Scotland Unspun

GERS Report Shows Scotland subsidises UK, says Professor Andrew Hughes Hallett

2011-06-26T01:23:00.001+02:00

From Newsnet Scotland

EXCLUSIVE: Newsnet Scotland has interviewed Professor Andrew Hughes Hallet about the latest GERS report on Scottish public spending, which covers financial year 2009-10.

Professor Andrew Hughes Hallett is a world class economist who divides his time between George Mason University in Virginia and St Andrews.

From 2001 to 2006, he was Professor of Economics at Vanderbilt University (Nashville) and before then at the University of Strathclyde in Scotland. He has been Visiting Professor in Economics at Princeton University, Bundesbank Professor at the Free University of Berlin, and has held visiting positions at the Universities of Warwick, Frankfurt, Rome, Paris X, Cardiff and at the Copenhagen Business School.

PROFESSOR HUGHES HALLET, COULD YOU SUM UP YOUR IMPRESSION OF WHAT THE NEW GERS REPORT TELLS US ABOUT THE SCOTTISH ECONOMY DURING THE DEEPEST PART OF THE GLOBAL RECESSION IN 2009-10?

The things that stand out are that it has been a rough couple of years, but Scotland had weathered the storm better than the UK as a whole. She has a budget deficit for the first time in half a dozen years but it is a smaller deficit than the UK. So the implicit subsidy to the rest of the UK (RUK) is still there.

What’s more, this has been happening in a period when oil prices were low. This is of course a backwards looking exercise (up to April 2010). Those low prices were reversed a year ago, so the implicit subsidy will have increased markedly since then.

Note: all my remarks take the revenues/spending actually raised in Scotland, as opposed to those allocated to Scotland by the accounts (which are often quite different). You will appreciate the significance of that difference.

IN WHAT WAY IS SCOTLAND SUBSIDISING THE REST OF THE UK?

Public spending has fallen as a percentage of UK total each year since 07-08, so Scotland is being squeezed more than RUK. That seems unfair, and it goes back to when Gordon Brown took over as PM.

However the share of Scottish public spending in the UK total has risen
when oil revenues are included, so RUK is relying more and more on Scotland’s share of oil revenues for its spending.

The deficit on the current budget is 6.8 per cent of GDP, whereas for the UK as a whole it is 7.6 per cent. Again you see the implicit subsidy to RUK - equivalent to about one per cent of our GDP being sent south (adjusting to get RUK figures, rather than all UK figures).

Adding in capital spending, the figures become 10.6 per cent (Scotland) versus 11.1 per cent (all UK). Same story.

Note capital spending in Scotland is rising fast (unlike RUK) as it should be to power the way out of a recession. Correctly: any recession is too good to waste!

WHAT ABOUT THE VOLATILITY OF OIL INCOME?

Non-oil GDP is down 3.0 per cent, but with oil it fell 7.5 per cent. As I said, oil was a damaging factor in this period, but will have improved now. Hence Scotland is actually doing better than it appears from these figures.

However, UK GDP is down only 1.8 per cent. So Scotland's performance has been weaker than UK, presumably because she is subsidising the latter and because she has been allowed to run a smaller "counter cyclical" deficit.

IS THERE ANYTHING IN GERS THAT THROWS LIGHT ON THE SNP GOVERNMENT’S DEMAND FOR MORE TAX POWERS?

Income tax revenues are down 2.8 per cent overall, implying a significant deflation bias under the current Scotland Bill proposals - as many had argued when the Bill came to the Scottish Parliament last year.

But more significantly many of the other tax revenues are now rising as a share of total revenues: I note here national insurance contributions, fuel, and particularly excise taxes (tobacco, alcohol, vehicles).

So income taxes are a poor source of revenue to rely on. Think what you could have done with a wider spread of tax revenues to power the spending to get out of recession and to use as levers to grow the economy.

news scotland

Scotland better off leaving bankrupt Britain

2011-06-23T14:24:00.001+02:00

From Newsnet Scotland

Despite a huge drop in North Sea oil prices in the year 2009-2010 an independent Scotland would have been better off economically being outside the UK according to newly released Government figures.

Commenting on the new GERS (Government Expenditure and Revenue Scotland) figures released today one of Scotland's leading investment bankers Ben Thomson, chairman of the Campaign for Fiscal Responsibility, said: "The latest GERS figures show that Scotland’s budget position in 2009/10 was better than for the UK as a whole.

"As a percentage of GDP, both Scotland’s net fiscal balance (-10.6% compared to the UK’s -11.1%) compare favourably with the UK as a whole." (See chart)

"This is despite the drop in Scotland’s geographic share of North Sea revenues for 2009/10 from £11.7 billion to £5.9 billion which has resulted in a deterioration in Scotland’s budget position.

Debt to GDP ratio based on GERS

"It is also worth pointing out that this will also have improved considerably since 2009/10, the year covered by GERS.

"The Office for Budget Responsibility (OBR), in its 2011 Budget Report, estimated that North Sea revenues would average £13.4 billion over the next five years of which Scotland’s geographic share would be £12.2 billion.

"This is more than double the revenue levels in 2009/10 and would bring Scotland’s net fiscal position close to balance."

Compared to current UK debt

Against a backdrop of out-of-control UK debt it is clear that Scottish families, institutions and businesses would benefit significantly from independence. This year UK public sector net borrowing for April and May totals £27.4bn which is £1.5bn more than the same period in 2010 according to the official ONS (Office of National Statistics) report.

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see: Bankrupt Britain borrows even more
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UK consumer confidence

According to YouGov's Household Economic Activity Tracker (HEAT) UK consumers remain extremely negative (-26 points) about the next 12 months ahead. This compares woefully to China which has a positive (+42 points) rating making the difference in consumer outlook between the two economies a 68 point gap.

Newsnet Scotland Comment

With oil revenues much higher in the last year it is clear that being released from its share of UK fiscal debt an independent Scotland would be in the position to increase the standard of living of all Scottish citizens.

Yes, as Unionist commentators like to point out an independent Scotland would have carried debt in this single year but as can be seen it would be less debt than it must carry as part of the UK.

news scotland

Cost of the Union to every Scot - £2, 413 each year

2011-06-13T19:32:00.002+02:00

Leader piece on Newsnet Scotland today:

Scots must pay £12.546 billion every year just to stay in the Union according to Office of National Statistics (ONS) information. UK public sector net borrowing (excluding financial interventions) was £139.4 billion in the year 2010/11 and so Scotland's share based on 9% population amounts to £12.546 billion.

This is at least the annual cost for Scots of remaining within the Union as Scotland's national accounts show a surplus meaning none of the debt is accrued in Scotland.

According to world-renowned economic expert Professor Andrew Hughes Hallet Scotland's economy, unlike the UK economy is in robust shape:

“Scotland’s accounts, rather than those compiled in London, show that Scotland has a small net surplus, rather than being a net beneficiary from the UK."

The bad news for Scots is that the UK treasury is accruing debt which is accelerating owing to bad house-keeping south of the border and dragging the Scottish economy down with it.

Think Tank statement

An analysis from the right-wing think tank - the Institute of Economic Affairs (IEA) - shows Scotland's share of the UK's skyrocketing public debt will be a staggering total of £110 billion by the time it is likely to become independent.

This sum is startling and, to make matters worse, is set against official UK Government figures which forecast unprecedented levels of UK debt which will surge past £1.1 trillion this year.

Perhaps not surprisingly these figures will be used by pro-independence supporters to show that Scotland must get out of the sinking UK ship as quickly as possible.

There's no cause for alarm though as Scotland will have the ability to escape this problem if it votes 'Yes' in the forthcoming independence referendum. The real problem facing the budgets of Scots families, institutions and businesses is that the SNP Government may wait too long to call the independence referendum while each year Scots have to pay £12.5 billion and rising - merely to be ruled from London.

Based on the official figures it costs every single Scot £2, 413 per year to pay off a debt they didn't cause. This debt could be avoided if Scots vote 'Yes' in the referendum and so would be an 'independence dividend'.

With full independence Scotland will control its oil and gas reserves and so have no problem picking up this 'Union tab' but how much longer will Scots tolerate austerity and benefit cuts designed for a plummeting UK economy?

Scotland's share of UK debt is unlikely to be as bad as the analysis by the IEA's Richard Wellings suggests as it bases its figures on Westminster public spending figures which are exaggerated. For example the entire cost of maintaining Trident is classed as a Scottish expense rather than a UK one. Wellings' analysis though does say that there is a preferable method of estimating Scotland's share of debt:

"Better still would be an estimate that also took account of the share of UK tax revenues generated in Scotland, but such a calculation is complicated by significant fluctuations in North Sea receipts from year to year."

As we know Scotland is in surplus and that is calculated based on our population share of North Sea oil and gas reserves. An independent Scotland would be entitled to far more of those resources than its population share and so it reasonable to assume that Scotland's share of the debt will be estimated downwards during independence negotiations with London.

Certainly, whatever Scotland has to absorb from the UK's debt mountain will be manageable - once Scotland is independent - as when oil and gas revenues are added to a Scottish exchequer our debt to GDP ratio will be far less than England's.

At the moment exports from Scotland's huge financial services sector are credited to London which means Scotland's current GDP is hugely underestimated. Post-independence this picture will become clearer and Scotland will look in much better shape to face the future.

News Scotland

Reasons Scots will vote 'Yes' to independence - Shoogly pegs

2011-06-13T19:29:00.001+02:00

A piece I did recently for Newsnet Scotland:

Analysis by Alex Porter

Scottish Unionism has seen better days and there are any number of angles on its current crises. So, as the great referendum debate starts to take shape can the usual arguments for Union hold?

Shoogly peg 1: The media is the massage

One worth consideration is that control over the traditional media no longer equates to control over the political loyalties of Scots. Unionist politicians can gang up on a Nat in a tv debate and believe their collective reasoning to be indestructable but the Nats still win elections. That must rankle in certain quarters.

Every year around 1.5% of the population becomes eligible to vote. These people are young and clued-in with all things world wide web. Every year 1.5% of the population - with few internet skills - leaves Scotland to the rest of us. Taken together these figures mean every year 3% of the voting population becomes instantly internet savvied and so the influence of traditional media dwindles. Of course, the rest of us in the middle are not sitting still so are also becoming more internet savvy. At every passing election the Katie Grants of this world talk exclusively to her own rapidly-dwindling kind.

One very real danger for Unionism posed by the internet is that voters have so many varied sources of information. The consequence is that their 'bollotix' alarm sounds at the merest hint of a dodgy narrative on TV news reports. People are not easily led or misled anymore. It was thanks to the internet that the SNP overcame the hositility of Scotland's Unionist media to win their historic first term in 2007. Four years later social networking and other internet channels played no small part in delivering the SNP a majority of Scotland's 129 seats in Holyrood.

It stands to reason then that the internet will play a key role in who wins Scotland's independence referendum. More Scots now get news from the internet than any other source such as the BBC and that trend is consolidated year after year in proportion to the passing of traditional Unionism and its print media allies. Unionism depended heavily on influencing traditional media and so even if there is any substantial remaining attachment to the Union, Unionists must surely realise that it can no longer get its own way because it can massage the message.

The contrived narrative about Scots having no desire to exercise their democratic right to an independence referendum is now consigned to the midden of history where it always belonged. However, said midden will have to wait a wee while longer before giving refuge to 'received wisdoms' of Scotland's pro-Union mainstream media on the subject of the benefits of independence. Will Unionism be able to bamboozle our internet savvy Scots voters into sticking with the "Union dividend" in the midst of austerity cuts? Somewhat, but Scottish nostrils will detect a reek and so an opportunity presents itself to the SNP.

Political beliefs are no longer simply drip-fed to the Scots electorate by fusty establishment figures like Jim Wallace (Lord Wallace of Tankerness) with a penchant for ermine but are arrived at using peer-to-peer recommendations via social networking channels. Scots, especially young Scots, have developed a healthy distrust of traditional media's political commentary and reportage. Information passed on from a friend, on the other hand, has value. Having young bright things such as Kirk Torrance, the party's New Media Director, to advise the SNP who have grasped this new paradigm shift leaving Scottish Unionism a decade behind the curve.

Shoogly peg 2: Independence a distraction

Watching the Unionist-leaning media having a post-mortem about what has gone wrong was the icing on the cake for Nationalist activists. Most Scots couldn't give two hoots what happened to Unionism. The Unionist political establishment, or what remains of it, is shocked and the old Jedi mind-tricks that once held sway in TV political commentary are now exposed, deliciously for independentistas, as blindingly obvious scare-tactics in real-time.

The well-worn classic is the one about how debating the constitution is a distraction from dealing with the economy. If that's the case then how can Unionists such as former chancellor Alasdair Darling also argue that an independence referendum should be held quickly so as to minimise uncertainty for business? If independence is not relevant to the economy then what could business be uncertain about? People are not daft and if you treat them as if they are they'll eventually change the channel.

For their part the Nationalists could argue that the delay in transferring tax-raising powers to Holyrood is causing uncertainty for Scottish business. Many Scottish boardrooms feel threatened by London's current advantages and so the business landscape is now very favourable to fiscal autonomy - Unionism would be foolish to lose whatever business constituency is still retains and some, such as the decimated Lib Dems, are beginning to realise that only by proposing substantially more powers will the Scotland Bill become palatable to the Scots electorate.

Today's Scots, and especially internet-savvy Scots, know full-well that independence is about politics and economics and therefore jobs and services - to suggest otherwise is treating the electorate contemptuously and the recent election showed that Scots have had their fill of specious, negative soundbites.

To his credit David Cameron, in reaction to the SNP's landslide, did promise he would make a positive case for the Union during the referendum campaign. It is not clear who in Scotland will bother to listen to the English Etonian Prime Minister, least of all Scottish pro-Union supporters. Scottish Unionists, on the whole, have defined their Unionism entirely by what they are against and so when pushed - and they haven't been pushed much until now - can't express why they support the Union except in vague terms of economic benefits.

Instead, we are bombarded with the economic downside of independence but this is never convincingly substantiated by official statistics which could prove or disprove their case. Those figures have been long concealed from public view arousing yet more scepticism of the case against independence.

Shoogly peg 3: Umbrellausterity

Which brings us to the next shoogly peg of Unionism. Scotland needs the umbrella of Union to protect it from the uncertainties of the international economy. What planet are these commentators on? The reality of living in UK PLC is perfectly and simply understood by all Scots who know what the word 'austerity' means.

Austerity cuts are imposed on Scotland by Westminster which is running an unprecendented and ballooning deficit. UK government debt stood at £903.4 billion at the end of March and heading due North. At the same time Scotland's economy under the stewardship of John Swinney is in surplus. So, despite Scotland's economic surplus the Scottish parliament has to lose out to pay for poor house-keeping South of the border. Some umbrella.

The umbrella metaphor goes from the ridiculous to the sublime when reflecting on the plummeting value of the pound. A depreciating sterling means foreign goods and components become more expensive. Scottish importers must then pass their increased costs on to Scottish consumers. What is becoming clearer, month by month, is that an increasing number of economists and analysts accept that there is no reason to believe that austerity measures and historic low interest rates will do anything but make the UK economy worse.

Britain is being left behind by its key trading partners according to Scottish economist Brian Ashcroft. Germany is a manufacturing power-house and so can balance its books by exporting goods it makes. Manufacturing only accounts for 12.8% of the UK's economy. That is a dire state of affairs and means there's no easy way of paying off spiralling govenment debt. Closing the gap in manufacturing would require more than a generation of capital investment. Capital is formed by companies saving money but with interest rates held at 0.5% there is no incentive for them to save.

There-in lies the UK's catch 22 - raising interest rates is not an option for Westminster as its debt now approaches £1 trillion and the UK's consumer debts are higher than the rest of the EU combined. If the people are already struggling and you land them with higher interest payments how will they be able to also pay for the government's increased interest payments through taxation? Some umbrella.

To continue borrowing the UK government must borrow against future North Sea oil revenues. If it can't then confidence in the UK economy will nose-dive and capital will flee. The fly in the ointment is the referendum on Scottish independence which is now certain after the SNP's landslide victory. Much of the commentary from the English print media suggests that the English would be glad to get the subsidy-junkie Scots off their backs. The London treasury knows the truth, though, and the issue of control over North Sea assets could not be more sensitive. The truth is that Scotland's North Sea resources are the UK's economic umbrella.

Nationalist self-imposed shoogly peg

Set against this economic reality it makes perfect sense for the SNP to prioritise securing more tax powers for Scotland's parliament in advance of the referendum. If parliament secures more economic powers - especially corporation tax - then full independence will become increasingly certain as the divergence of the Scottish and English economies gathers pace.

One potential pitfall for the referendum 'Yes' camp though is the thorny subject of currency. Scotland's Finance Minister John Swinney simply must face the issue of a Scottish currency head on. It is unfortunate and potentially damaging that the SNP are uncomfortable on the subject of advancing an independent Scottish currency as the monetary gods are currently smiling on Salmond.

With the UK's debts mounting, London's approach will be to continue inflating debt away by increasing the money supply. This will accelerate the devaluation of sterling. It matters less then if Scots keep more of their money if that money buys less and so fiscal autonomy is only part of the economic powers equation.

There is a real opportunity for the Nationalists to argue that a strong Scottish currency, backed by oil, would quickly rise in value against sterling (suddenly not backed by oil) meaning Scotland's share of the UK deficit will be much cheaper to pay off. The case for an independent Scottish currency can be won in the boardrooms and it simply must now be the subject of national debate.

With such a strong case to make there is no reason to risk the distrust of Scots who have shown they want to be levelled with. And the currency issue will be brought up again and again by Unionists who sense the SNP's unease on the subject. With everything going the SNP's way why would they throw a lifeline to the 'No' camp?

Hanging Scotland's Jacket

Our independence referendum will of course be about many issues and at core be about how secure Scots feel about themselves and their culture. Perhaps it is a weakness that the debate is reduced to "little more than a car boot sale haggling session" but the fact is that much of the debate will centre on the issue of economics.

The problem for Unionism is that its economic rhetoric no longer mesmerises as it once did and so the 'No' camp must quickly get with the internet programme. The 'Yes' camp on the other hand is ahead of the game and has the momentum in a nation which seems to no longer fear the word independence any more.

The only danger for the cause of an independent Scotland is whether or not the 'Aye' camp will feed Scotland's insecurities and try to sweep the issue of currency under the carpet. If the latter want Scots to take a leap in the dark with them then Scots will have to believe that they are being told it like it is.

news scotland

Unionist expert backs Scottish independence

2011-06-13T19:21:00.002+02:00

A piece I did for Newsnet Scotland:

Analysis by Alex Porter

A clown twisting a balloon into a dog grabs children's attention briefly and increasingly briefly each time the child sees the same trick. The political editor of Scotland on Sunday (SOS) Eddie Barns's anti-independence articles have a similar impact.

