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The EU membership will most likely come with a change of currency, which means leaving the BoE for the ECB. Given the ECB's track record and it's inability to d

by atmosx 10y ago

The EU membership will most likely come with a change of currency, which means leaving the BoE for the ECB. Given the ECB's track record and it's inability to do what a central bank ought to do - protect banks from bank runs, devalue, etc. - I believe that it's suicidal. The QE was was a joke. Surplus recycling is nowhere to be found in the European Union, vis-a-vis Germany Scotland will have deficit, hence it's doomed in the long run to become like Greece. The way the EU manages the economy, it's stupid for any deficit country to come in and compared to Germany, everybody will be in huge deficit in the long run. At that point you depend on the Bundesbank to over-value and the German government to raise salaries. None of this will happen, at that point you'll have a country on it's knees depending on a foreign institution (the ECB) who is controlled by a foreign nation which has it's own interests to protect. I'm sorry for GB. I'm sorry that a nation had to go through this, but their best bet is to stick together. EDIT: The first thing that the German gov did after Brexit says a long shot about how Germany envisions Europe: They summoned the 6 (or 7) countries that created the European Union. But the EU has 27 members now. Do you really want to be part of a union who doesn't give a damn about you and give your monetary policy to that union? About 16 years ago, at her last speech, M. Thatcher in a rare moment of enlightenment said about the EUR: He who control the interest rates controls the Economy and he who controls the economy controls the politics in Europe She was spot on.

