Scot co.: should RBS stay Scottish?

Thanks to the recent Oscars of World Travelling, I'm writing this in a fairly non-de script café/pub off the rue of the Royal Mile, enjoying a coffee and a flattened panini. What could be more authentically Scottish? Alas, the napkins are also emblazoned with ‘Gracious por su vistia’.

I suppose this is how many Scots feel when they travel to Edinburgh and find that while the country had, at one point, five banks to England’s one and the drivers of its industrial revolution, the UK’s slide into decline allows one to imagine the British economy's bar code being pulled back and we find that those banks are now owned out of Westminster and not in dreary Edinburgh.

It was even attested by Ed Miliband, like carrying on the escalator of nostalgic references, with his sickening sanctimonious rhetoric of a ‘One Britain’ policy, a diminutive of Blair’s parliamentary reference in 1998’s election victory. The leader of the Labour Party acts without the grit and teeth of the Disraeli’s use of the same phrase more than hundred years ago; the very word ‘One’ meant something very different at the time. Yet Ed Miliband and Balls are attempting to woe the Scottish public over to their side, not just to Unionism, but an unwieldy self-effacing financial masochism – and any exertion on Labour’s part to spread its financial credentials should be met with an equal degree of scepticism that their incompetence led to the financial mess that became so concentrated that we can see this in specific banks to this day. Business Secretary and Liberal-Democrat leader hopeful, Vince Cable, is yearning for RBS to become the UK’s ‘Public Investment Bank’ and help small businesses in the North, is admirable considering it assumes that it is no longer a Scottish bank.

The fact remains that even after independence for Scotland billions of cuts must come, and there’s a certain degree of comic credulity about Scottish Labour leader Johann Lamont phony outrage that it must come to a proposal to cut major public services or at the cost of totally defacing any hope of an independent financial system – tied forever to Westminister. It is, in fact, an argument that follows that we must depend on an English model of cost cutting and financial stimulus if we simply want to return to the days where cutting cost was a message in of itself. Rather than deregulation, because many English policies the Scots will be done and away with them, or competition by reducing the corporate tax threshold.

As a Labour lapdog from Westminster for a year, it makes sense that taking any of their advice would lead to large-scale ruin of Scotland’s economy – now built on entirely different lines and one more floor up the escalator we find – like it had been when RBS had at one point been a stalwart of the Scottish economy – that back when Edinburgh-educated Palmer was Prime Minister, Scottish and the bank was owned and operated by those who knew had to run it best, by Scots and regulated in Scotland.

Even by one perfunctory it became impossible to have a ‘Scottish bank’, under the conditions of autonomy currently drawn up by a White Paper, delivered from Shadow Foreign Secretary Douglas Alexander, recently. The liabilities and assets will be set aside, but disproportionately put into an independent Scotland’s banking balance sheet, apparently.

For one, the liabilities are currently in the Bank of England’s balance sheet – so unless we are also ready to design a Scottish central bank with an ample and ready use of a united securities market where all bank portfolios from Cardiff to Clydebank are held – then there really is no point of having an independent Scottish financial industry in the first place after 2016. All the liabilities and assets will be so scattered as to simply be the same as the present – and the will BoE hold on to it. Well, Scottish banks provide unique privileges, i.e. printing different looking money and the ‘region’ has but one representative on the executive board of the BoE. If we follow this logic, an independent central bank in Scotland would lose a representative, despite the fact that the liabilities and assets will be cut up so that the two will be tied together indefinitely. In fact, such an arrangement has never happened in history where two central banks hold the debt of a nationalized company even if it no longer belongs or benefits one or the other.

Why? RBS is not a bank and never was one of the flag baring Scottish banks. It has a large headquarters in Edinburgh. Great – following this logic a number of English companies that would relocate to Scotland due to a lower expected corporate tax would automatically become ‘Scottish enterprises’ as well. We can conclude that if anything like the previous plans proposed by Labour are carried out it will not just be Scotland which will be the ‘sick man’ of Europe but also England as well. A distinction between assets and liabilities, once stripped out of the English economy and moved to Scotland, must be done in a way that doesn’t doom one to its economic demise as soon as its new flag goes up in 2016.

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