In last week's SOS Eddie ran the lead story "SNP expert says split will hit economy". It's only once you've finally made it to the end of his piece that you realise that said expert is not in fact an SNP expert and he didn't say anything about how a split [independence] would 'hit' the economy.

The expert in question is economist John Kay who is not an SNP member but is in the Government's Council of Economic Advisors - an august body whose members straddle Scotland's constitutional divide. Having led his readers to believe that Kay is an SNP insider, Barnes reaches the breathless conclusion that Kay's opinion "undermines a vital plank of the First Minister's quest to break Scotland away from the Union". All that in the first paragraph and a half and typifies the recent hysterical reaction from the Unionist press since the landslide SNP election victory a month ago.

Professor Kay did mention that full independence would bring with it "complications" as does any responsibility and Kay does say that an independent Scotland would be "limited by the realities of globalisation" as all independent nations are but he didn't say that an independent Scottish economy would be "hit" or suffer in any serious way at all.

Kay, visiting Professor of Economics at the London School of Economics, supports fiscal autonomy which means all of Scotland's taxes being raised and collected in Scotland. Arguing that full tax powers would benefit Scotland, Kay's opinion actually undermines the postion of all the Unionist parties, none of whom support fiscal autonomy. As fiscal autonomy is not on offer it would be more credible to interpret Professor Kay's view as showing that continued Union will hit the Scottish economy. Indeed, Professor Kay actually said that an independent Scotland is a "perfectly viable economic prospect". Last week's SOS could easily have led with "Unionist expert backs Scottish independence" as its headline.

Professor Kay's take is that Scotland would benefit from being part of a larger state within the Union so long as it controls and collects all its own taxes. This is a reasonable opinion which finds wide support in Scotland.

His analysis does however ignore the the massive monetary downside of Britain's skyrocketing national debt and the consequent devaluation of the pound. The realities of UK PLC are that there is no economic umbrella as the Coalition Government's policy of currency devaluation destroys savings and pensions - a backdoor tax or wage cut. Devaluation brings inflation as overseas products become more expensive meaning your family budget doesn't stretch nearly as far as it did last year.

Considered political journalists can get the economics of independence badly wrong too. On the same day across the M8 at the Sunday Herald Iain Macwhirter perpetuated the unionist myth about Scottish banks being bailed out at English tax-payers' expense. Iain still hasn't got his head round the fact that it was the bank's shareholders and bondholder, based mostly in the City of London, that were bailed out at the expense of all taxpayers including Scottish ones. There are numerous examples of governments bailing out their home-based companies and banks who lost money through foreign investments. Why would an independent Scotland bail out London-based investment houses, who did not do their due diligence and so made poor investment decisions, at all?

And given Iain's left credentials perhaps he can tell us why any of these banks should have been bailed out by the taxpayer at all - a point ably made last week by Professor Kay.

Macwhirter moves on to the subject of fiscal autonomy: "Fiscal autonomy is fine, but do you want control of taxes in order to cut them to promote enterprise, or raise them to meet ambitious social objectives? You can't do both."

The point of fiscal autonomy is indeed partly that - the policy privilege of exerting your own priorities. However another key point which is completely missed by Iain is that having those powers, in itself, would give Scotland a wage increase. So, you have more money before making your policy choices as a nation and there are plenty examples to demonstrate this. So with an increase in income you actually can "do both" or incentivise enterprise while maintaining social spending for example.

That, at least, is the position of one internationally renowned expert in Economics. Professor Andrew Hughes Hallet of St. Andrews and George Mason University in Virginia this week backed the ability of Scotland to improve its economic performance by using the "whole range of fiscal policies" independence would bring.

I'm pretty sure Hughes Hallet's independence endorsement will not be described by Eddie Barns as "supporting a vital plank of the First Minister's quest to argue the SNP's case for Scottish independence". Something tells me that's not in Eddie's box of tricks.

News Scotland

Apologies for being away

2011-06-13T19:08:00.002+02:00

Apologies to followers of my blog. I've been busy working with Newsnet Scotland. Now that the election is safely out of the way I hope to be able to update my site from time to time.

News Scotland

Not being independent is costing Scots jobs and prosperity

2011-05-02T19:43:00.001+02:00

A piece I did for Newsnet Scotland

by Alex Porter, Economy Editor

As the party leaders clashed last night during the latest TV debate, Iain Gray claimed Alex Salmond’s dream of an independent Scotland would cost every Scot £2600. With the election now reaching fever pitch and Labour well behind in the polls and facing the loss of some high profile MSPs, Mr Gray resorted to spreading fear and panic insisting that Scotland would be left with a £13.75 billion black hole in its finances if it became independent.

Before the 2007 election Labour warned that every Scot would face a £5000 tax bomb were the SNP to be elected and many were turned off voting for the party. The reality of the SNP government was that Scots had their Council Tax frozen which actually reduced stress on family budgets.

The most recently available official figures show that Scotland's national accounts run a surplus. Scotland's financial position in the financial year 2008-2009 was a budget surplus of £1.3 billion (GERS) while the rest of the UK has been running the highest deficits in its history.

The question the Scots electorate might be then be forgiven for asking is why their nation should be shackled to the UK economy and paying the price for massive deficits it doesn't contribute to. With UK government debt heading for the £1 trillion mark and with no sign of Westminster tax-take increasing in the drowning UK economy, Scots can look forward to years, if not decades, of increasing austerity cuts if we remain within the confines set for us by Westminster rule.

London-driven public sector cuts have been foisted upon Scots to pay for the failure of economic policies largely under Gordon Brown's Labour government and then continued by the current coalition. The result of this chronic economic mismanagement is the UK's financial, economic and currency crises which Scots have no option but to watch their cities, communities and families being dragged into.

Despite this corrosive economic environment at UK level, Scotland's national accounts have heroically remained in surplus and employment trends have bucked the depressing UK reality. This is testimony to the sound management of the SNP, and especially Finance Minister John Swinney, who has created enormous efficiency savings in the way government is run, particularly in the area of public sector procurement. It is regrettable that Scots cannot reap the rewards of these savings and instead continue to face a reduction in their parliament's block grant from London.

The harsh truth is that with the relative value of the pound collapsing and UK debt continuing to rise to unsustainable levels, Scots must consider their options and decide what powers their parliament needs most to protect their families, jobs and businesses.

North Sea oil is currently underwriting UK government borrowing. Without it the UK would be insolvent. With around 8% of the UK population, estimates put Scotland's contribution - through North Sea oil revenues from corporation tax alone - at 20% of the UK total. That figure disregards taxation raised at the pump.

In an independent Scotland that money would be reinvested in jobs and services. With the second-largest pension fund in the world, Norway, the richest country in the world according to the Legatum Property Index 2010, shows that rather than face a future of austerity Scots could, and perhaps should, be building a prosperous future for their children and grandchildren.

In poll after poll Scots have shown that they want their parliament to have more economic powers. In order to thwart that expressed desire the Unionist parties have designed, what they shamefully call, the Scotland Bill in order to give the impression that more powers are about to be returned to Scotland, but upon closer scrutiny we can discern that more powers will be re-reserved to Westminster.

Another cruel piece of rhetoric being disseminated by the Scotland's too wee, too poor and too stupid brigade is that an independence referendum would distract government from improving the economy. Firstly, it seems that the more attention the last Labour government and the current coalition government pays the economy the worse it seems to get. That aside, Scots are more than capable of having a national debate on independence while still going to work. If we can watch EastEnders and work, if we can read newspapers and still run a family budget and if we can follow the football while making sure the BBC licence is still paid then the Scottish government can bring forward the independence referendum that Scots want, while still managing to get on with improving the economy - something only the SNP government in recent years has been capable of doing in any case.

The truth is, though, that independence is about improving Scotland's economy. Without independence Scots, through their parliament in Edinburgh, do not have the collective powers to really put jobs and prosperity back on the national agenda. It is a daily economic crime that Scots are misled about the economic lifeboat of independence whilst the truth of what lies ahead for the UK Titanic is kept from sight.

news scotland

Contraction underlines Scottish and UK economic divergence

2011-02-27T13:09:00.001+01:00

A piece I did for Newsnet Scotland:

Britian's GDP contracted by 0.6% in the last quarter of 2010 according to the Office of National Statistics (ONS).

Scotland UK comparison

Although the same figures are not available specifically for Scotland, the UK numbers do nevertheless provide evidence of divergence between the Scottish and the UK economies. The contraction in UK numbers takes place against a backdrop of falling Scottish unemployment and rising employment.

Recently enterprise minster Jim Mather, comparing job market statistics, alluded to the divergence of the two economies saying: "For three consecutive monthly labour market statistics releases, we have seen falling unemployment and rising employment in Scotland compared to rising unemployment and falling employment across the UK.

"Scotland's total employment rate is at its highest level since the three months to December 2009 - and Scotland has a higher employment rate and lower economic inactivity rate than the UK as a whole."

This latest economic data serves to underline existing evidence which shows that the Scottish economy is in robust shape whilst the UK economy is in trouble. According to the most recent Government Expenditure and Revenues Scotland (GERS) report the Scottish economy was running a surplus as recently as 2008-2009.

Having factored in interventions in the financial sector in 2008-2009, Scotland's financial position was a current budget surplus of £1.3 billion, or 0.9 per cent of GDP, including a geographical share of North Sea oil revenues. At the same time, the UK was in current budget deficit of £48.9 billion, or 3.4 per cent of GDP, including 100 per cent of North Sea revenues.

Given that UK government borrowing has escalated, standing at £23.3 billion for the single month of November 2010, one would expect an economic contraction in Scotland leading to job losses. However the opposite is true.

This is good news for SNP Enterprise Minister John Swinney as his party goes into the Holyrood elections. By being able to point to Scotland bucking the trend the SNP will impress upon the Scottish electorate that where their parliament has powers over the economy success ensues, and so more powers will mean more economic success.

Low interest rates bitter-sweet

According to received wisdom the ONS negative growth figures will lend authority to those seeking to keep interest rates low. Low interest rates, we are often told, makes it easier for companies to borrow and so stimulate economic activity.

However the reality is that although lending to main street banks from the Bank of England (base rate) is only 0.5%, the banks aren't lending to main street. Instead, it seems, they use the almost free money to buy and sell financial products to and from each other, triggering commission on each transaction and therefore bonuses.

In the City of London this almost free money sloshing around gives the impression of buoyant underlying economic activity. The commissions and bonuses ulitimately derived from devaluing the pound have a ripple effect and so in the South-East there is a general sense that recovery is never far away. Devaluation is felt more severely outwith the South-East where increased prices are squeezing family budgets and an increasing number of homeowners now need to use credit cards to meet mortgage payments.

Prices rise as a devalued pound means importers will have to pay more for products and components coming into the UK. These costs are passed on to the consumer creating price inflation.

It is not clear what the economic benefits of devaluation are to the UK economy as a whole. Despite the pound losing value against key trading partners, unemployment is rising in the UK whereas it has never been lower in Germany.

Currency devaluation does benefit exporters but as the UK is an importing economy the trade deficit widens and so the government receives less in taxation. Consequently to pay for public services the government must turn to borrowing on the markets in order to finance its increasing deficit. This in turn leads to the case being made for austerity cuts.

Monetary policies which benefit the City leads necessitate austerity cuts. Yet those who use public services most tend not to be the City bankers or shareholders. Any benefits homeowners have from lower interest rates on mortgages are offset by higher prices and public sector cuts. Once interest rates do rise it will be clear to homeowners that their low mortgage payments were bitter-sweet.

scotland news

Dollar hegemony takes another knock

2011-02-27T13:06:00.001+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

The Bank of India (BoI) is the first Indian bank to offer trade settlements between the rupee and the Chinese yuan (RMB) from Hong Kong. Hong Kong is the only offshore market for Chinese currency with $400 billion yuan being traded against other currencies in the past year. The news is the latest in a string of efforts by China to have the RMB accepted as an international currency and follows a campaign of persuasion by the China Banking Regulatory Commission.

Currently Indian buyers make payments in US dollars and so often have to convert their rupees into US dollars to effect transactions. This new facility being offered by the BoI lessens the need for Indian importers to keep the same volume of US dollar in reserve and use as an intermediary.

With world markets being flooded with dollars the rupee is considered by Chinese exporters as being more stable. That aside, if Indian importers want to procure low-cost goods then Chinese exporters have some leverage to have settlement in rupees.

The US will not be overjoyed by this development as having the dollar as a reserve currency means the dollar's value is supported by the need for foreign companies to have reserves to make international transactions. This structural demand helps offset the glut of supply and so prevents the value of the dollar falling more than it has in recent years.

Real-time financial settlements are now supported with the Bank of India having a RMB account with Bank of China with transactions extending to buyers and sellers in all of China's provinces.

Towards the end of last year Russia and China began trading directly in each other's currencies. Russia's currency, the ruble, is fully convertable in international exchanges. Although international investors believe that it would be in China's best interests to float the RMB, Beijing is cautious.

One key strength of the US dollar is that there is no obvious candidate for replacing it as the world's reserve currency. Until recently the markets were convinced that the euro would become an obvious candidate to become a rival however soveriegn debt problems across in Greece, Spain, Portugal and Italy have undermined confidence in the euro's future.

Many analysts believe that the Chinese would like to position the RMB as a successor reserve currency. Holding a large amount of US debt, the Chinese have been frustrated to see the value of their dollar investments become depreciated through quantative easing by the Federal Reserve.

scotland news

Niall Ferguson: USA could collapse. What about UK?

2011-02-20T18:45:00.003+01:00

In the video below Prof Niall Ferguson of Harvard University is explaining why the US could collapse under the weight of debt it has. The collapse he argues would be akin to the collapse of the Soviet Union which buckled under the weight of the Afghanistan war.

Given that the UK has bought $250m of US debt. Some argue that this is a currency where the US and UK print new money and buy each other's debt to make themselves look solvent.

All this raises the question that if the US could well collapse then isn't the UK in exactly the same postion? And if a Harvard professor is talking about the US becoming a failed state then why does the US have AAA ratings? Are the ratings agencies captured?

All this is should say one things to Scots. Demand powers of your taxes and prepare for a new currency!

Independence of Scots Law at risk from Scotland Bill

2011-02-16T22:38:00.001+01:00

A piece I did for Newsnet Scotland:

by Alex Porter

Scottish Lib Dem peer and former Depute First Minister of Scotland Jim Wallace has inserted an amendment in the Scotland Bill which will see criminal appeals from Scotland's High Court of Justiciary go to the UK Supreme Court. There are concerns that this little publicised aspect of the Scotland Bill will lead to a diminution of the powers of Holyrood, and is a threat to the identity and independence of the Scottish legal system.

"Loss of identity"

Elish Angiolini QC, Scotland's Lord Advocate, has warned that Scots law will suffer a "loss of identity" because of the UK Supreme Court's extended powers to rule on Scottish human rights cases.

Giving evidence to the Scottish Parliament's Scotland Bill Committee, Scotland's top law officer explained: "Because of the approach of the Supreme Court, there is a real danger that we will not just have harmonisation of our criminal law, procedure and evidence, through that process, but that there will be a complete loss of identity for Scots law unless it is something which is genuinely rarely exercised in the context of something which is of substantial constitutional significance across the United Kingdom, or where it is a very new piece of jurisprudence which is clearly ambiguous."

Her comments follow the controversial decision taken by the Supreme Court in the Cadder v HMA case, which overruled a previous decision by the High Court of Justiciary in Edinburgh. The Supreme Court ruled that detention of suspects by the police without access to legal advice breached the European Convention on Human Rights (ECHR). The decision has had serious implications as a total of 867 cases have since been unable to proceed or continue as a direct result, according to a review on the impact of the case by the Crown Office and Procurator Fiscal Service (COPFS).

Unclear on the scope of the Cadder appeal ruling, Angiolini has now sought the referral of five cases to the UK Supreme Court to achieve a "definitive resolution" on the matter.

A spokesperson for the Crown Office said: "The judgment of the Supreme Court in Cadder v HMA has given rise to a number of collateral issues. It would be beneficial to achieve a definitive resolution and referring these cases to the Supreme Court is the most effective way of achieving that." The five cases are not expected to be heard until October.

Fears are that Jim Wallace's (Baron Wallace of Tankerness) amendment will render Scots criminal law subservient to the UK Supreme Court in all matters.

As Scotland's Advocate General, Wallace has had an amendment inserted into the Scotland Bill which removes the authority of Scots law in relation to criminal appeals. Part of the ammendment includes:

"Remove acts of the Lord Advocate in her capacity as head of criminal prosecutions and investigation of deaths in Scotland that are incompatible with any rights conferred by the European Convention on Human Rights that are given effect to by the Human Rights Act 1998 (“Convention rights”) or Community law from the ambit of section 57(2) of the Scotland Act; and

"Create a statutory right of appeal from the High Court of Justiciary sitting as a criminal appeal court to the Supreme Court in relation to matters where it is alleged that the Lord Advocate has acted incompatibly with any such Convention right or Community law to replace the existing devolution issue procedure that currently applies in such cases. The jurisdiction of the Supreme Court should be maintained both for reasons of constitutional propriety and, more importantly, to ensure that fundamental rights enshrined in international obligations are secured in a consistent manner for all those who claim their protection in the United Kingdom."

The idea of transferring the statutory rights of appeal from the Scottish High Court of Justiciary to the UK Supreme Court is supported by the Scottish Human Rights Commission (SHRC) in criminal cases where it is alleged that the Lord Advocate has acted in breach of the European Convention on Human Rights.

Giving evidence to the Scotland Bill Committee earlier this month, Professor Sir David Edward (University of Edinburgh), a former European Court of Justice judge who recently produced a report on this area of legal jurisdiction, said: “It is perhaps significant that in their submissions to us the Scottish Government, the justice directorate, the Scottish Law Commission and, indeed, the Lord Advocate all said that the Supreme Court's jurisdiction should be totally brought to an end. Our view was that there was a case for giving the Supreme Court some jurisdiction, but not in the form in which it had previously existed.”

SNP Justice Secretary Kenny MacAskill told Newsnet Scotland that his view is that Scottish courts should be the ultimate decision-making authority in every aspect of criminal law.

The telling question amid this whole process is why won’t Jim Wallace, a Liberal Democrat peer, consider the option of allowing all these powers to be held entirely by Scottish courts where ultimately the judges are Scottish instead of solely considering further centralisation?

Liberal Democrats: promises, assurances and bearing gifts

These latest revelations give further credence to the argument that the Scotland Bill, which was supposed to further devolve powers to Scotland, is in reality a Westminster Trojan horse designed to take powers back.

Experts have told Newsnet Scotland that some of the new powers being devolved will almost certainly be used such as Scottish Duty Land Tax (SDLT), landfill tax and the ability to borrow but these powers are insignificant compared to the far more substantial taxes such as Corporation Tax, national insurance or VAT.