dijit 10y ago
Sorry, but the point of the EU is not to just let everyone mooch off of the central banks and beg for handouts. Scotland outside of UK and part of the EU is a Scotland ripe for service industry. If the EU helps it's member states to be better than they are individually, which is supposed to be how it works, then there's no reason to assume Scotland will be running at a deficit forever.
- pm90 10y ago
  It will be initially though, which is what we know for certain. Whether they will become a service industry utopia, is something which remains to be seen. In that case, it makes much more sense for Scotland to have control over its monetary and fiscal policies and not have them dictated by the ECB.
pm90 10y ago
Agree with most of your comment. One nit: interest rate (and monetary policy in general) isn't as important as the independence to determine fiscal policies. The two are related of course if you don't have an independent currency. That is my biggest beef with the Euro.
- atmosx 10y ago
  > One nit: interest rate (and monetary policy in general) isn't as important as the independence to determine fiscal policies. The two are related of course if you don't have an independent currency. agreed :-)
jcfrei 10y ago
Why should Scotland join the Euro? As you've outlined it's not in their interest.
- jacalata 10y ago
  All recent new members have been required to, I believe.
  - JakeColtman 10y ago
    Confirming source here http://ec.europa.eu/economy_finance/euro/adoption/index_en.htm http://ec.europa.eu/economy_finance/euro/adoption/index_en.h... There's an interesting question around the fact that the UK has an opt out of the Euro.
  - nazgob 10y ago
    Yes but no. There is no deadline. So if you don't wait it, you can just delay it forever. Many countries does just that. Others like Poland, even if they would want to join, have national currently enforced in constitution and changing that is super hard.
tehabe 10y ago
Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest rate to zero. Almost all European governments cut spending and remove money from the economy. The results are awful is most economies, except those which can export more than import. They live on the deficit of other countries. BTW Germany is currently the country which suffers the most from the low interest rates of the ECB. The problem is that countries like Greece, Spain, and Portugal are being forced to cut spending, which doesn't end their crisis but will prolong them and make everybody poorer in the process. There is certainly a point in which the deficit is too high, but where this point is, is unknown. It is the same with inflation, a little bit inflation is good for an economy. It gives incentives to spent money and to invest now and don't wait for lower prices. But too high inflation will hurt an economy badly.
- atmosx 10y ago
  > Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest rate to zero. Almost all European governments cut spending and remove money from the economy. The results are awful is most economies, except those which can export more than import. They live on the deficit of other countries. Maybe I didn't make my self clear: I didn't say that deficit is a problem per se. I argued that given the current design and status quo in the EU, any country that has a deficit vis-a-vis Germany should stay out of the common currency because inevitably, it will end up like Greece in the long run. I agree with most of what you said. Regarding Germany and the ECB, that's true but it's only a small part of the bigger picture.
danmaz74 10y ago
Actually, most newer members of the EU don't have the Euro (eg Poland, Romania, Hungary, etc). If Scotland wants to create a currency of their own, they can do that - even if the wanted to, they couldn't get the Euro right away, it takes some time. On the other hand, one of the main arguments against leaving the UK, at the time of the referendum, was that Scotland couldn't leave the union and keep the GBP as their currency, and they feared a weak and especially a volatile currency could wreck havoc on their economy. Having a secure path to EU membership (without veto power by the UK) and the backing of the ECB would help a lot against that risk.
gumby 10y ago
> The EU membership will most likely come with a change of currency, which means leaving the BoE for the ECB. European countries (except UK, DK, SE) need to join the Euro but not right away. Many aren't there yet. In Scotland's case it can remain in a currency union with the UK until they are ready to join the Euro. Ireland was in a currency union with the UK after independence. It's not an exotic relationship, especially with economies so intertwined.
touristtam 10y ago
The EU project is a political one (encompassing things like currency, fiscal and social union), and not just a single market like the most liberal English right winger want it to be. The referendum is a plebiscite for this politic, even though it seems that part of the electorate has been conned into voting to leave.
- narrowrail 10y ago
  I had to look up plebiscite, which turns out to be a synonym for referendum (as far as I can tell). As a result, your comment is kind of cryptic.
  - touristtam 10y ago
    David Cameron has resigned as a consequence of the vote. This should give you a hint of why I call this a plebiscite for the Tory leadership (and by extension the most liberal politics they prone at home and abroad).
- atmosx 10y ago
  I have a romantic view of referendums: I don't believe that decision taken via referendum can be wrong. It's the quintessence of democracy and I ultimately believe in democracy, which means I believe that the majority votes as best as the can. IMHO you're misunderstanding: Listening BBC Radio 5 the last couple of days I can say that lack of transparency, austerity promotion and the way countries like Greece (primarily), Ireland and Portugal were treated in 2014 and 2015 by the EU played a major role in turning voters to Brexit.
  - touristtam 10y ago
    Having seen first hand the British media (both English and Scottish) coverage of the debate surrounding the EU referendum, I can confidently say that part of the British electorate has been mislead to think all blame are on the EU institution. There is also the antiquated notion of Nation-State that does not apply to the UK as Northern Ireland and Scotland have voted to remain and are now seeing their future outside the EU against their will.

by atmosx 10y ago

dijit 10y ago

Sorry, but the point of the EU is not to just let everyone mooch off of the central banks and beg for handouts. Scotland outside of UK and part of the EU is a Scotland ripe for service industry. If the EU helps it's member states to be better than they are individually, which is supposed to be how it works, then there's no reason to assume Scotland will be running at a deficit forever.

pm90 10y ago
It will be initially though, which is what we know for certain. Whether they will become a service industry utopia, is something which remains to be seen. In that case, it makes much more sense for Scotland to have control over its monetary and fiscal policies and not have them dictated by the ECB.

pm90 10y ago

Agree with most of your comment. One nit: interest rate (and monetary policy in general) isn't as important as the independence to determine fiscal policies. The two are related of course if you don't have an independent currency. That is my biggest beef with the Euro.

atmosx 10y ago
> One nit: interest rate (and monetary policy in general) isn't as important as the independence to determine fiscal policies. The two are related of course if you don't have an independent currency. agreed :-)

jcfrei 10y ago

Why should Scotland join the Euro? As you've outlined it's not in their interest.

