s like the fingers saying it does not need the arm! What you’ll get is not secession but an amputation! The rest of the U.K will eventually get over the loss of its limb but we all know what happens to the limb at the end! I am not saying this to belittle the Scots but just pointing out the folly of a separation.


California which is America’s largest economy in terms of State will face dire economic circumstances were it to decide to go independent. It may be the 10th largest economy in the world but will be futile and an act of self-destruction were it to consider a split from the United States. Why is Scotland any difference?


It is estimated that up to a million Scottish jobs are dependent on the U.K economy and up to 300,000 Scots live in London!  It is estimated up to a million Scots live in England. If we add Wales and Northern Ireland, Scots may top a million. That about 20% of their population! It’s a jaw dropping figure.


The Separatist keeps shouting that Scotland has oil. My answer to that is big deal. The U.K earns more from taxing petrol and diesel than from selling crude oil stupid. An independent Scotland I must admit will do wonders for the oil industry there but oil isn’t everything.


First independence will lead to a loss of confidence in the Scottish economy. There will be capital flight and speculators betting against the Scottish economy. Most experienced traders are moved by cold facts and not emotional political sentiments like those of the Separatists. If speculators could take down the pound in 1992, what will happen to Scotland economy which is a minnow? 


Yes, Scotland may not initially have its own currency but what of the bond market? Investors will demand higher rates and when these higher rates begin to sip into the economy, businesses will begin to collapse and mortgage payments will become dire and there will be grumblings in the streets. 


The Scots can argue that sweet crude oil will rescues them from my apocalyptic ramblings. They should perish the thought. 


Government spending gained from the oil windfall may not boost demand as expected. Be reminded that Scotland is a small country and with it a small economy. The spending will simply be used to buy imported wares and not locally made products. That has been the experience of Israel. 


Also government spending will increase by at least 6% of GDP. As an independent state, it can no longer take a hitch on the larger U.K state any longer.


It will have to get its own army. NATO rules demand that its members spend 2% of their national GDP on defense. The desire to massively improve the NHS will probably lead to another increase of 2% of GDP. Cost of setting up government offices in Edinburgh, embassies worldwide and so on will cost an additional 2% of GDP.  That’s 6% of GDP. 


Were the Scottish economy to tank as I expect, a budget deficit equivalent to at least 6% of GDP will appear before considering the increased spending stated above. The tanking will be due to a loss of confidence and businesses fleeing to the England. To add to this, if unemployment begins to soar, there will be a flood of Scots flooding England seeking work. This will be humiliating especially for those screaming independence.


It’s simply passion blinding these separatists and the people of Scotland will take a beating for this. 

Anyway, September 19 is coming! Let’s see which way the cookie rumbles as we watch it unfold in 3D.

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