Ostensibly there are a significant transfer of income tax powers but Newsnet Scotland is advised that because of the way the Bill has been crafted there is an inbuilt cost-disincentive to using this tax. A number of renowned experts such as economists Jim and Margaret Cuthbert and Professors Andrew Hughes-Hallett and Drew Scott of George Mason and Edinburgh universities, among others, argue that the income tax powers are "dangerously flawed", "unworkable" and "a perfect storm".

Observers will be forgiven for concluding that the income tax powers have been designed this way on order to give the impression of more powers being transferred. This strategy would have the effect of partly placating the Scottish electorate's desire for their parliament to have full tax powers whilst actually taking powers away from Scotland. The aim, critics will speculate, is to achieve confidence whilst picking Scotland's pockets of existing devolved powers - a 'confidence trick' or 'con'.

The role of Jim Wallace - now a member of the unelected House of Lords - in the Scotland Bill process indicates a trend, according to some commentators, of how Liberal Democrat politicians readily abandon their liberal principles of decentralisation and federalism upon catching a whiff of power.

The debate over the value of a Lib Dem promise has taken another twist in relation to the Scotland Bill as news unfolds that powers have been dropped or at best delayed from the Calman proposals, including air passenger duty, aggregates levy and the assignation of income tax yield from savings and distributions. This completely contradicts promises and assurances from the Lib Dem leadership.

In addition, some powers already held by the Scottish Parliament in areas such as insolvency law, charity law and the regulation of the health professions may actually be taken back by Westminster.

In May last year Liberal Democrat MP Alistair Carmichael, now depute chief whip to the House of Commons said: "Calman's recommendations will be implemented and many other Scottish issues on which Labour has prevaricated will now be tackled."

Current Secretary of State for Scotland Michael Moore (Lib Dems) promised that the proposals recommended by the Calman Commission would be "implemented in full."

Leader of the Lib Dems' Holyrood group Tavish Scott offered assurances that the proposals of the Calman Commission would be implemented in full insisting: "Absolutely ... no doubt".

Given that the Scotland Bill radically affects the nation one would expect the Lib Dems to seek a referendum on the new devolution settlement. No such vote is being planned by the ConDem coalition government although they are holding a referendum on a new voting system that no-one wants.

As for the Bill itself, there will be a number of hearings at Westminster today. Professor Hughes-Hallett, who believes that the Bill is "dangerously flawed", will be amongst those giving evidence.

In Scotland's media much has been written about the problems associated with the powers included within the Bill, but the unwritten story is about the powers that have been dropped or re-reserved.

news scotland

Poll shows SNP heading for second term

2011-02-16T10:36:00.002+01:00

A piece I did for Newsnet Scotland:

by Alex Porter

An opinion poll by IPSOS Mori today shows that Alex Salmond's SNP Government is poised to form a second term after this year's elections to Scotland's Holyrood parliament.

The poll of 1,000 people was taken between the 10th and 13th of February and shows that the SNP has now closed the 10 point gap with Labour, recorded as recently as November 2010 by the same polling company. In this latest poll, the SNP has overtaken their principal Holyrood rival which records 37% of the popular vote for the SNP government compared to Labour's 36%.

In the light of this latest opinion poll, Scottish political commentators, many of whom have recently forecast certain victory for Labour at the forthcoming Scottish elections, will now be dramatically revising their predictions.

The poll shows that on the regional vote the SNP leads by an even larger margin over Iain Gray's party, recording 35% to Labour's 33%.

Worryingly for Labour this reversal in their party's electoral fortunes is likely to be largely attributable to political leadership - the Scottish electorate's familiarity with First Minister Alex Salmond - as well as their identification with his performance as Scotland's foremost political representative.

Last weekend signs emerged that the Holyrood Labour group were struggling to demonstate unity with reports suggesting senior figures within the Labour shadow cabinet were critical of Iain Gray's leadership. Gray, according to party sources, is easily led by "immature" influences within his team.

The Nationalists, who formed a government for the first time in their history in 2007, will be eager to present themselves as having been a competent administration. In this context SNP strategists will want to present the party as even more popular than they were when they won office four years ago.

This latest analysis boosts the SNP's re-election prospects as polling on both the constituency and regional votes show the SNP being four points up on the party's election winning performance in 2007.

Commenting on the poll described on the Times front page as "Salmond surges into Holyrood poll lead", SNP Depute Leader and Scotland's Deputy First Minister Nicola Sturgeon said:

"Today's poll shows there is all to play for in Scotland's election this May. With the SNP moving ahead of Labour and achieving a poll rating four points higher than the election results of 2007.

"As voters look toward Scotland's election in May it is the SNP's strong record in office, our team of recognised and trusted ministers and MSPs, and the vision we have for Scotland's future that is winning the support of voters who want to re-elect a Scottish Government that is working for Scotland.

"In the last week the SNP has delivered on jobs with 25,000 apprenticeships, protected public services with a balanced budget, funded the fourth year of a council tax freeze saving the average household £322, and put in place the money to abolish prescription charges from April this year.

"And it is the SNP that is on the same side as people across Scotland in opposing rising fuel prices with our demand for a fuel stabiliser and the scrapping of the Tories duty rise.

"Over the next 80 days as we head toward's Scotland's election, the SNP will continue to govern for Scotland, to build Scotland's economy, protect our public services, and to stand on our record of delivery and vision for Scotland's future."

News of the SNP's lead in popular opinion will perturb Labour strategists who will now surely question Labour's negative strategy as the May 5th election approaches.

news scotland

Labour civil war ahead of Holyrood election

2011-02-14T19:02:00.003+01:00

A piece I did for Newsnet Scotland.

by Alex Porter

Weekend reports claim that the Labour party in Scotland face internal divisions that could derail the party's goal of replacing the SNP as the Scottish government, just weeks before the Holyrood election campaign begins in earnest.

Over the weekend the Times newspaper reported that serious divisions have emerged inside the Labour shadow cabinet over Iain Gray's decision to vote against the SNP government's budget despite Finance Secretary John Swinney agreeing to Labour's demands. The internal criticism is aimed at Gray and his "failing to take control", reports the Times.

The reports suggest that senior voices inside Mr Gray's Holyrood group have criticised how the leader "allowed himself to be led by immature voices within the shadow cabinet".

One Labour MSP is quoted as saying: “What we should have done, given that we got most of what we wanted, was to say that while the budget was still imperfect, we would vote for it and be seen to put the national interest before the party interest …

“… That would have been the mature thing to do. Iain was not driving the ‘No’ vote. Instead he allowed himself to be led by immature voices in the shadow cabinet – he let it run.”

The news will be seized on by the SNP who will now seek to exploit Labour's divisions. The party's Campaign Director Angus Robertson said: “The revelations show Iain Gray was led on the Budget vote and that he isn’t even capable of leading his own group of MSPs, never mind Scotland.

“It just proves that they were offered all they wanted – and more – and put puerile political opposition before the national interest.

“It is obvious many of his MSPs are unhappy and have startlingly resorted to making known their unhappiness with Iain Gray’s leadership."

Labour's manifesto uncosted

In another dramatic twist over the weekend it emerged that the Labour party's draft manifesto is uncosted and must undergo a comprehensive re-write a matter of weeks before the Holyrood election.

In an article in the New Statesman journalist Dan Hodges revealed that key Labour election pledges have not been costed:

http://www.newstatesman.com/blogs/dan-hodges/2011/02/party-labour-miliband-shadow

“Labour's Scottish election campaign has also suffered an additional setback after the manifesto was produced without costings, and has had to undergo a comprehensive re-write …"

Iain Gray's leadership

The revelations indicate that there are problems of organisation inside Labour's Holyrood team which, as the election approaches, are fraying nerves and causing bitter divisions between leading members of the party.

At the root of the matter is Iain Gray's leadership qualities. Iain Gray has kept a very low profile since it emerged that Labour at UK level did all they could to facilitate the release of the Lockerbie bomber, whilst at the same time the Scottish arm was orchestrating a campaign to shame the SNP for the Libyan's release on compassionate grounds.

As the election campaign heats up Gray must convince the Scottish electorate that he, not Alex Salmond, is the man to lead Scotland. With his own senior MSPs describing him as being led by an "immature minority" within the party, convincing the electorate of his ability to excel as Scotland's First Minister will now be a much tougher prospect.

news Scotland

Scots want economic independence - but how badly?

2011-02-11T23:28:00.006+01:00

A piece I did for Newsnet Scotland:

By thwarting the voters' widespread desire for their parliament to have full powers over taxation via the mechanism of the Scotland Bill the Labour, Lib Dem and Conservative parties have become an austerity alliance

by Alex Porter, Economy Editor

With the Holyrood election campaign imminent none of the horse traders would have seriously risked bringing down the Scottish budget and opprobrium on their parties' heads. It was a forgone conclusion that Labour's chronic oppositionalism would see it vote against any SNP budget and the smaller parties would have to fall into line to make passing the budget arithmetically possible. With the Scottish budget adeptly ushered through by Finance Secretary John Swinney we can now turn to the political elephant in Scotland's economic room - Westminster austerity cuts and Scotland's determination to stop them.

Scotland in post-austerity Britain

Two news items in the last week have given a glimpse into the future in Britain PLC post-austerity.

Covered here by Newsnet Scotland, the first examined the shocking news that North Ayrshire council is considering implementing a plan which would introduce a four-day school week for its childen at both primary and seconday schools. Public spending is being decimated to pay for the UK's spiralling budgets deficits and so a way of life, taken for granted since the introduction of the welfare state, is at stake. The social implications of this kind of policy are profound and threaten Scotland's status as a first-world nation.

The second item hitting the headlines is the revelation that Glasgow University could be insolvent by this time next year. According to Principle Anton Muscatelli the university, established in 1451, could run out of money in academic year 2012-13. The university has sounded the alarm and has drawn up plans to end or merge a number of courses to help make £20 million in savings over the next three years.

An indication of the financial dire straits in which the university finds itself is that the plans include the controversial merging of the history, archaeology and classics departments as well as the axing of several modern language courses. Such extreme cuts will undermine the international prestige of the university and Scotland's rankings in the world of academia. For a nation which was once the preeminent academic hub of the world during the period of the Scottish Enlightenment and whose academic innovations include the professorial system itself, it is unthinkable that one of its ancient universities should not have an independent anthropology department.

Given the parlous state of the UK economy and the public sector cuts planned by the ConDem government in London, it is critical that those facing consequent redundancy and unemployment in Scotland can have access to educational courses. However the university is considering cutting its evening and weekend classes which are currently subscribed to by 5000 adult learners a year. The social dimension is further affected as vital courses in nursing and social work face a cull, and additionally the university's renowned Centre for Drugs Misuse Research faces the axe.

Scotland's Unionist opposition parties will, as politicians do, try to blame the SNP government for the cuts, but the reality which has to be faced is that the cuts are being forced on the Scottish government by Westminster. London is cutting Scotland's block grant by a total of £1.3bn in 2011-12 (that's less than the previous year), a figure which is not even adjusted for inflation.

The SNP finance minister has saved Scotland a lot of money through creating efficiencies in the public sector, especially in the area of procurement, but a £1.3bn (around £1.7bn when inflation adjusted) hole is more than difficult to fill. Council services and employees, universities and others will invariably take a hit.

Powers not cuts

However amidst the negotiations and horse trading over Scotland's diminishing budget, we risk losing sight of the salient issue. The cuts are not necessary. Scotland's national accounts (GERS) show a surplus, so the £1.3bn question is - why the cuts?

Alex Salmond's party will argue that with Full Fiscal Autonomy (FFA) none of these cuts would be happening. The fiscal surplus which Scotland currently enjoys could, the Government argues, be spent on increasing - not cutting - public expenditure. Westminster's cuts are about paying for the UK's deficit, a deficit which is generated south of Hadrian's Wall. With FFA Scotland would not be have to be held accountable for its neighbour's debts.

The Unionist parties have anticipated these calls for FFA and have preempted them by drawing up the Scotland Bill proposals. The Scotland Bill will give and take some powers from/to the Scottish parliament but these powers are not significant and experts believe that they are "unworkable" and "dangerously flawed". Polls show a clear majority (57%) of Scots favour their Parliament having full tax powers, but the Scotland Bill falls far short of that desire.

Critics claim the Scotland Bill does "not go nearly far enough" and is badly crafted because it is merely a device for channelling the Scottish electorate's desire for significant change into a constitutional cul-de-sac. Unlike FFA the Bill does nothing to protect Scots from Westminster's cuts agenda and so the three Unionist parties, by designing the flawed Bill then colluding to usher it in, leave themselves open to being castigated as an austerity alliance.

The critics make a good point. The SNP will argue at the election that Scotland needs economic independence. It has a compelling case and there is clear public backing for it, but is it deliverable?

The truth is that even if the SNP are given a second term by voters there is nothing it can do to gain more powers for the Scottish parliament. The Scottish parliament can not add or subtract from its own powers. Control over the Scottish parliament's powers is retained by Westminster. The nationalists tend to do better at Holyrood elections than Westminster elections and so as long as the Unionist parties constitute a majority of Scotland's MPs in Westminster there is nothing the Scottish people can do to have such democratic demands met.

If popular desire is to be satiated then a popular campaign to demand more powers would have to be launched. The problem though is that the subject is rather a dry one. It is difficult to imagine masses of demonstrators on Princes Street in Edinburgh chanting, "What do we want? Full Fiscal Autonomy. When do we want it? Within the current financial year."

Campaigners would need a seductive slogan that could act as a focus and mobilise the public to put pressure on the Unionist alliance currently blocking such significant reforms. Swingeing cuts resulting in such profound social changes as the proposed four-day school week do offer siclike opportunities. Fiscal Autonomistas could point out that economic independence would protect Scotland from the very clear and present dangers which London's austerity programme hold for Scotland. Many struggles throughout history have been won and lost premised upon the popular appeal of a slogan. "Make love not War" heavily influenced public perceptions during the Vietnam war because it was and still is evocative and appealing on many levels. "Powers not Cuts" or "Autonomy not Austerity" don't really cook the same goose.

Paradoxically Salmond's team faces the situation whereby pointing out the limited powers the Scottish parliament has to effect change in the economy actually depresses voters, who feel then feel that their parliament and by extension the SNP government are impotent.

It would be something of a relief for the SNP then if such a popular movement arose. In that respect there is much sound economic thinking currently being done behind the scenes by organisations such as Reform Scotland and the Campaign for Fiscal Autonomy but these are ill-suited to the purposes of a Scotland-wide grassroots campaign movement. The brain power is already in place so it requires only an umbrella organisation to set the heather alight. With austerity looming such an organisation would find allies the length and breadth of Scotland and from boardroom to livingroom.

The situation whereby Scots go to the polls wanting full economic powers but vote for the Unionist parties who seek to block these powers indicates that one of those Jedi Knight mind-tricks are in play. Indeed, it brings to mind the Monty Python crucifiction scene whereby one of the Christians who are in line to be crucified briefly interrupts reality when he tells the Roman he's taking the freedom option. He's actually taken seriously for a moment and is going to be set free before revealing that he was pulling the Roman's leg. The moral of the story is that servitude is all in the mind.

With the Unionist parties ignoring the public mood over the subject of economic independence, the moment for a new movement dedicated to the Scottish parliament having its own treasury has arrived.

news scotland

Scottish economy suffers as UK trade deficit escalates

2011-02-11T23:25:00.001+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

The UK's trade deficit, which stood at £8.5bn in November 2010, rose to £9.2bn in December according to the Office for National Statistics (ONS).

In light of the latest figures all talk of an "export-led recovery" in the UK economy will now be viewed with extreme scepticism. The latest monthly deficit in goods compares to a surplus in services which includes the 'resurgent' banking sector and which stood at £4.4bn to the good.

The banking surplus is not surprising given how much free money the Bank of England is injecting into the private banks. This almost free cash is used by the banks to buy and sell financial products from and to each other and each transaction is then calculated as earnings which then triggers banker bonus payments.

The policy of the former Labour government and the current ConDems of transferring taxpayers money to support the banking sector is having a deleterious effect on the UK economy. When the trade deficit is subtracted from the balance of payments surplus there is an overall deficit of £4.8bn for the single month of December 2010. This is the worst monthly deficit in the last 5 years.

Compared to key trading partners the UK has a relatively small manufacting and exporting sector. The Bank of England's policy of printing new money and giving it to the banks (quantative easing) decreases the value of the pound. This does help make exports more competitive but as the UK is an importing economy importers must pay more for the goods which come into Britain, and so the trade deficit escalates. On top of that the increased costs incurred by UK importers are then passed on to the UK consumer resulting in increased prices on main street, othweise known as inflation.

Increasing trade losses means there is less and less tax take for the UK treasury which consequently has to borrow money to balance its budgets. Given that the UK government is undergoing a crisis in its public finances this kind of news is very unwelcome. In November government borrowing reached a record £23.3bn and today's trade figures means that even that staggering figure will likely be surpassed.

With the UK economy falling off a cliff, Scotland is being told to cut its cloth. This is despite the fact that Scotland is running a surplus in its national accounts. That surplus goes to help plug the hole in the UK's finances whilst a further £1.3bn is being shaved from the Scottish budget to fill the same hole.

As has been evident in the last week these cuts are beginning to bite. North Ayrshire council have proposed a plan to implement a four-day school week for primary and secondary schools and Glasgow University could be insolvent by next year according to its Principle Anton Muscatelli. These are the first signs of just how deep Westminster's austerity cuts are going to be.

With the Holyrood elections looming Scots will want to know how their jobs and family budgets can be protected from the consequences of the UK's economic crises.

Full Fiscal Autonomy would mean Scotland's surplus would stay in Scotland and if there's a deficit south of the border then it's not for Scots to be held to account for the debts of others. This is the policy of the SNP, however as long as Westminster controls the powers the Scottish parliament has over taxation it is for Scots voters to pressurise the Unionist parties into withdrawing their support for the Scotland Bill. This ill-conceived Bill leaves Scots exposed to the worst effects of the crisis in the UK's public finances. The Unionist parties must give backing to fiscal autonomy, which is supported by a majority of the Scottish electorate along with eminent economists and business leaders.

Two forces of the economic weather system are about to collide. The high pressure of the UK austerity programme is about to meet the low pressure of the Holyrood election campaign. Voters are in an extreme state of anxiety over jobs and services and the party which does not convince the Scottish electorate of its economic competence will find itself tossed out of the consequent tornado on May 5.

news scotland

Is The Guardian paving the way for war in Iran?

2011-02-09T20:28:00.003+01:00

When the Weakileaks files first hit the headlines in Britain it was through their partners The Guardian.