jacalata 10y ago
All recent new members have been required to, I believe.
- JakeColtman 10y ago
  Confirming source here http://ec.europa.eu/economy_finance/euro/adoption/index_en.htm http://ec.europa.eu/economy_finance/euro/adoption/index_en.h... There's an interesting question around the fact that the UK has an opt out of the Euro.
- nazgob 10y ago
  Yes but no. There is no deadline. So if you don't wait it, you can just delay it forever. Many countries does just that. Others like Poland, even if they would want to join, have national currently enforced in constitution and changing that is super hard.

tehabe 10y ago

Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest rate to zero. Almost all European governments cut spending and remove money from the economy. The results are awful is most economies, except those which can export more than import. They live on the deficit of other countries. BTW Germany is currently the country which suffers the most from the low interest rates of the ECB. The problem is that countries like Greece, Spain, and Portugal are being forced to cut spending, which doesn't end their crisis but will prolong them and make everybody poorer in the process. There is certainly a point in which the deficit is too high, but where this point is, is unknown. It is the same with inflation, a little bit inflation is good for an economy. It gives incentives to spent money and to invest now and don't wait for lower prices. But too high inflation will hurt an economy badly.

atmosx 10y ago
> Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest rate to zero. Almost all European governments cut spending and remove money from the economy. The results are awful is most economies, except those which can export more than import. They live on the deficit of other countries. Maybe I didn't make my self clear: I didn't say that deficit is a problem per se. I argued that given the current design and status quo in the EU, any country that has a deficit vis-a-vis Germany should stay out of the common currency because inevitably, it will end up like Greece in the long run. I agree with most of what you said. Regarding Germany and the ECB, that's true but it's only a small part of the bigger picture.

danmaz74 10y ago

Actually, most newer members of the EU don't have the Euro (eg Poland, Romania, Hungary, etc). If Scotland wants to create a currency of their own, they can do that - even if the wanted to, they couldn't get the Euro right away, it takes some time. On the other hand, one of the main arguments against leaving the UK, at the time of the referendum, was that Scotland couldn't leave the union and keep the GBP as their currency, and they feared a weak and especially a volatile currency could wreck havoc on their economy. Having a secure path to EU membership (without veto power by the UK) and the backing of the ECB would help a lot against that risk.

gumby 10y ago

> The EU membership will most likely come with a change of currency, which means leaving the BoE for the ECB. European countries (except UK, DK, SE) need to join the Euro but not right away. Many aren't there yet. In Scotland's case it can remain in a currency union with the UK until they are ready to join the Euro. Ireland was in a currency union with the UK after independence. It's not an exotic relationship, especially with economies so intertwined.

touristtam 10y ago

The EU project is a political one (encompassing things like currency, fiscal and social union), and not just a single market like the most liberal English right winger want it to be. The referendum is a plebiscite for this politic, even though it seems that part of the electorate has been conned into voting to leave.

narrowrail 10y ago
I had to look up plebiscite, which turns out to be a synonym for referendum (as far as I can tell). As a result, your comment is kind of cryptic.
- touristtam 10y ago
  David Cameron has resigned as a consequence of the vote. This should give you a hint of why I call this a plebiscite for the Tory leadership (and by extension the most liberal politics they prone at home and abroad).
atmosx 10y ago
I have a romantic view of referendums: I don't believe that decision taken via referendum can be wrong. It's the quintessence of democracy and I ultimately believe in democracy, which means I believe that the majority votes as best as the can. IMHO you're misunderstanding: Listening BBC Radio 5 the last couple of days I can say that lack of transparency, austerity promotion and the way countries like Greece (primarily), Ireland and Portugal were treated in 2014 and 2015 by the EU played a major role in turning voters to Brexit.
- touristtam 10y ago
  Having seen first hand the British media (both English and Scottish) coverage of the debate surrounding the EU referendum, I can confidently say that part of the British electorate has been mislead to think all blame are on the EU institution. There is also the antiquated notion of Nation-State that does not apply to the UK as Northern Ireland and Scotland have voted to remain and are now seeing their future outside the EU against their will.