It seemed that the first published documents painted a very critical picture of the Iranian government. Now it seems that The Guardian did not publish information which threw light on Iranian opposition parties that it had hitherto portrayed as lovers of democracy and freedom.

Now it seems Wikileaks and The Guardian have fallen out and threats of legal action abound:

Labour should apologise over Lockerbie hypocrisy

2011-02-08T22:54:00.005+01:00

Now that Labour are exposed as having cynically exploited the Lockerbie bombing for political advantage there are some questions which have to be answered. That done the victims, the Scottish government, the Scottish parliament, the Scottish people and beyond now deserver an apology for this repugnant hypocrisy.

Labour had pressurised for the release of Megrahi whilst at the same time trying to heap shame on the Scottish government for his release. How utterly despicable.

Below are just a small number of questions that now need answering. And then we need an apology.

by Joan McAlpine

Questions for Scottish Labour hypocrites over Megrahi

Now that all the evidence is out in the open. Here are some questons for the hapless Iain Gray and his adolescent Justice Mnister, Richard Baker.

When did you discover that your Labour colleagues in London were plotting to have Megrahi released?

When?

Was it before or after you started your attacks on the SNP government policy?

Why did you continue to attack the SNP, knowing that your own colleagues plotted Megrahi's release?

Will you now condemn Gordon Brown and his Ministers who plotted to have Megrahi released?

Why not and what does that say about you - Iain Gray - as a 'leader'?

What's it like being a patsy, used by the big boys in London?

news scotland

Labour reeling: last ditch smear attempt fails as Megrahi files finally vindicate SNP

2011-02-08T00:41:00.004+01:00

Revelations by Newsnet Scotland piles pressure on Labour to apologise for cynical exploitation of Lockerbie bombing for political gain:

A last ditch attempt at smearing the Scottish government on the Megrahi issue has failed spectacularly after official documents exonerated the SNP’s handling of the affair and revealed the previous UK Labour government did “all it could” to facilitate the release of Al Megrahi.

A report by top Whitehall Civil Servant Sir Gus O'Donnell has vindicated claims made by the SNP over its handling of the issue and revealed that, far from not interfering in the process, the Labour party did "all it could" to help facilitate the release of the man known as the Lockerbie bomber.

The report follows the recent publication of secret files by controversial website Wikileaks that showed Labour Ministers had advised the Libyans only one week after Megrahi’s illness had been diagnosed. The Scottish government has also published documents detailing the communications it had with senior Labour party Ministers.

US relative Stephanie Bernstein, who lost her husband in the downing of Pan Am 103 said: "It's disgusting, absolutely appalling. It looks as if the Labour government were acting as attorneys for the Libyans."

Frank Duggan, the Washington-based lawyer who is representing US families, said the politicians' behaviour had been "disgusting". Mr Duggan criticised Kenny MacAskill for releasing Al Megrahi but said his conduct had not been as bad as the Labour government representatives.

Mr Duggan added that “...they [the SNP] were not as bad as the British diplomats and officials who claimed to have no part in this decision but are now shown to be advisers to the Libyans one year before the actual release of the murderer. It is disgusting but not unanticipated."

The report also makes clear that the Scottish government were not influenced by the then UK Labour government’s desire to free Megrahi and that there was no evidence to suggest BP business interests played any part in the decision to release him on compassionate grounds.

Responding to Sir Gus’ report a Scottish government spokesperson said:
“The Scottish Government has consistently made clear that the Cabinet Secretary for Justice's decision to grant Mr AI-Megrahi compassionate release was taken following due process and following the precepts of Scots justice, without regard to foreign policy, commercial or any other considerations. The findings bear out the consistency of the Scottish Government's position in all respects.”

The spokesperson added:
“The review also confirms that, in contrast, the UK Government's position on the negotiation of a prisoner transfer agreement with Libya was influenced by commercial considerations, including lobbying by BP. What has not previously been public knowledge is that commercial and other considerations led, in late 2008, to a change in the UK Government's policy to favour the release of Mr AI Megrahi although they attempted to conceal that policy from the Scottish government.”

The fresh revelations pose serious questions for Labour politicians in Scotland who have, from day one, mounted a vociferous campaign against the SNP over the compassionate release of Mr Megrahi.

On 21 August 2009 Labour’s Holyrood leader Iain Gray said: "If I was First Minister, Megrahi would not be going back to Libya. The decision to release him is wrong. He was convicted of the worst terrorist atrocity in our history."

In a speech to Holyrood on 2 September 2009 Mr Gray said: “It is now almost two weeks since the Justice Secretary took his decision to release Mr Al Megrahi and return him to Libya. I said then that I believed that was the wrong decision and nothing we have heard in the past fortnight or this morning has convinced me otherwise.”

In December last year Labour’s Justice spokesman Richard Baker said: "As I said at the time, the decision to release Megrahi was wrong. He is the worst murderer in Scottish history.”

Commenting on the new revelations, Mr Baker insisted that there had been no hypocrisy on the part of the Labour party over their attacks on the Scottish government. However Mr Baker may well have caused problems for himself and his party by repeating on Radio Scotland discredited newspaper smears that the Scottish Government were trying to gain more powers by agreeing to release Megrahi under the PTA.

Smear attempt
These smears surfaced at the weekend after an English Sunday newspaper ‘The Mail on Sunday’ carried an article claiming Alex Salmond had sought a deal over the secret PTA agreement originally hatched by Tony Blair. The catalyst for the claims was an article in the Vanity Fair magazine.

The ‘story’ suggested that the Scottish government had offered a deal on the PTA in return for help with compensation claims expected from prisoners forced to ‘slop out’ in Scottish prisons. The smear also made it onto the pages of two Scottish newspapers.

However it has emerged that the story was based on an internal email sent by former senior Labour party official John McTernan to two Labour colleagues, Mark Davies and Tom Greatrex. In the email Mr McTernan mentions a ‘deal’ and refers to Scottish Ministers having the final say on prisoners. The email, dated 09th November 2007, refers to a meeting between Jack Straw and Kenny MacAskill.

Newsnet Scotland can reveal that the ‘deal’ mentioned by McTernan was a demand by the Scottish government that Al Megrahi NOT be included in the PTA. Far from wanting to strike a deal that would have let a fit and healthy Al Megrahi return to Libya (as Labour wished), the SNP were opposed to such a move and wanted Megrahi removed from the PTA altogether. Something that Labour’s Foreign Minister Jack Straw originally agreed to but would later backtrack on.

Newsnet Scotland has also learned that less than one week before, Jack Straw privately revealed that the Libyans had no expectation of Megrahi’s release. Newsnet Scotland can also reveal that, when asked if Alex Salmond had in fact suggested the deal alleged by the newspaper articles, Straw would neither confirm nor deny it, saying: “My conversations with Alex Salmond were private.”

Mr Salmond’s spokesman Kevin Pringle has since described the claim of any deal with Labour to release Megrahi on a PTA as “complete and utter garbage without a shred or scintilla of truth.”

The article in Vanity Fair was authored by David Rose and contains some glaring errors. In the article Rose claims that a report on Megrahi’s cancer by one Dr. Karol Sikora , dated July 30 2009, was taken into account by Kenny MacAskill. In fact Dr. Sikora’s report played no part in Kenny Macaskill’s deliberations on Megrahi’s application for compassionate release.

Commenting on the newspaper claims a Scottish government spokesman said:
“This story is simply wrong, just as the previous - and different - version by the same author in Vanity Fair was also wrong. Anyone who knows anything about the issue knows it to be a total misunderstanding.

“The issue in 2007 was not about release of al Megrahi but the technical issue of whether to exclude al Megrahi from the face of the Prisoner Transfer Agreement - as the Scottish Government demanded - and the UK Government seeking to renege on their commitment to do so on the basis that the issue was academic as they would publicly say that Scottish Ministers had a veto over any such transfer.

“The UK Government seemed to think they could achieve this by attempting to link it to other issues under discussion at that time. However, our concern was that even if we exercised the veto and rejected prisoner transfer for al Megrahi, we could be subject to judicial review in the absence of a specific exclusion.

“Therefore, and as the record shows clearly and consistently, the Scottish Government maintained our opposition to the PTA itself and to al Megrahi’s non-exclusion from it, and criticised his non-exclusion in extensive correspondence in 2007 and 2008 with Jack Straw and the Prime Minister, from both the Justice Secretary and the First Minister.

“We made it clear in every single piece of correspondence and meeting that Scottish Ministers would judge the issue on the precepts of Scots Law and not on any other considerations."

To have a clearer understanding of the origins of this latest failed attempt at targeting the SNP over Megrahi we need take a look at the background of the three people involved in the email.

The sender, John McTernan, was advisor to Tony Blair when the secret ‘Deal in the Desert’ was struck. McTernan (seen in the video below) claimed last year that the PTA agreement, hatched between Blair and Gadaffi, had nothing to do with oil deals and was in fact a “reward” to the Libyan leader after Libya dismantled its WMD programme. Dim lights Embed " readonly="readonly" type="text">

The main email recipient Mark Davies was special adviser to Jack Straw from 2005 to 2010, crucial years as far as the ‘Deal in the Desert’ is concerned. The second recipient, Tom Greatrex, is now Labour MP for Rutherglen and Hamilton West and was a former advisor to ex Secretary of State for Scotland Jim Murphy.

Last year Mr Greatrex was named by The Sun newspaper as the source of another smear after a leak compromised the Queen’s security. The ‘Balmoral Paths’ smear was intended to be used to attack the SNP, and indeed Labour MSPs at Holyrood demanded the resignation of SNP MSP Roseanna Cunningham when the story broke in The Daily Record, however things went quiet when The Sun named Mr Greatrex as the leak source.

Hypocrisy
These latest Megrahi disclosures are hugely embarrassing for Labour at a time when the party is seeking to install Iain Gray as Scotland’s next First Minister. Many will question why he allowed the party to politicise such a sensitive issue, repeatedly making comments that would ultimately prove to be at odds with the actions of his own leadership.

The events are certain to have damaged the Holyrood Labour leader and come barely a month after he made insulting ‘ethnic cleansing’ remarks about Montenegro that caused a diplomatic row.

Mr Gray now faces accusations that he was either completely ignorant of what his London leaders were up to and has been made to look foolish or he was in fact aware of Labour’s ‘double dealing’ and is guilty of a serious lack of judgement and quite staggering hypocrisy. The latest comments from his Justice Spokesman Richard Baker suggest that Mr Gray is guilty of the latter.

This poetic justice for Labour must surely bring their shameful politicising of this incident to a close and will hopefully cause reflection on the part of very many Scottish journalists and BBC Scotland correspondents who caused outrage by acting as chearleaders against their own Scottish government and whose own reputations hang a little limp today.

There still remains though the small matter of possible injustice and the questions that surround the safety of the conviction of Mr Abdelbaset Al Megrahi.

news scotland

Lockerbie, Megrahi and Labour Hypocrisy - The Truth comes out

2011-02-07T20:02:00.006+01:00

The story of how Britain wanted Al Megrahi freed is going round the world. In Scotland, the BBC is still trying to make the Scottish population believe it's all down to the SNP government. Labour have used the Lockerbie bombing to try and undermine the SNP government accusing it of embarrassing Scotland and calling for resignations. All along they were lobbying for his release which shows the people just what kind of organisation they are.

The best take on the story I've read is by Joan McAlpine and I've reproduced her piece here for my blog frequenters:

by Joan McAlpine, Go Lassie Go

All the documents relating to Megrahi's release were made public today. As expected they vindicate the Scottish government and are highly embarrassing for Scottish Labour which continued to publicly oppose the release 2009 while they knew their ministers in London supported release and had done for a year. (Will Iain Gray and Richard Baker now admit defeat?)

However the new papers also show that the ludicrous American suggestion that the UK government successfully put pressure on Scotland simply is not supported by the facts. In the new papers the cabinet secretary Gus O'Donnell says "Moreover it is clear that Her Majesty's Government (HMG) considered that any attempts to pressurise or lobby the Scottish government could be counterproductive to achieving this outcome." eg Megrahi's release.

This weekend saw another red herring in the Mail on Sunday - based on a false Vanity Fair piece and picked up by Guido. Paragraph 14 of the cabinet office document and subsequent letters between Jack Straw and Des Browne discuss a UK government "understanding" that Kenny MacAskill was prepared to discuss the terms of the Prisoner Transfer Agreement in 2007 in return for certain concessions on compensation for prisoners taking slopping out cases and devolution of firearms law. This was their “misunderstanding”, no doubt based on wishful thinking – they were desperate to conclude a PTA, in terms acceptable to Libya. The SNP wanted a specific exclusion of Megrahi from the deal (a position they maintained). So there was no deal or trade off. The UK Government reneged on seeking such an exclusion because Libyans wouldn’t accept it (or they wouldn’t progress energy/BP deal) In 2007, the issue was not about his release – it was about his non-release. Remember Megrahi did not have cancer at that point, the PTA was the only discussion and it was rejected by Scotlan. So all the UK speculation about what MacAskill might want was just that - speculation.

The Scottish government rejected the dodgy Prisoner Transfer Agreement cooked by Tony Blair in return for oil deals. In 2008 the UK govenrment was firmly in favour of release. But how much more evidence do we need of Labour hypocrisy? All the Scottish Government documents can be viewed here. The Scottish govenrment's detailed response to today's new information is here. But the most damning assessment of Labour's role comes from the Cabinet Secretary Gus O'Donnell whose assessment I will reprint in full:

SIR GUS O’DONNELL’S CONCLUSIONS

i. none of the materials that I have reviewed contradicts anything in the then Foreign Secretary‟s statement to the House Of Commons (12 October 2009) or the current Foreign Secretary‟s letter to Senator Kerry (23 July 2010), or statements made by the former Prime Minister on this matter;

ii. it is evident from the paperwork, including in documentation already released, that the Libyans made explicit links between progress on UK commercial interests in Libya and removal of any clause in the PTA whose effect would be to exclude Mr Megrahi from the PTA. It is also evident, including in documentation already released, that BP did lobby the former Government to make them aware that failure to agree the PTA could have an impact on UK commercial interests, including Libyan ratification of the BP exploratory agreement (EPSA) signed in May 2007. As is already in the public domain, these commercial considerations played a part in the former UK Government‟s decision to reverse its position and agree to the removal of this exclusion clause. And once the exclusion clause had been removed from the draft PTA, the former UK Government in turn held up final signature until progress on commercial deals had been achieved. The records show that Cabinet Office and FCO Ministers and officials were mindful of, and pressed Libyan interlocutors for progress on, the major BP deal (alongside other UK deals) in the context of agreeing the PTA. But:

a) while the PTA provided a framework to consider the transfer of prisoners, it did not permit transfer when an appeal was outstanding and, critically, in line with every other PTA, provided no automatic right to

transfer;

b) any decision on an application for transfer of Mr Megrahi under the PTA was for Scottish Ministers alone to make. Scottish Ministers retained an absolute veto over any request for prisoner transfer in the case of Mr Megrahi, a veto they used in August 2009 by rejecting his application for

transfer;

c) the PTA did not in any case form the basis for the release of Mr Megrahi; 14

d) there is no evidence that pressure was placed on the Scottish Government by BP for the transfer or release of Mr Megrahi (either under the Prisoner Transfer Agreement or on compassionate grounds);

e) there is nothing in the paperwork to indicate any pertinent contacts between BP and HMG after February 2008;

f) the Libyans were not told there were linkages between BP‟s exploratory agreement and the transfer or release of Mr Megrahi (either under the Prisoner Transfer Agreement or on compassionate grounds).

iii. it is clear from the paperwork that at all times the former Government was clear that any decision on Mr Megrahi‟s release or transfer under a PTA was one for the Scottish Government alone to take. The documentation considered by the review demonstrates that they were clear on this in their internal deliberations and, crucially, in their contacts and exchanges with the Libyans, including at the highest levels, and with the Scottish Government. In Gordon Brown‟s only meeting with Colonel Qadhafi, on 10 July 2009, he made clear that the decision was solely a matter for Scottish Ministers and HMG could not interfere.

iv. nonetheless, once Mr Megrahi had been diagnosed with terminal cancer in September 2008, HMG policy was based upon an assessment that UK interests would be damaged if Mr Megrahi were to die in a UK jail. The development of this view was prompted, following Mr Megrahi‟s diagnosis of terminal illness, by the extremely high priority attached to Mr Megrahi‟s return by the Libyans who had made clear that they would regard his death in Scottish custody as a death sentence and by actual and implicit threats made of severe ramifications for UK interests if Mr Megrahi were to die in prison in Scotland. The policy was primarily motivated by a desire to build on previous success in normalising relations with Libya and to safeguard the substantial gains made in recent years, and specifically to avoid harm to UK nationals, to British commercial interests and to cooperation on security issues. The desire to see such a result developed and intensified over time as Mr Megrahi‟s health declined and the imminence of his death appeared greater; 15

v. Policy was therefore progressively developed that HMG should do all it could, whilst respecting devolved competences, to facilitate an appeal by the Libyans to the Scottish Government for Mr Megrahi‟s transfer under the PTA or release on compassionate grounds as the best outcome for managing the risks faced by the UK. This action amounted to: proceeding with ratification of the PTA; explaining to Libya in factual terms the process for application for transfer under a PTA or for compassionate release; and informing the Scottish Government that there was no legal barrier to transfer under the PTA;

vi. I have not seen any evidence that HMG pressured or lobbied the Scottish Government for the transfer or release of Mr Megrahi (either under the PTA or on compassionate grounds). Jack Straw stated clearly in his calls with Alex Salmond including on 13 and 24 October 2008 and his meeting on 28 April 2009 that this was a matter for the Scottish Government. Indeed, throughout this period, the former Government took great effort not to communicate to the Scottish Government its underlying desire to see Mr Megrahi released before he died. Moreover, it is clear that HMG considered that any attempts to pressurise or lobby the Scottish Government could be counter productive to achieving this outcome. Although it is likely that the Scottish Government was aware of this desire, there is no record that it was communicated or that UK interests played a part in Mr Megrahi‟s release by the Scottish Government on compassionate grounds. When the matter came to the then Prime Minister in August 2009, he did not seek to exercise any influence on the First Minister or the Scottish Government. Mr Megrahi‟s release on compassionate grounds was a decision that Scottish Ministers alone could – and did – make

This entry was first published on Go Lassie Go

news scotland

UK economic crises threaten Scotland's status as a developed nation

2011-02-07T13:52:00.003+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

If you wondered just how bad Westminster's austerity cuts are going to be, news that the Labour-run council of North Ayrshire is bringing forward proposals for a four-day school week in all primary and secondary schools is a not-so-subtle hint.

This is not another ambush by the Labour party to manufacture a story and blame it all on the SNP government, this is the first real sign of what's to come. Austerity cuts are not going to squeeze public services, they're going to crush them. This proposal by North Ayrshire council will likely be dropped as it is shocking in its implications and public opinion is not yet accustomed to such traumatic events. However siclike stories will soon become less shocking as they increase in frequency.

The real significance of this announcement is that it demonstrates how the bankruptcy of the UK state is now threatening Scotland's status as a developed nation.

Crisis in the community

Shocking though it is, this plan for a cut in the school week will only save £2.3m, however the council has a target of saving £38m by 2014. A raft of other cuts are being explored by the council in their “strategic options” document.

Not surprisingly reaction has been one of deep concern. Paul Arkison of the GMB Scotland trade union said of the four-day week plan: “The mere thought of this proposal shows you the sad state of affairs this council is in. Parts of North Ayrshire have some of the highest levels of unemployment and the worst areas of deprivation in Scotland. To put school children on a four-day week could threaten their educational development and would cause chaos for working parents.

Perhaps it is a sign of the nationalists' paranoia about an ambush that SNP MSP Kenny Gibson commented:

“I am astonished that Labour-controlled North Ayrshire Council is considering a reduction in the school working week from five to four days.

"The law makes it clear that pupils should have a minimum of 190 days a year in school. A four-day week would mean a 47.5 week year, something I doubt would be welcomed by parents, teachers or pupils. Educationally I can see no merit in this proposal which appears to be finance driven.”

While perhaps Mr Gibson could point to council mismanagement it is perhaps unfair to lay the blame solely at the Labour council's door.

The cuts come from the UK government in London and are indicative of more to come. With huge cuts expected over the coming years Britain could easily be looking at the privatisation of council services, the introduction of road tolls and cuts in police numbers just as crime rises due to an acute increase in financial hardship.

It would not be wise then for the SNP government to get drawn into bickering with councils when clearly the the core of the problem is the UK's economic crises.

UK crises and preparations for another another City bailout

In 2008 the financial crisis saw the UK's financial sector become insolvent. It should have been put into administration and a new financial architecture established. This would have meant the banks' shareholders and bondholders would have lost their money. Instead Gordon Brown bailed them out by transferring the debts to the taxpayer. In conjunction with this policy the Labour government colluded with the Bank of England to print new money (quantative easing) and lend it almost free to banks.

The result was that a colossal amount of debt owed by the financial sectors were hung round the neck of Joe Public. So far the public has witnessed a huge increase in unemployment and now inflation, but the true price of the banks' bail out has yet to be revealed. The debt is enormous - many times GDP - and will be getting paid off by generations of taxpayers not yet born. Gordon Brown's legacy is not just economic collapse but an immoral tax on generations who will pay for his bribing of the financial sector long after his insane economic policies are swept under the carpet by a grateful financial establishment.

More astonishing though is that despite large amounts of private debt being transferred to the taxpayer, the financial sector is still irretrievably insolvent.

Yes, they are posting profits but that's because they are buying and selling products from and to each other using bailout money and freshly printed new cash from Mervyn King. The reason this isn't picked up by auditors is that the accountancy rules were relaxed by Gordon Brown so that the banks could hide their losses and not go under. He wasn't going to go down as the chancellor who destroyed the UK's financial sector. Not Prudence. The effect is that bankers can announce profits and so justify big fat bonuses. And then you'll be warned that if we don't let them have bonuses they'll leave. Yes, if we don't stop them robbing us blind they'll walk off and rob someone else blind. How will we cope?

Why doesn't the UK's political class deal with the situation? Simple. What brains do exist in London do not reside in the skulls of politicians but financiers. The political parties are mere bankers' puppets. And they've got the media pretty much tied up too. That's why they can transfer taxpayers' wealth to themselves with impunity. On top of that they believe their own hype so much they actually believe the population would suffer without them.

They are not going to take criticism. If a politician speaks out, 'city analysts' will howl about their economic policies and get into bed with the Labour opposition. And as we saw under Brown, Labour would not bat an eyelid over bankrupting the UK state and mortgaging your grandchildren's future to get elected.

What is even more mind-boggling is that after selling the population into debt-bondage the financial sector is still broke. The reason austerity cuts are being rolled out is because they are looking to save money up for the next round of bailouts. And David Cameron is currently engaged in ensuring that the taxpayer is properly tenderised for the bankers' banquet.

If, in the middle of the night, you went to your livingroom and happened upon a burglar you'd be entitled to be a tad enraged. With the taxpayer now saddled with generations of other people's debts the public are jusifiably angry.

Cameron's response is that he is not interested in "headlines satisfying people today and tomorrow that I've given the banks a good kick in the pants. Can we do more on bonuses, particularly on those banks we own? Yes we can, and yes we will," he told The Sunday Telegraph. "But look, we've just been talking about growth. I don't believe actually in the long run, you can deliver the enterprise-growth agenda while having a running war with the British banking industry at the same time."

Eh? David might have went to the same public school as these merchant bankers but the fact is that children in Scotland are looking at a four-day school week. This happens nowhere in the developed world. These banksters extract the public's money and then use it to buy the politicians that they shmooze around City clubs with.

Keeping the financial sector at the public trough is now sinking HMS UK PLC. According to the Office of National Statistic (ONS) government borrowing for the single month of November was a record £22.77bn. And there is absolutely no sign at all that this borrowing will not continue to increase as austerity diminishes the governments tax receipts. Yes, the idea of austerity is to cut costs but unemployed public servants don't pay tax, pay less VAT and require benefits..

A general bombardment of economic propaganda means numbers are difficult to put into perspective. That weill-kent Unionist business leader, Iain McMillan of the CBI, complains that the SNP governments' National Conversation has cost the taxpayer £1m. On the subject of the impact that UK government debt will have on the Scottish economy he is strangely silent.

Every day the interest payments alone on UK government borrowing are £119.3m. This is estimated to rise to £182m a day in 2015-16. Total debt (except those being kept off the balance-sheet) is around £1 trillion. That amount of money would pay for the Scottish bloc grant thirty times over and more.

Swallow the UK deficit or go for a Scottish solution?

Officially Scotland is in surplus but here we are facing the kind of cuts to public services which are experienced nowhere in the developed world. This is because the powers over taxation in Scotland are not controlled by Scotland's own parliament but reserved to Westminster. Scotland consequently has to take austerity cuts and so subsidise those south of the border where the deficit is generated.

This fact will not be altered by the Scotland Bill. The Scotland Bill will see a transfer of powers to and from the Scottish parliament but these new powers will be minimal as the process is mere tinkering, and bad tinkering at that.

The Scotland Bill is supported by Scotland's Unionist opposition parties. Aside from the limitation of the Bill's scope it is widely believed to be poorly thought out. Internationally renowned academics, economists and business people have characterised it as "dangerously flawed", "unworkable" and "a perfect storm".

Although it is Westminster legislation the Scottish parliament's Scotland Bill Committee is helping to craft the Bill. The Committee is chaired by disgraced former leader of Labour's Holyrood group Wendy Alexander who had to quit her post amidst corruption allegations.

Ms Alexander's chairing of the committee has seen the Scottish parliament's dignity suffer as eminent academics have been "ambushed" in committee hearings which were meant to deliberate the Scotland Bill but which was used by committee members to attack the SNP government.

Scotland's other option is Full Fiscal Autonomy (FFA) which would defend Scotland from the UK deficit crisis. Without assuming full tax powers the Scottish parliament will be impotent to prevent councils like North Ayrshire needing to effect policies such as a four-day school week. Alarming though it is this is exactly the kind of example FFA campaigners need to point to if they are to get a dry tax argument over to the Scottish electorate.

FFA is widely supported by academics and the business community and the Scottish population are largely behind the idea of their parliament having more tax powers. Only by generating momentum for the idea will force the Unionist parties into removing their ideological and parliamentary block to the process of increasing significant tax powers for the Scottish parliament.

The North Ayrshire plan should then bring the debate over economic independence to the fore. A crisis to Scotland's social structure is looming and the electorate has to have the facts from both sides of the argument so that they can instruct their political servants on how to act in their best interests.

Before the Holyrood elections there will be more signs of just how painful the impending austerity culls will be. With so many Scots now worried about jobs and family budgets, the issue of Scotland's economic choices of the Scotland Bill or economic independence must take centre-stage. Scotland has to make a decision. Making the wrong one could have profound implications for our international status as a developed country.

news scotland

Scottish economy a Swinney success as UK enters stagflation

2011-01-30T23:40:00.003+01:00

A piece I did for Newsnet Scotland:

The good news in Scotland is that the economy grew by 0.5% in the third quarter of last year but the bad news is that in the fourth quarter of 2010 the UK economy contracted 0.5%, according to the Office of National Statistic (ONS).

Economic growth right now may be a blessed relief for Scottish job-seekers and businesses although the bitter-sweet reality is that Scotland must face cuts to its block grant from Westminster in order to pay for the UK's spiralling budget deficits.

UK crises deepen

If you are in the habit, as most are, of swallowing the mainstream media's economic analysis whole then you will now know that the UK economy has gone into a "shock reverse". Apparently "analysts" had predicted modest growth and told us that the UK was experiencing a fragile recovery. Suddenly "analysts" are telling us that the UK economy is already showing symptoms of stagflation. This is when prices rise but growth contracts.

A shock turn of events? No.

Readers of Newsnet Scotland will note that this outlet was never on-message and the 'recovery' meme was never pumped out for mass consumption and distraction here. Indeed two years ago when the "green shoots of recovery" baloney was being disseminated as if it were one of the ten commandments this observer warned elsewhere that "analysts" were smoking those green shoots.

Just to recap. In 2008 the financial crisis happened because of the implosion of the rapid expansion of a fraudulent market in financial products called derivatives. This market was valued globally at around £500 trillion. To put this in context, global GDP at the time was around £50 trillion. Not everyone understands money on this scale so think of it this way: imagine you earn £1 per year and from that you have to pay taxes, pay the rent, eat and pay your bank charges. At the end of the year you have managed to save 5p (well done, most are already using behind on credit card payments). Then someone tells you that you suddenly have £10 debt to pay. How long will it take if you can save 5p every year to pay off that £10 debt? 200 years and that's excluding interest. That's the situation the world is in.

Now draw a deep breath because the worst is yet to come - Britain was the epicentre of the derivatives market. The City packaged and sold the majority of them around the world. Hence the "global crisis".

To put it another way, the UK financial sector is dead. They are being allowed to hide those losses so that they are not forced into liquidation. Meanwhile the government is borrowing like a drunken sailor and the Bank of England is printing money like confetti to keep the banks on a life-support machine.

Keeping the City on life-support means the UK economy is being squeezed and the pips are starting to squeak. Printing money, for a short while, feels like economic growth but it's debt and illusory economic performance. The outcome is devaluation and so we now have the situation where sterling is nose-diving and products are becoming more expensive. Inflation is nearing (officially) 5% while at the same time the economy is contracting - this is the definition of stagflation.

The citizen of Britain PLC has money which is rapidly losing value as the UK government gets out the epson money printing machine and goes to town. That's really dangerous not to mention worrying if you're a pensioner or low paid. That's life in the UK; banking buddies of the political class in London get socialist state hand-outs to the tune of trillions of pounds while the poor get the capitalist medicine - pull your socks up.

If it were all that easy it would simply make you livid. However the real problem is that all this money the government is borrowing to keep the banks going has to be paid for. In the single month of November 2010 UK borrowing reached a record £23.3 billion and the trend line is upward. Government tax receipt showed a small recovery last year but that is clearly dependent on the government pumping more money into the economy.

What's so worrying is that as tax revenues are not recovering owing to economic growth then how is the UK supposed to be able to keep paying back the money it's borrowing - and with interest? The point of bankruptcy has been reached. UK PLC is printing money to pay its debts. It may only be a matter of time before those who own long terms UK debt realise that they will be repaid in devalued currency and dump their UK bonds before everyone else does. That means currency collapse and capital flight ala Argentina circa 1999.

What about all the indicators and stories of recovery? Ok, think about it. All the borrowed/printed money is going to the City. Where are the "analysts" based? All the borrowed/printed money is going to the financial sector. Who do "analysts" work for? And why is it that when the government borrows money which then enters the economy and is spent then that money is not subtracted from GDP figures? You know, the figures which show "growth". And why are the unemployment figures massaged for that matter?

I'm sorry to have to tell you this but the mainstream media is pumping you full of propaganda.

Now, I doubt very much that the Scottish growth figures can be trusted because UK government borrowing is not subtracted, but official figures do show that fiscally the Scottish economy shows a surplus while the UK deficit is now completely out of control. Make no mistake, borrowing is premised on growth projections so that the principle can be repaid with interest. That's why the government does all it can to protect the population from the truth. Money printing and devaluation makes the economy look like it's growing on paper but that's nominal growth not real growth. Real growth was probably last achieved in the UK in 1976. Ever since then Britain has used the credit card to party on and they had future oil revenues so the credit card company were happy to extend credit, but that's all over now boys and girls.

There are calls for the Osborne to do a U-turn on economic policy but let's be clear 'austerity' has not started yet. The problems being experienced now are caused because of the banks. Yes, the wars and the missile systems are exorbitantly expensive but the reason the economy is going down the tubes is because of the bail outs and debt.

Opposition and trade-unions will argue for stimulus which means add to the debt meaning more of the problem cures the problem. You can't cure an drug addict or a ideologue by giving them more of what they want. Stimulus suits the financial sector and that's why it was and still is current economic policy. Stimulus sounds good but don't forget it's debt and keep in mind that Britain PLC is printing money to pay its debts.

Mervyn King (BoE) is warning of 5% inflation. The key mandate of the Bank of England is to keep inflation below 2% so why are interest rates not rising? Believe me, there's more inflation coming. You can't print money without prices rising eventually. Commodity prices around the world are surging. Prices like sugar and silver are skyrocketing and these type of commodites go into everything you consume such as chocolate bars and mobile phones. There's a time lag before rising commodity prices hit the main street but it's starting.

Inflation figures can be massaged too, but let's say the official rate goes up to 6% by spring. "Analysts" will start to panic about inflation rising very quickly. Interest rates will then be used to reduce the supply of money in the economy to bring down prices. Now with public and private debt at 449% of GDP and with the government already printing to pay debts how are interest payments going to be met?

In Scotland around 5% of the population, or 207,500 people, according to Shelter Scotland, are already using credit cards to pay their mortgages. So what happens if mortgage interest rates spike by say only 2%? I prefer not to imagine it.

Ugly stereotypes will be peddled from the London media as the UK government seeks to blame the economic malaise on subsidy junkies up North, the EU, the Welsh, the immigrants and yes, the poor will be blamed for being lazy. All this already happens so just imagine the magnification of those images in the dishonourable dash for political cover. Expect a rise of extreme right activities.

Scottish economic debate

As I said, the good news is that Scotland has an economic surplus in its accounts. It really is remarkable how Scotland has managed to remain in robust economic shape during the crisis and that is testimony to the sound economic management of the SNP government in Holyrood.

Our national parliament has few of the powers needed to effect real economic change but those which it does have are being handled more than capably by Alex Salmond and John Swinney - credit where it's due.

Large corporate businesses, and the parties they donate and lobby heavily to, have a dispropotionate influence over how economic news is reported. What the mainstream media seldom tells you is that the health of the private economy is essentially down to small businesses. Many more people work for small companies than large corporates and so the small business relief policy has been an SNP economic master-stroke. It is the probably the single most important reason that Scotland remains in surplus.

In order to help small companies compete with giant retailers the SNP introduced into its budget a levy on the the big out-of-town supermarkets. The move was well received by Scotland largest business organisation the Federation of Small Business. Today, it was voted down by the Unionist opposition parties which perhaps is a reflection of where supermarket polical donations will be going in the run-up to the Holyrood elections.

The Nationalists have also, after a suspension lasting a generation, undertaken council house construction projects and the Scottish construction sector is now contributing to Scotland's economic growth.

Crucial to protecting families and communities has been the SNP's freezing of council tax payments. This has saved family budgets from being plundered and so with a little more to spend in the shops small retailers have been thrown a lifeline to support them in times of UK crises. To prevent council services from being cut the party has achieved public sector efficiency savings especially by making public sector procurement more efficient. This is, for me, one of their most impressive achievements in government demonstrating ministerial capability and sound management.

Austerity

I mentioned above that the current parlous state of the UK economy is not related to austerity. That is not to say I think austerity will help. Indeed, I believe it will cause further economic decline.

Throwing hundreds of thousands of public sector workers on the dole and slashing benefit payments is the wrong way to deal with a problem caused by the financial sector - especially wealthy finance houses. Look no further to the collapse of the Irish government to see where this policy will take us. With the private economy contracting how will the burden of the austerity cuts be borne? Now, you can argue that cutting down the public sector is a good idea and that's a valid poltical viewpoint to hold under normal circumstances. However cutting public sector jobs and services at the same time as a private sector contraction is the economics of the madhouse.

Laid off public sector workers will have to be paid benefits. Many struggling to pay their mortgages will experience repossession. And with salaries gone and benefits cut there'll be less money going into the shops, already suffering from a VAT hike, and so there'll be a further drop in retail sector jobs. And do not public sector workers pay taxes? You might deduct their salary from the cost of running government departments but you must at the same time calculate the hit on the Treasury in terms of the consequent income tax revenue and VAT receipt losses.

Holyrood Elections

With the Holyrood elections looming, the UK sovereign debt, currency and financial crises will be the central theme of the campaign.

In the red corner will be disgraced former leader Wendy Alexander priming Labour spokespersons on the benefits of the Scotland Bill. Internationally renowned economists and academics have characterised the Scotland Bill as "fatally flawed", "unworkable" and "a perfect storm".

Adding to the opprobrium being heaped on the Scotland Bill this week saw the Institute of Chartered Accountants of Scotland (ICAS) claiming that the tax changes proposed by the Scotland Bill could mean a “disproportionate” amount being spent on collection and a backlash from workers who consider them unfair. The institute calculates that anomalies in the system could see an epidemic of evasion costing the Scottish taxpayer £150 million. The Scotland Bill is widely perceived as a Unionist project designed by opposition parties to prevent significant new economic powers being transferred to the Scottish parliament.

Economic independence, as espoused by the SNP, is very popular with the Scottish electorate. The Scottish Social Attitudes Survey 2010 showed that 57% of Scots would like their parliament given full control over Scottish taxes and 62% full control over benefit payments.

Economic indepependence would see Scotland fiscally protected from the dire UK economic situation and is supported by a large number of business leaders, economists and academics. Such shelter would be welcome news for Scottish families, businesses and institutions such as the university sector all of whom must now plan for Westminster austerity cuts.

Alex Salmond's cabinet has shown itself to be very competent and many commentators who are not aligned to the SNP will tell you that, albeit privately. Despite the SNP minority government facing a hostile and often feverishly anti-independence media the party has survived its first term with dignity and kudos. Many in Scottish civic society have praised its professionalism and commitment to the nation.

Salmond and his advisors must then point not simply to their economic successes but to get re-elected they must compare the healthy state of the Scottish economy with the UK's crises. Yes the Nationalists really only benefit from upbeat messages, but if they must be sparing in their criticism then negative criticism must be spared to point out that the UK's deficit was caused by the Labour party. That will give them the opportunity to ask the electorate to think twice about believing that Labour can be believed to solve a problem that Labour themselves caused.

For Gray, economics is not his strong point and to win control of Holyrood he must defeat a popular and charismatic sitting First Minister who is a former economist. Gray's strategy then must be to avoid the subject when possible and when he must simplify his message and use Labour's ubiquitous influence over the mainstream media to focus all the blame for the UK's economic crises on the ConDem coalition.

As far as the electorate is concerned the next electoral term is not about getting elected but keeping a roof over the head and food on the table.

Scots will have to decide whether they believe that the size and prestige of the British economy and currency is going to help their family survive and prosper over the next few years or whether they they should opt to have their own parliament take the important decisions over the Scottish economy.

The propaganda is thick when it comes to politics and economics and so deciding how to vote will be a difficult decision to make. In times of crises people tend to be conservative but when you are on a sinking ship and you see a lifeboat, radical and decisive action is widely believed to be an appropriate response.

News Scotland

Egyptians versus Israel

2011-01-30T15:45:00.004+01:00

It goes on. The demonstrations in Egypt are about deposing the Mubarak regime. The people are waiting and waiting for Mubarak to go. A stalemate has been reached. Clearly, the US is trying to manage the situation in order to suit the interests of Israel.

The swearing in of Vice President Omar Suleiman by President Mubarak represents the Whitehouse desire. He is trusted by the Israelis whose network are said to control the US Congress and the bulk of the US political system through Zionist lobbying organisations and political campaign funding. Israel has a kind of bouncer role in its role in the middle-east which provides cheap oil to the US. Dollar hegemony is the issue as the middle-east sells oil to the rest of the world and that business is done in dollars which is the single most important factor in holding up the value of the dollar as the Federal Reserve and Obama continue to flood the world with dollars. You want to buy oil, you need to buy dollars first..

Israel wants an obedient regime. Clearly though, the interests of Israel/US are not those of the protesters. Stories about how the US is behind the protesters are merely attempts to position themselves to benefit from any outcome.

This is why the stalemate goes on and why intimidation and violence is likely to continue. Hundreds are now dead as the authorities have released prisoners from jails. Criminal gangs are now looting and committing act of violence. Police are said to be among the looters, organising and encouraging them. Communications have been cut and as I write airforce jets are flying low over the capital. In neighbourhoods water has been cut. State TV are showing scenes which do not reflect the true nature of the demonstrations. Al Jazeera have had their accreditation withdrawn but they are still filming live. Watch here: http://english.aljazeera.net/watch_now/

These Egyptians are brave. They, again, are defying another curfew.

It is becoming clear that they are not going to settle for a new regime which reflects the interests of the US and Israel. They have waited decades and now is their time.

I therefore fear the worst. I imagine there will be some pretext for a brutal clamp down. Perhaps the crowds will be sprayed with chemicals designed to passify the demonstrators but the demonstrators seem stubborn. I hope I am wrong but the US and Israel will not permit a situation whereby Egyptians will have an opportunity to decide their own destiny as that could lead to an outcome which doesn't suit their interests in the region.

My take is to ignore all calls from the US when it calls for democratic reforms. That is not what they want. They want a puppet regime controlled by themselves. And repressive regimes are usually the very kind of states the US prefers as they are easier to control and it keeps they keep populations poor and so oil cheap. All you've got to do is look after the dictator and make him rich.

So, we wait. However, my view is that all sorts of plans are taking place to quell the protestors. It seems that the longer the US put things on pause the more likely violence will be the only way for either side to succeed.

Failed state and Scottish political branch operations

2011-01-27T00:26:00.002+01:00

Piece I did for Newsnet Scotland:

by Alex Porter

News this week that the Conservatives in Scotland must hand over their management and their money to their London headquarters is yet another indication that the Unionist parties face an identity crisis in Scotland.

A growing membership means their SNP rival can now claim, with validity, to be not merely Scotland's largest party but Scotland's party.

As Unionist measures to control the Scottish political landscape become increasingly bizarre, the issue is not about whether Scots can be persuaded to remain within the Union but rather whether Britain's current economic, social and political crises are signals that the Union's end is imminent and irreversible.

Conservative branch

The story of how the Conservatives in Scotland have been brought to heel by their London bosses broke in yesterday's Telegraph in an article by Simon Johnson:

"Senior insiders told the Daily Telegraph that money raised by the Scottish Tories is being passed to the UK party along with ultimate oversight over a radical restructuring of their operations."

Ahead of the Holyrood elections Scottish party chiefs are to be sidelined according to Johnson and applicants for three new regional campaign manager posts in Scotland must apply to the Conservatives’ Millbank headquarters in London.

The London party is not happy that the party in Scotland managed to secure only a single MP in Scotland in the Westminster election last year. After a review by Lord Sanderson of Bowden senior party insiders, who have expressed the view that the party in Scotland is not trusted to deliver desired changes in terms of leadership, financing and membership recruitment, are quoted as saying that London has "taken control" and, "Every penny we raise now has to go to London.”

An advert, announcing the campaign manager posts, has been placed on the Conservative website and states that the successful applicants will be based respectively in the east, north and west of Scotland. The job description says: "Reporting directly to the Scottish Field Director the Regional Campaign Manager will be responsible for front-line campaigning in all constituencies in their area."

The party will now face ridicule as it seeks to examine the economic prospectus of the other parties during the Holyrood election campaign as their adversaries will simply point out that if they themselves are not trusted with their own money then how can they be taken seriously with Scotland's money. More serious though is the historical significance of this development. It can be seen as another sign of Unionist parties losing control in Scotland.

Labour branch

There is perhaps no clearer a sign of this crisis of Unionism in Scotland than the fact that Labour simply never accepted that they lost the Holyrood election to the SNP in 2007. Having assumed for generations that Scotland was their natural fiefdom their loss was traumatic and in opposition Labour have exhibited symptoms of denial.

Failure to come to terms with losing to the SNP has meant Scotland has missed having a constructive parliamentary opposition. Instead, the parliament and public debate have been trivialised by the use of abusive procedural tactics against the SNP minority government.

The motivation for this is merely to wreck legislation and disrupt ministerial activities in accordance with an overarching plan to undermine everything the Scottish government tries to achieve. Labour's Holyrood strategy team is not concentrating on improving the lives of Scots families or the long term health of Scottish institutions but purely and simply on getting elected.

This weekend the press is carrying a story that internationally renowned academics have lodged a formal complaint to the Scottish Parliamentary Standards Commissioner over their treatment after having agreed to give evidence to the Scotland Bill Committee. Expert economists Professors Andrew Hughes-Hallet of George Mason University in Virginia and Drew Scott of Edinburgh University prepared, in advance and as requested, to give evidence in relation to Westminster's Scotland Bill. The professors are known to hold views favouring the Scottish parliament having the powers of fiscal autonomy. The committee, chaired by Labour MSP Wendy Alexander, 'ambushed' the academics on that subject showing no interest in their evidence in relation to the Scotland Bill.

Scotland's parliament has had a good relationship with experts who over the years have offered up their time freely to help its committees improve legislation before becoming law. This latest furore will undoubtedly undermine the parliament's committee system. One academic and constitutional expert who does not support the SNP, Alan Trench, has already cancelled his visit to a hearing by the same committee describing its treatment of fellow academics as an 'inquisition'.

The issue has drawn attention internationally as a senior colleague of Professor Hughes-Hallett from Virginia, Professor A Lee Fritschler, who served in the sub-Cabinets of Presidents Clinton and Carter, has written to Presiding Officer Alex Fergusson expressing his “dismay” at the way the two witnesses were “harassed in mean, petty and non-germane ways”.

Sadly this is only too indicative of how Labour in Scotland have behaved as an opposition. It is only a few weeks since Iain Gray, in his visceral desire to undermine the idea of small countries gaining independence, inadvertantly insulted Montenegro resulting in incensed diplomatic communiques from the Montenegrin chargé d’affaires, Marijana Živković.

The reason that the opposition parties are in such a pathologically oppositionalist mode is because they really are not allowed to offer anything more to Scotland. With no real scope to offer increased powers or an alternative agenda to what's currently on offer from London, Labour can offer no vision nor even a better managerial team. It is therefore reduced to carping and insulting and the net effect is that the Scottish electorate switches off.

Lib Dems branch

And the last of this oppositionalist triumverate are the LibDems. Many of their voters were angered that they didn't form a coalition with the SNP to create a majority governement for the good governance of Scotland. Their move into opposition was seen as a result of interference from London. Against this backdrop their forming a UK coalition government with the Tories in London has discredited the party in the eyes of many Scots voters and a mauling at the Holyrood elections is expected by political commentators.

Centralisation of a failed state

Scotland is being pulled in rival directions. Both London and the Scots want more control over Scotland.

The forces which are at work run deep. Britain PLC is running deficits which are spiralling out of control. In the month of November government borrowing reached £23.3 billion and total UK government debt is approaching £1trillion. If you think about this in terms of the grant given to Edinburgh from Westminster it amounts to over 30 Scotlands.

This year North Sea oil receipts will represent 25% of UK government revenues from corporation tax and that ignores tax revenues from the pumps. Without North Sea oil the UK would not be able to offer repayment guarantees to creditors. In that scenario the current planned UK austerity cuts would seem like a walk in the park in a late spring morning.

When the City imploded, Gordon Brown, advised by current shadow chancellor Ed Balls, bailed them out with tax payers' money. The mighty merchants of the City of London failed as capitalists and begged for state benefits in the form of bail outs from hard working citizens. People who were conned into believing that the bail outs saved their jobs and savings.

That wasn't enough for the bondholders and shareholders, so the Bank of England and Brown and now Cameron turned on the money printing machine. The new money diluted the wealth of the people and was given to financial institutions so they could continue trading fraudulent financial packages with each other and draw down large bonuses which properly reflect their skillsets as preeminent scammers. The population is continually threatened that if the bankers don't receive large bonuses they'll leave.

Yes, the supine British media presents that as a threat rather than a promise.

In recent weeks some of the Icelandic bankers who caused their own financial system to collapse have been arrested as has former Prime Minister Geir Haardie who faces charges of gross economic negligence - a crime which carries a two year jail sentence. It is perhaps stretching credulity to compare Britain to a European democracy.

There's never going to be enough for the City. Bail outs are a guarantee that no matter how much risk you take you can't lose and so they go gambling away with impunity. That's why the austerity cuts are coming. Bankers know that another round of bail outs are in the pipeline and are making sure that there's enough cash around for them to go back to the public trough. The citizens are being squeezing in anticipation.

This is the real reason that Scottish economic independence is being resisted. London City needs its next fix and the surplus in Scotland's national accounts is ripe for the plucking. However the real threat to Britain's kleptocratic rulers is that if Scotland demands economic independence the oil money will be next and then you can forget about the ballooning deficit. No-one will lend to Britain PLC. The IMF will come knocking on the door and demand austerity cuts that will relegate Britain from the league of first-world countries.

Right now Mexico is declining as an economic power and the accelerating trend is towards centralisation. When states go into a death spiral they suck capital into the centre from the peripheries in a desperate attempt to shore up the apparatus.

The result is rapid economic decline around the peripheries leading to the dramatic drop in tax revenues we are now witnessing. The centre can buy a little more time but it has increased the unsustainability of its hegemony. When the penny drops the state experiences capital flight and the population is fed to the dogs. Ask Argentina.

Failed states are typically characterised by social, political and economic crises and the rapid process of centralisation of resources just in advance of the tipping point where the state seizes up, fractures and then awkward pieces start breaking off. The Soviet Union is a case in point.

This is why Scots are not being offered a referendum on the Scotland Bill. The alternative is far too attractive but for Westminster far too dangerous.

The Conservatives may not like having their money controlled by their London bosses. Pondering the Tory membership of the Calman Commission in light of this turn of events would make you laugh at the irony of it all if it didn't underline and highlight an unedifying Scottish trait.

For some reason Unionist parties can effectively argue that Scots can't trust their own Parliament with the powers needed to improve Scotland's economy even at a time when London is technically bankrupt. That deep-rooted insecurity in my fellow Scots concerns me.

Read previous essays written by Alex Porter for Newsnet Scotland:

Scotland's Choice: Calman's Gulag or Economic Independence

Scotland versus Britain
Part 1 , Part 2

LABOUR'S BANKRUPT BRITAIN

Rediscovering Oil – A From Rags to Riches Story
Part 1, Part 2, Part 3

Would an independent Scotland have a viable economy?

news scotland

Newsnet Scotland Launch

2011-01-24T20:35:00.005+01:00

It's election year and Scotland has a captured media which perpetuates the myths of Unionism.

To take back our nation we must build an alternative media. (Complaining about injustice achieves nothing.) Newsnet Scotland is involved heavily in this effort. I urge that all bloggers which support Scottish self-determination put aside all our regional and personal differences, for a short while, and post Newsnet Scotland's video (see below) on your blogs.

Newsnet Scotland believes that Scottish languages are absolutely central to Scotland's national identity. On our Burns Day launch we wish to let everyone in Scotland and our friends around the world know that Newsnet Scotland has arrived.

Work as if you live in the early days of a better nation:

Ed Balls bad news for Iain Gray's Holyrood chances

2011-01-22T10:59:00.002+01:00

Piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

With the UK budget deficit accelerating, the British pound plummeting and austerity cuts just around the corner, the issues of jobs and the economy will cast a long shadow over the fast approaching Holyrood election campaign. What effect will Labour leader Ed Milliband's choice of shadow chancellor, Ed Balls, have on the crucial economic debate on Scotland?

To answer that question we have to realise that the UK economy is not in the same robust shape that the Scottish economy is in. While Scotland's national accounts show a surplus, the UK's deficit reached a staggering and unprecedented £23.3 billion in the single month of November last year, according to the Office of National Statistics. As government debt (minus off-balance sheet debts) are soon to pass the £1 trillion mark there is no real sign that Britain PLC can stop the deficit from ballooning further out of control.

Labour's Crisis

Gordon Brown's fiscal, monetary and regulatory policies sped up the process of refocussing the UK from a manufacturing economy into a service sector economy. If you manufacture fewer products then a national economy suffers as it cannot earn income by selling goods abroad. As consumers Britons spent money on goods from abroad meaning more money left the economy than came in. This is unsustainable as deficits continue to rise. Britain's economy under Labour was driven by more debt, not growth.

Deficit finance is no longer a disaster waiting to happen, it is happening. Unable to pay its debt the UK government and the Bank of England are indulging in money printing. This policy devalues assets and wages and is effectively legal fraud. After money printing there's a lag and then price inflation visits and you realise you have the same money in your pocket but it buys a whole lot less.

Of course most currencies around the world are now devaluing. The developing world must now print to devalue their currency so that their exports remain competitive in a world of ever increasing dollars. Britain is simply the worst offender. However Britain is printing money not to be competitive - it's an importing country after all - no, it's printing money to pay its debts.

The tax take from the financial sector has fallen off a cliff. Bail outs and stimulus had to be paid for and so drained the private sector, meaning tax receipts are not recovering and firms are now dependent on increased government borrowing to maintain earnings. Decreased tax receipts are what is causing the deficit to grow not an increase in public spending. While the City was selling dodgy derivatives around the world the UK government had a good rake but that's largely gone. Unless the public keeps stuffing banks with newly printed or borrowed money they would not be posting any profits at all.

Printing money to pay debts means Britain is technically bankrupt. And if you thought there was some kind of economic benefit to devaluation you were wrong. Sterling has lost 20% of its value against key trading partners but whereas public confidence in the UK economy continues to tumble, Germany is recording its lowest ever unemployment figures.

The devaluing pound will mean that importers will have to use more pounds to import goods for consumption inside Britain and those costs will be passed on to the consumer. Food prices are already rising but we're only at the start of this process. The price of oil is set to rise too meaning transport costs for food will make matters worse. An early indication of problems can be seen in recent food riots in Algeria, Tunisia, Morocco, Yemen And Jordan. Tunisia's President fled after failing to quell public unrest by slashing staple food prices. In the developing world a larger percentage of expendible income goes on the family food budget and so nations with poorer populations act as canaries in the global economic mine.

Gordon Brown's drive to shift the British economy in the direction of services means that the UK is now trapped. The massive wealth generator that was the City of London was an illusion based on fraud. The Treasury was aware of the problem but Gordon Brown facilitated the rapid expansion of City activities through 'light touch' regulation. Britain looked flush for a while and then the truth emerged. The City was packaging and selling fraudulent derivatives around the world which resulted in the financial crash of 2008. The reality was that the City was a giant economic parasite sucking the rest of Britain dry and relying on North Sea oil to guarantee its debts.

Britain's sovereign debt, financial and currency crises will, when the history books are written on the subject of Britain's fall from its status as a global to a second-tier power, be attributed to Fife's Son of the Manse.

Balls's name is inextricably bound up with Brown's, so he too is closely identified with the financial crisis. He was close to Brown and the Treaury throughout the years when the crisis was incubating. Balls was appointed as an economic adviser to Shadow Chancellor Gordon Brown (1994–97) before becoming chief economic adviser to HM Treasury from 1999 to 2004. During this time he was once described as the 'most powerful unelected person in Britain'. On becoming an MP he stepped down as chief economic adviser to the Treasury and spent some time at the Smith Institute, a political think tank, before being made Economic Secretary to the Treasury in 2006. When Gordon Brown became Prime Minister in 2007, Balls was promoted to Secretary of State.

Balls was at the heart of the Treasury and was a key ally of Gordon Brown when the policies of light touch regulation were rolled out and legislation was designed to favour the financial sector. He was therefore central to the creation of the derivatives bubble and the 2008 crash which ensued.

Will Balls help or hinder Labour in Scotland?

Iain Gray will attempt to shift the debate onto the ConDem coalition's austerity programme but according to YouGov 40% of the UK population blame Labour for the public sector cuts, 22% blame the coalition and 25% see both London parties as equally culpable.

For Gray to win the keys to Bute House he will have to convince the Scottish electorate of his party's economic competence. People are extremely worried about jobs and the economy and are rightly angry about the reasons the crisis happened. Labour strategists will have their job cut out for them in refocussing attention away from the causes of the crisis and onto the current UK government's management of it. Given that Balls is so closely associated with the last Labour government and closely identified with Gordon Brown, putting this recent economic record behind Labour will be much harder to effect. The electorate are no fools and know that the financial crisis happened during Labour's time in office.

By making Balls the UK Shadow Chancellor, the SNP has been handed an electoral gift.

The new Shadow Chancellor has a combative style and that may resonate with voters over time and as austerity bites. The problem for Labour UK is that this will bring the ConDem coalition out fighting. George Osborne will seek to pin the blame for the deficit on Labour's legacy but fortunately for the Chancellor there is now a Shadow Chancellor to point the finger of blame at.

As the Holyrood campaign focuses minds on Scottish politics the benefit Labour accrues from coalition bashing will dissipate. Iain Gray will be asked searching questions on a subject he is weak on - economy. And he faces the big beast of Scottish politics - former economist and sitting First Minister Alex Salmond.

Salmond has no need to attack Tory cuts during the campaign. He can simply blame Labour and Balls for causing the crisis. Labour will be put on the spot and forced to point to the ConDem cuts as the root of the problem. The SNP will have the luxury of killing two birds with one stone. And it gets better for the Nationalists. As Labour are forced to defend themselves they will struggle to pin the blame both on the ConDem coalition and the SNP government simultaneously. Salmond can jab Labour but Labour's counterpunch will be weakened.

Of course Iain Gray and Labour have a seemingly pathological obsession with attacking the SNP and so with some calm economic logic Salmond can lay traps and watch Gray and his campaign team walk into them with predictable regularity.

The Nationalists have another trump card. If Labour tries to blame the SNP over the state of the economy the SNP can retort that the powers needed to drive the economy are reserved to Westminster and so the crisis is London's fault. The case will be made that what few powers the Scottish Government does have were used effectively. After all, Scotland's economic state is healthier than the rest of the UK's. And the kicker for the Nationalists is that the argument that the UK umbrella protects Scotland from volatile international markets can be presented by the SNP as having always been a myth.

So, blaming the SNP will only serve to move the economic agenda on to their turf - the case for economic independence. On this territory the SNP have a majority of public opinion behind them. A significant majority of Scots, if polls are to be believed, want their parliament to have complete control over taxation and benefits in Scotland. At the same time Labour must defend the Scotland Bill from heavy criticism by internationally renowned economists and business leaders who have characterised it as "dangerously flawed", "unworkable" and "a perfect storm".

For Labour the longer the media focus is on the ConDems and London politics the less they will come under real scrutiny in Scotland and the higher will be their poll ratings. By contrast a specific media focus on Scotland can't come quickly enough for the SNP who are currently behind Labour in popular opinion surveys. The fact that there will be a referendum on the AV voting system on the same day as the Scottish elections will not be helpful to the SNP. Neither will the royal wedding scheduled for a week before.

With the all-important economy issue such a key advantage for the SNP, Labour will need to try and bury their role in causing the crisis or the Scottish electorate will migrate towards Salmond and the SNP's case for economic independence. With Balls as Shadow Chancellor, Iain Gray's strategy of shifting the electorate's attention away from Labour's role in the financial crisis is now much less deliverable.

News Scotland

Lib Dems U-turn as business backs SNP supermarket tax

2011-01-14T16:53:00.002+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

Almost three-quarters of Scotland's businesses - 74 percent - support the SNP Government's proposed 'supermarket tax', which aims to raise £30 million for public services, according to Scotland's most important business organisation - the Federation of Small Businesses (FSB) Scotland.

With the Holyrood elections approaching the supermarket chains are behind a campaign to have the SNP drop their 'levy'. This campaign by the corporate giants will promote the message that town centres and retailers in general will suffer however evidence shows that around 92.3 percent of the tax will be paid by the big 5 out of town chains: Tesco, Asda, Morrison, Sainsbury and B&Q.

Lib Dem policy U-turn

Lib Dem finance spokesman Jeremy Purvis who has lodged a parliamentary motion to annul the measure and who called the SNP measure "perverse" and "anti business" said,

"I heard the identical concerns from retailers about the damage that the large retail levy will have on jobs, the economy, Scotland's competitiveness and our economic reputation.

"The SNP are putting Scottish businesses at a competitive disadvantage."

However, it has emerged that only last week Mr Purvis listed on his website “more support for local retailers struggling against the big supermarkets” as one of his top 11 priorities for the Scottish Parliament.

The sudden U-turn will raise confusion among floating voters who will want to know if Mr Purvis's view last week or his view this week now represents Lib Dem policy.

Business Support for SNP plans

With 20,000 members the FSB, which represents Scotland's SMEs, believes that the tax will help create a level playing field for its members when competing against the large corporate supermarket chains.

In their submission to Holyrood's Local Government Committee on the proposed move, the FSB highlights that, despite claims the supplement will hit city centres, figures in the public domain suggest that 86 per cent of the projected take (£25.7m of a projected £30 million) will be paid by the "big four" supermarkets.

In the Committee's hearing next week, the FSB's Public Affairs Manager, Colin Borland, will argue that the SNP's move willl bring more fairness and proportionality into the rates system.

Of local competetiveness, Mr Borland said,

"Supermarkets are here to stay. Their business model is incredibly successful and their record profits and turnover are testament to this. But, at a time when rising overheads are further squeezing margins in local small businesses, when cash-flow is tight and financial reserves depleted, it is now more important than ever that the playing field is levelled wherever possible.

"Progress has been made through the introduction of the Small Business Bonus. But rates are still a disproportionate burden for the small businesses who pay them, with nearly half citing them as a major barrier to their business success. Contrast this with the 225 largest retail properties whose bills, according to Scottish Government calculations, account on average for only around 2 per cent of their turnover.

"It is for these reasons that three quarters of our members feel that it's time for the largest out of town supermarkets – who benefit from free parking and other amenities our members don't enjoy – to start paying more of their fair share."

In contrast David Lonsdale of the Confederation of British Industry (CBI) which represents large corporate businesses and has around 90 members said,

"Our members are greatly concerned that this new tax will make Scotland a less attractive place for retailers to invest and create jobs, and that other sectors could be similarly targeted in subsequent budgets from the devolved government.

"The campaign against this hefty tax rise on business is gaining support and momentum."

Figures in the Times newspaper in an article entitled "Supermarkets see red over ‘supermarket tax'" on Tuesday 11 January show that under the SNP's proposals to raise £30 million pounds, Tesco would pay £9m, Asda £8.8m, Morrisons £4.4m and Sainsbury's £3.5m totalling £25.7m. This is around 85.7% of the total amount which it is estimated could be raised by the proposals. Included in these figures is B&Q who would pay £2m – bringing the projected total for these 5 out of town retailers to 92.3%.

In 2006, the FSB in Scotland published a report (1) based on an extensive research study entitled, "The effect of supermarkets on existing retailers" – looking at how new supermarket developments affected town centres and independent retailers in Alloa, Dingwall and Dumfries. The full report's conclusions were that, in each of the towns, a new supermarket meant:

• A decrease in the number of convenience retailers operating in the town centre;
• An increase in the number of vacant units and corresponding floorspace;
• A broad shift in convenience expenditure away from the existing town centre retailers to those operating the new supermarket development;
• A significant decline in the level of business activities undertaken by existing retailers. This is attributable in the main to competition from the supermarket; and
• A general acknowledgment in respect of a decline in the overall number of shoppers frequenting the traditional town centre.

News Scotland

SNP supermarket tax will boost local communities

2011-01-14T16:49:00.003+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

The SNP government aims to raise £30 million to pay for public services by taxing Scotland's predatory supermarket chains.

With the UK coalition about to slash the Scottish block grant by £1.3 billion and with workers already facing pay restraint the SNP government are looking at ways in which to spread the pain and protect front line jobs.

In order to mitigate against this funding shortfall Finance Minister John Swinney announced in his November budget last year that he would impose a levy on large corporate supermarket chains such as Sainsbury's, Tesco, Asda and Morrisons.

Effect on local economy

Supermarket chain shareholders are, as one might imagine, none too pleased at the tax which is aimed at giant retail firms who own properties with a rateable value of more than £750,000.

Sainsbury's chief executive Justin King threatened to shelve the supermarket chain's entire Scottish investment plans unless ministers cancel the tax hike.

However the move will provide a new lease of life for small shops and communities the length and breadth of Scotland which have been decimated due to the predatory corporate tactics of supermarket chains, who are regularly accused of bullying and having overly close relations with politicians.

Representing the large chains, Fiona Moriarty, Director of Scottish Retail Consortium (SRC) has claimed that the SNP's tax will put 8,000 jobs at risk. This concern will be viewed with a mixture of anxiety and interest by local supermarket workers many of whom will never have met Mr King or any supermarket shareholders.

Claims of job losses always raise anxieties and especially so during times of economic crisis. The supermarkets warn us of how many new jobs may be lost because of their threat to pull investment but in order to calculate the true cost to affected local communities these projections of jobs to be created must be set against the value of the jobs lost in small family shops and communities after supermarkets become established.

Communities are enriched by small shopkeepers. How this process works is simple. In a thriving community the barber spends £1 in the tea shop, the tea shop owner spends that £1 in the butcher's, the butcher spends that £1 in the baker's, the baker spends that £1 in the newsagent's and so on until eventually it gets banked.

This process is what economists call 'money velocity'. The benefits to the community are important in generating vital economic activity and a higher quality of life. Small shopowners have key relationships with the community offering jobs in book-keeping, loading and delivering, cashing up and banking, supplying, ordering, security, inventory, planning and other management skills.

Supermarket business models are widely documented. When supermarkets open, little shops close driving local owners and wealth creators away. Supermarket jobs are mostly unskilled positions, such as trolley collectors and shelf-stackers. Main street retail outlets close and become occupied by charity and betting shops.

The former community model which saw money velocity supporting a vital community is lost and replaced with benefits/low income family expendable income going into supermarket tills and then straight into investors' bank accounts. Such investors will never know the names of most of the towns where their returns are generated.

Some might argue that supermarkets are one of the reasons for the UK's economic crisis as communities are stripped of wealth and unable to contribute to the Treasury.

Local farms

It's not just higher value local jobs which are lost when supermarkets are established in a community, farmers' livelihoods are squeezed across Scotland too.

Kenneth Campbell, who owns a herd of 400 cattle in Castle Douglas, said:

"It's sickening when you see milk being used as the loss-leader in supermarkets. It is costing me 30p a litre to produce and I'm getting 25p for it. People are getting very despondent."

James Withers of the National Farmers' Union (NFU) Scotland said: "Family farms are not looking for special treatment, just fair treatment. The average milk price for a Scottish dairy farmer is 3p below the cost of production. And whilst they lose money on every pint produced, retailers are making millions on milk and other dairy products."

Political fall out

All three Holyrood opposition parties are against the SNP's "supermarket tax" and indeed now threaten to vote down Swinney's budget if the measure is not removed.

Raising one serious concern the leader of the Conservatives' Holyrood group Annabel Goldie said: “The retail sector in Scotland is a major employer – higher taxes will only make Scotland less competitive than the rest of the UK.”

As these same supermarkets exist in both Scotland and England this, Ms Goldie is implying, will lead to people across Scotland going to England to shop. This potential unintended outcome, Unionist opposition parties will argue, shows that the SNP haven't thought these proposals through.

For the Lib Dems the matter is a little muddled. Their finance spokesman Jeremy Purvis said he had lodged a parliamentary motion to annul the measure and that it may 'harm Scotland's reputation'. However, until last week he listed on his website “more support for local retailers struggling against the big supermarkets” as one of his top 11 priorities for the Scottish Parliament.

Labour are thought by many to have very close, longstanding ties with big supermarkets. In 1998 it was reported that the lobbying firm LLM secured a waiver on paying a car park tax for their client Tesco. The tax would have cost Tesco £20 million per year but the waiver was secured and Tesco contributed £11 million into funding for Labour's pet Millennium Dome project.

Like the Lib Dems, Labour also exhibit some confusion on the issue as during the minimum pricing for alcohal debates they argued that the Scottish Government should find a way to tax supermarket profits.

The SNP make the case that they back local businesses and that communities should have a fighting chance when it comes to competing with supermarkets. Christine Grahame MSP said: “The SNP is committed to backing small business and to levelling the playing field for our town centres."

Threat or promise?

Sainsbury's Mr King said that the SNP levy could force the supermarket chain to shelve plans for stores in Kelso, Nairn and Irvine as well as three planned extensions to existing premises in Linlithgow, Stirling and East Kilbride.

Given, as many argue, that the supermarket business model causes local economic and social stagnation, local residents and businesses will wonder if this is a threat from Mr King or a promise.

News Scotland

Iain Gray under pressure as voters blame Labour for deepening crisis

2011-01-14T16:40:00.004+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

Results of a shocking new survey conducted by YouGov show that 5 percent of people in Scotland - equivalent to 207,500 card-holders - have used credit cards to pay their mortgage or rent in the last 12 months.

The findings (1) are extremely worrying according to Graeme Brown, director of Shelter Scotland, the housing and homelessness charity which commissioned the survey:

“A reliance on high interest options such as credit cards to pay rent or a mortgage is a highly dangerous route to go down and is known to contribute toward uncontrolled debt, repossession or eviction and, eventually, homelessness.

“It is also very worrying that thousands of people in Scotland are being forced to move in with family or friends and that many more are having to take on extra hours and/or a second job just to make ends meet."

The survey results coincide with YouGov tracker evidence which shows Labour are blamed by the electorate for the parlous state of Britain's public finances.

The UK-wide survey (2) asked who people thought were "most to blame for the current spending cuts." Of the respondents 22 percent thought the ConDem coalition government were culpable, 40 percent the last Labour government and 25 percent pinned the blame on both the present and previous governments equally.

These consistent findings will deeply concern the leader of the Labour group at Holyrood as he seeks to lead his party to victory over the sitting SNP government at the Scottish elections on May 5th.

Economic Competence

With UK government borrowing hitting £23.3bn per month according to the Office for National Statistics (ONS), and seemingly now out of control, the electorate are increasingly concerned about job prospects and family budgets. Electorally the issue of economic competence will be the decisive factor in the choice of who will form the next government in Edinburgh.

Across the UK the economic outlook is extremely pessimistic according to YouGov. Asked, "How worried are you that people like you will not have enough money to live comfortably" over the next two to three years, 70 percent of respondents replied that they were "fairly" or "very" worried.

During the political campaign the principal contenders will have to explain to the electorate how their party will best insulate Scotland against the worst effects of the UK's sovereign debt, currency and financial crises.

Holyrood's leading contender Iain Gray will have the unenviable task of defending the Scotland Bill which on Tuesday was slated by world-renowned economists and academics as a "perfect storm". The economists fear it could damage and trap the Scottish economy with a too narrow spread of tax powers at a time of prolonged austerity and economic volatility. The warnings about the Scotland Bill are the latest in a growing list of anxieties expressed by experts over the Bill, characterising it as "dangerously flawed" and "unworkable".

Former economist and current first minister Alex Salmond has by contrast the luxury of advancing the case of economic independence which enjoys popular support in Scotland, as reflected in the recent Social Attitudes Survey 2010 which showed 57 percent of Scots wanting the Scottish parliament to have full tax powers with 62 percent wanting the Scottish parliament to fully control benefit payments.

Leadership Popularity

As though these problems were not enough for Iain Gray, his popularity rating of 24 percent in a YouGov poll back in October lags some way behind Scotland's First Minister with a 42 percent rating.

Some recent attempts by Gray to close this gap in the leadership popularity contest have backfired. This will have raised concerns for many of his MSPs fighting in two-way marginal constituency contests. His most recent gaffe caused diplomatic anger. In an attempt to associate recent Balkan problems with Scottish independence, Gray offended Montenegrins by wrongly claiming that their country was involved in ethnic cleansing and a war-crimes tribunal. In fact the country is proud that it stayed out of the Balkan conflicts.

The good reputation and standing of Scotland internationally is a core responsibility in a first minister's job specification. On Newsnight Scotland this week Gray was given the opportunity to express his regret at the insult but refused:

As YouGov trackers are showing a sharp increase in people believing Westminster cuts are having an impact on their lives, up to 72 percent from 62 percent in December, Iain Gray will need to find a way to deflect blame for Labour's role in the UK debt crisis onto ConDem austerity cuts. The Scottish electorate will need to be convinced that Labour can protect Scotland from the UK's troubles despite the widely held belief that Labour caused those problems in the first place.

With popular backing for the SNP's economic prospectus and its leader, SNP strategists will believe that by keeping the pressure on Iain Gray the election will swing their way during the campaign. To find a winning formula Iain Gray will have to do more than attack his opponents. Scottish voters are tired of petty party bickering and will demand comprehensive solutions to deepening economic problems.

The alarm has been sounded by Shelter Scotland's Graeme Brown:

“As we brace ourselves for the full impact of savage cuts to jobs and housing benefits, we are very concerned that more people are going to face even greater debt and the threat of homelessness."

Whichever party provides the most compelling economic solutions and treats the voters with the respect they deserve will be entrusted with the reins of power come election day.

Notes:
1. Press release from SHELTER

2. Yougov poll

News Scotland

Peak Oil and a Changing Climate

2011-01-11T01:56:00.004+01:00

With no-one trusting anyone these days and with conspiracies about conspirators rife, what with banks robbing us blind aided and abetted by almost democratically elected governments and Scotland's pro-union mainstream media spinning like a gyroscope it is no wonder that 'climate change' is another subject that folks are sceptical about.

I mean big business is involved in making everyone scared stiff about climate change so they can introduce carbon trading, which will be followed soon after by the kind of derivative trading that has brought the world to its knees by endemic fraud. Introducing the tax that would 'legitimise' world government and carbon credits which can be bought and sold - bought by heavy consumers with a series carbon footprint from the poorest on the earth who have no carbon footprint.

And then the biggest carbon offenders apparently being pregnant women, because of their children's footprint, means racial cleansing as rich white people buy poor South Americans' or Africans's credits who can only sell it if they agree to joining sterilisation programmes, we really do get people extremely worried.

Then there is the whole issue of 'peak oil' which some, including myself, argue will hugely decrease carbon footprints as we hit post-industrial society. Surely we shouldn't be so concerned then?

I have seen both sides of the debate and find it a bit of a shame that attitudes are so hard on the subject. It doesn't follow for example that because there are a lot of scams in the 'climate change industry' that we don't have a problem. There are scams in the health care industry does that mean we don't need doctors and nurses?

How useful it is then to get a series of informed contributions on the matter such as the following:

UK VAT rise poses strategic dilemma for Salmond

2011-01-04T19:09:00.003+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

So the latest measure to save the UK economy from collapse has been rolled out by the ConDem coalition government in London. Everything consumers buy - except most food products, prescription drugs, baby's clothing, passenger transport and books - will now be taxed by the UK treasury at 20 percent - a rise of 2.5 percent from 17.5 percent.

The Scottish government has estimated that this VAT hike along with rising gas bills will cost the average Scottish family £600 in 2011, extracting £1.4 billion from the Scottish economy to help plug the UK's deficit. Government borrowing in November reached a staggering £23.3bn according to the Office for National Statistics (ONS). Total UK government debt is now accelerating towards the £1 trillion mark. To put this into context, if you think of it in terms of the Scottish bloc grant from Westminster the money that the UK government now owes is the equivalent of over 30 Scotlands.

These Spiralling debts and collapsing tax revenues are the legacy of the last Labour government to Britain's public finances. In an attempt to wrestle with the magnitude of this problem the ConDem coalition have brought in an austerity package which is a combination of cuts in public services and benefits as well as today's VAT increase.

Holyrood Impact

This latest raid on family budgets will fuel further calls for economic independence in order to protect Scottish taxpayers, businesses and institutions from the worst effects of the UK's deficit crisis. Scotland's national accounts (GERS) shows a surplus and that is currently sent to London. On top of that, cuts to the Scottish bloc grant will see a further £1.3 billion leave Scotland this year and head to the London treasury.

With the Holyrood elections looming the governing party in Edinburgh, the SNP, will hope to be re-elected by arguing for economic independence. The nationalists' argument is that Scotland should not be made to take the economic medicine for an economic disease it doesn't have. This case will resonate strongly during the campaign as the ConDem austerity measures are introduced forcing the leading electoral contender, Labour, to argue why they support the Scotland Bill.

The Scotland Bill is Westminster legislation, falls well short of 'fiscal autonomy' which has the support of the Scottish population, if opinion polls are to be believed, and leaves the Scottish economy fully exposed to the UK's escalating deficit problems and the ConDem coalition cuts.

Social Impact

With thousands of families across Scotland already struggling because of the UK's rapid economic decline this latest measure will tip many more families into poverty and hardship. SNP Lothians MSP Shirley Anne Somerville said: "There will be few families in Scotland that can afford the cost of a Tory government in London."

Families are under a lot of financial pressure already. Stress on family budgets is known to contribute to break-ups, homelessness and domestic violence. The accountancy firm PKF has warned that that 440 Scots are likely to be declared bankrupt every week in 2011. Increasing VAT will tip many Scottish families into desperate circumstances putting an increased burden on social services which are simultaneously facing ConDem austerity cuts.

Institutions such as those in Scotland's university sector face a funding crisis as Westminster reduces Scotland's budget. The SNP have promised to keep access to university free but it is not yet clear how universities can afford to maintain standards and at the same time absorb the ConDem cuts.

Unless a percentage of North Sea oil revenues are assigned to ringfence university funding, or some other solution is found, it is likely that fewer students will be offered higher education places. Also, with less high paying jobs to graduate into, students from poorer backgrounds will think again before taking on student debts. The VAT effect on Scottish families will pressurise poorer students into taking a low paid job instead to contribute to the family budget.

Businesses, especially in the retail sector, will be hit hard as goods become more expensive to buy and so demand will drop off. There are also forecasts of job losses in the building industry where companies fear reduced demand for repairs and maintenance work. Many of these job losses will hit the low paid and part-time workers.

Economic Impact

These likely consequences raise the spectre of an increase to the VAT rate being counter-productive. This outcome is a very real possibility and economists, investors and business leaders are anxious. At a certain rate of VAT consumers are priced out of the market and move into the black market. A combination of this and falling sales could see VAT receipts remain static or fall meaning that there will be no gain for the treasury whilst private sector activity actually shrinks and jobs are shed.

Should this scenario play out at the same time as public sector cuts, the combination of the two could be a lethal concoction. The reaction by the ConDem government in London and the Bank of England will undoubtedly be more 'quantative easing' aka money printing, which will cause devaluation. Devaluation means that everyone's money becomes worth less as its purchasing power diminishes - your salary stays the same but you buy less with it. This is a backdoor wage cut.

Without economic independence money will continue to be drained out of the Scottish economy. The SNP government's freeze on council tax bills is therefore absolutely pivotal in offsetting the VAT hike in Scotland in order to ensure that as many families as possible can afford the essentials.

However, making matters worse is London's policy of devaluing the pound which combined with a sharp rise in commodity prices and oil - still to be priced in to the economy - has led to analysts forecasting increased inflation and so reducing the average household's purchasing power further still.

Salmond's Dilemma

The Scottish government has called for the VAT rise to be postponed, but in reality Alex Salmond's Cabinet has no influence over the principle economic powers that steer economies.

In view of increasingly grim economic assessments of the UK economy First Minister Salmond will come under pressure to explain to fellow nationalists how the powers of economic independence are sufficient to protect Scots from the UK's sovereign debt, financial and currency crises.

The UK's VAT increase will impact on the UK's monetary position. The powers of 'economic independence' will protect Scotland from the UK's fiscal impasse but not the deeply troubling monetary predicament south of the border.

It may not suit Salmond's political strategy to campaign for full independence but it is now imperative economically that full independence is prominent on the political agenda so that Scots have the comfort of knowing they can - if they need or wish to - escape from the pound, establish a Scottish currency and protect the Scottish population from the inherent dangers of the UK economy: sovereign debt default, currency devaluation and price inflation.

Scottish Government Attacked by Iain McMillan - Again

2010-12-30T13:20:00.003+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

Seasonal messages are popular with public figures. The President of the USA has a Christmas message. In the UK the Queen and in Scotland the First Minister both have seasonal messages and so apparently does Iain McMillan of CBI Scotland.

In his New Year message the Confederation of British Industry (CBI) Scotland director says SNP Ministers have implemented "too many policies that are likely to hinder business and the economy and for which the Scottish Government deserves to be sharply criticised".

The Economic Case

The first of the SNP's sins and one of Iain's recurring themes is 'cancelled transport projects'. Does this criticism ring true? The SNP have ploughed money into various transport projects such as the completion of the M74, completing the M80 to motorway standard, the Forth replacement crossing project and the completion of the Airdrie to Bathgate rail link which is the largest railway development in Scotland in a century. Let's also not forget the Edinburgh trams project foisted on the capital by the unionist parties opposition bloc vote at Holyrood at considerable cost to the taxpayer and now considerable pain.

However, aside from misrepresenting the Scottish Government, what of the economic merits of such transport projects? Britain's total debt including household debt is 466% of GDP. This is the second worst in the world behind Japan. However Japan has a manufactuing base and its debts, unlike the UK's, are largely owned by its own citizens.

Britain is argued by many international investors to be the most endangered economy in the developed world. In November, UK borrowing reached a staggering and unprecedented £23.3bn. As the UK government can't meet its debt payments it, along with the Bank of England, is simply printing money and so is technically bankrupt. You'd imagine that business leaders would be advising the government to save its money. Not Iain McMillan. Presented with his now regular Scottish media platform this hard-nosed capitalist is arguing for keynsian-style economic stimulus.

Given that the UK is in the midst of an economic crisis which is well beyond a mere recession where less people are going to work, less business trips are being made and there's a dip in tourism, the burden on the transport system is sharply diminished. You would expect that against this backdrop, 'business leaders' such as McMillan would applaud the SNP government for not spending money to buy votes - which is one of the reasons that Western economies are in the mess they are.

Not Iain who has embraced Scottish Labour's transport hobby horse with relish. Would the contracts for said transport projects go to consortia Iain lobbies on behalf of per chance? Is Iain McMillan part of the economic disease which is eating away at the Western economies - croney capitalism?

For some reason big business wants socialism for itself but not for the working population. The poor and the working population get the capitalist medicine. They have to live with the economic consequences of their circumstances - pull their socks up or perish by the wayside. Big business doesn't have to fight to survive however. Business Oligarchs such as those who Iain represents want state benefit hand-outs in the form of bailouts and government contracts. You see, they have rights and privileges that the rest of us mere mortals don't.

As the UK's public finances are in such a parlous state, Scotland's block grant is to be slashed to the tune of £1.3 billion. The Scottish government is critical of the UK government's austerity measures. They are right to be. There is absolutely no evidence that they will do anything but undermine economic performance. The evidence of Latvia, Argentina, Greece and now Ireland points to economic mayhem as a conequence of austerity.

You can look at the problem in two ways. Firstly, government spending is spiralling out of control and secondly, government tax receipts have collapsed.

Austerity will reduce spending but it will almost certainly reduce income too. The question is by how much? Cutting public sector jobs and benefit allowances will cause a dramatic reduction in the population's expendible income meaning less VAT revenues for the government and triggering a fall in retail sector jobs which in turn will spark a steep rise in overall social security expenditure. These job cuts will also see more mortgage payment defaults meaning downward pressures on house prices. As interest payments go up as forecast, this process will multiply causing people to spend less as they strive to keep a roof over their heads.

For his clients Iain McMillan wants stimulus and juicy government contracts. For you and me he advocates austerity cuts. When not talking on behalf of the large business interests he represents Keynes is suddenly not Iain's cup of tea:

"John Swinney continues to berate the UK government for spending cuts, but the UK government's approach is supported by us in the CBI."

The outcome of austerity is at best uncertain but to be as a sound economic strategy it must first pass the test of being equitable. Is it?

The UK is in its death throws because of the fraud which is endemic across the financial sector. Who is to suffer? Not the banks - they get bailouts. Not big business - they get government contracts if lobbyists such as Iain get their way. No, the ordinary working citizen should be forced to cough up again and again and again.

Who else does McMillan represent? Oh yes, supermarkets.

In his November Budget John Swinney said that from next year retail properties with a rateable value of more than £750,000 would pay a higher business supplement - an increase he hopes will raise an additional £30 million in 2011-12. McMillan is a bit perturbed by this explaining that Swinney's policy "discriminates" against supermarkets "risking increased prices for consumers, fewer jobs and less investment in that sector".

Let's think about this for a second. Small retailers and indeed farmers all over Scotland have been put out of business by the predatory tactics of supermarkets. This has caused enormous damage to communities. How so? Simple economics: I spend a pound in the barbers across the road, the barber spends a pound in the butchers, the butcher spends a pound in the bar and so on. It's called money velocity. This keeps a community wealthy.

When the supermarket swaggers into town the money that goes into their tills goes immediately into the Swiss bank accounts of their shareholders and the community they 'serve' becomes blighted by social exclusion and alienation. Before there were skilled jobs running shops, keeping books and inventories, working with suppliers and with the local community but after, all you can do is push shopping trolleys around, sign on the dole or emigrate. Is this the kind of sound economic policy a government should pursue on behalf of the nation it represents?

That is the kind of Scotland Iain McMillan's 'leadership' will take us to. Unemployed and/or unskilled, bare minimum of public services and impoverished, barren and debt-laiden communities marked by supermarkets, betting shops and charity outlets. Those Iain represents will be as neo-feudal lords and the gap between the rich and poor akin to Victorian Britain.

While the SNP are going to make it more difficult for supermarkets to, according to well-rehearsed business plans, savage community retailers and farmers across the land they have also abolished business rates for many thousands of small business - the back bone of all communities and economies. None of this was mentioned in McMillan's New Year message and by extension those in the Scottish media who parroted the message.

The Agenda

Does McMillan's agenda go beyond representing big business interests many of whom are headquartered furth of Scotland?

Well, Iain is not happy that the SNP government spent £1 million on its National Conversation on the constitution. Yes, £1 million is a lot of money for individual taxpayers but not a lot in terms of government spending. The AV referendum that no-one is interested in will cost £millions, the trial of Tommy Sheridan cost £5 million, the wars £billions, the bailouts £trillions but £1 million spent on consulting the population about its national constitution exercises Iain quite a bit.

Perhaps that's because Iain McMillan (pictured) was on the Calman Commission which cost many £millions. The Calman Commission was also a discussion about the constitution but was one comprising the unionist parties which set it up after the election of the SNP government in 2007. Observers note that its function was to contain the new SNP government's drive towards economic independence. One of the ideas rejected out of hand by this unionist commission was full fiscal autonomy. The reason was not that it wouldn't have helped Scotland, it was rejected because it might have harmed the Union.

But how has the Calman Commission proposals been received in Scotland? Eminent economists have described it as transferring "not nearly enough" economic powers and as "dangerously flawed" and "unworkable". Indeed only last month a group of prominent Scottish businessmen and women and academics took out adverts in Scottish newspapers calling for Scotland to be given more powers than Calman proposed.

Furthermore the Scottish Parliament's Scotland Bill Committee, which is supposed to scrutinise the powers, is chaired by Wendy Alexander who, as leader of the Labour group in Holyrood, resigned amid accusations of financial corruption in 2008.

The recent Scottish Social Attitudes Survey 2010 shows that the electorate wants the Scottish parliament to have significantly more powers, including 57 percent favouring full tax powers and 62 percent wanting Scotland to have control over benefit payments. Calman falls well short of that desire. Scotland's prestigious Council of Economic Advisors has argued in favour of economic independence so that Scotland can be sheltered from the dire state that the UK economy is in whilst keeping the surplus that is currently shown in Scotland national accounts (GERS) to benefit businesses and Scottish institutions like the university sector.

This polling evidence and case cuts no ice with Iain McMillan. To understand why, we must keep in mind that many of the interests that he represents are not headquartered in Scotland - they simply have Scottish 'operations'.

A number of years ago McMillan was slapped down by his own membership for his aggressive anti-SNP rhetoric in the lead up to elections in Scotland. Many of his Scottish members are supportive of the SNP and felt misrepresented by their Director General.

What do others think and what are we to make of Iain McMillan then? His economics shifts between 'keynesian' subsidies for his clients and austerity for the general public. He misrepresents his own members and involves himself in constitutional politics, being found often in the company of leading unionists some of whom are tainted with allegations of corruption.

Do his public messages on behalf of the CBI, and which are regularly covered in the pro-unionistScotsman newspaper as "Leading business figures launch a scathing attack" on the "SNP's record" tell us anything useful about Scotland's economy or the Scottish government's economic record?

Perhaps as a contrarian indicator. Other than that all we can really decipher is that Scotland's economy seems to be of secondary importance to Iain, well behind the narrow business interests he represents and way behind his political agenda.

Julian Assange's deal with Canongate leaked

2010-12-30T11:23:00.002+01:00

A piece I did for Newsnet Scotland:

by Alex Porter

Canongate, the Edinburgh based independent publishers, has signed a deal with Wikileaks founder and editor-in-chief Julian Assange to publish his memoirs.

For the rights Assange will receive $800,000 from American publisher Alfred A. Knopf and £325,000 ($502,000) from Canongate. Assange explained that as Wikileaks has been prevented by Visa, MasterCard and PayPal from receiving donations the money will go toward paying his legal bills, related to allegations of rape against him in Sweden, and helping keep the WikiLeaks operations going. The deal is a risk for the publishers who could face the same sanctions from the credit card firms as Wikileaks itself.

Wikileaks and indeed Assange are now household names around the world after distributing 250,000 leaked US State Department documents to newspaper editors leading to public disclosure of diplomatically sensitive opinions which have been embarrassing to the White House.

Sensationally, the cables leaked to The Guardian newspaper showed that the last UK Labour government was privately promoting the early release of the convicted Lockerbie bomber Abdelbaset al-Megrahi. At the same time Labour politicians were attacking the Scottish government over the decision to release Megrahi on compassionate grounds claiming that the release was an embarrassment to Scotland. Indeed, Labour MSPs called for the resignation of Scottish Justice Secretary Kenny MacAskill over the issue.

There was also a campaign, given prominence by BBC Scotland, implying that the SNP had released Megrahi as part of a business deal with BP. The leaks exonerated the SNP government and showed that it was infact Labour leaders who pushed for Megrahi's release on commercial grounds. BBC Scotland did not give prominance to this aspect of the leaks. Instead Reporting Scotland on the day of the leaks painted an altogether different picture of their general thrust by presenting them as having damaged the First Minister and Scottish government.

Ironically, the Edinburgh based publishers were trying to keep the Assange deal secret but news leaked out. Last week the Brisbane Times said: "The British publisher was trying to keep the book secret but, as Assange would know more than most, things get out when they are not intended to. The deal was done by Canongate,.."

The Assange deal is a coup for the Edinburgh firm Canongate Books and its Managing Director Jamie Byng best known for discovering Yann Martel's novel Life of Pi. The memoirs, the manuscript of which Assange must deliver by March for publication later in 2011, will undoubtedly be hugely popular. In another irony involving Canongate and the Whitehouse, Byng previously secured the rights to publish President Obama's book Dreams From My Father.

Michael Forsyth calls for Referendum on Scotland Bill

2010-12-29T13:39:00.002+01:00

A piece I did for Newsnet Scotland:

by Alex Porter

Former Scottish Secretary Michael Forsyth is calling for a referendum on the Scotland Bill arguing that the public has a democratic right to decide whether or not they want to transfer powers over income tax from Westminster to the Scottish parliament.

The Scotland Bill is a Westminster piece of legislation and is the outcome of the work of the Calman Commission chaired by Sir Kenneth Calman.

The Commission, set up by a unionist coalition of the Labour, Conservative and Liberal Democrat parties after the SNP won the 2007 Holyrood election, was widely perceived as a strategy designed to contain the new SNP government's demands for economic independence.

Michael Forsyth, now Baron Forsyth of Drumlean, is to table an amendment before the House of Lords arguing that there is a clear principle for a referendum on the plans. His case points to the 1997 referendum question which asked whether Scots wanted their parliament to have the power to vary income tax at a rate of plus or minus 3p on the basic rate. The new tax plans are significantly wider argues Forsyth and empowers MSPs to keep income tax 10p lower than the rest of the UK and no ceiling on rises.

Forsyth's point is a moot one as, unlike the 1997 referendum, the Scottish public has no real say over the bill which will define the tax powers and other powers of their parliament in Holyrood. He said:

"When the bill comes before the Lords, I will table an amendment that requires them to have a referendum on the tax-raising powers."

"I think if you are going to do something like that, those in favour have to put their case."

Calman: Insufficient and "unworkable"

The moves by Lord Forsyth will be welcomed by those who want to see not less but more powers for the Scottish parliament and who regard the Calman Commission proposals as insufficient and potentially damaging.

Scotland's prestigious Council of Economic Advisors (CEA) recently concluded in their Third Annual Report that the Calman Commission proposals "do not go nearly far enough" and that "full financial responsibility" with "control of the major tax levers" is Scotland's "best chance" to maximise its economic potential. Marc Coleman, former economist at the European Central Bank, said of the proposals: 'Scotland requires immediate fiscal autonomy and Calman falls well short of fiscal autonomy.'

As Briton's now face sovereign debt, economic and currency crises, Scots appear to be warming to the idea of economic independence as a means of sheltering Scotland from the parlous state of the UK economy.

A recent opinion poll by TNS shows that the union is now supported by a minority of Scots (44 percent). The Scottish electorate has shown in the recent Scottish Social Attitudes Survey 2010 that it would like the Scottish parliament to assume significantly more powers, including full control over taxes (57%) and benefit payments (62%). The Scottish people's desire for 'full control' over taxes is significantly more that what the Scotland Bill is offering.

The Calman proposals have not only been criticised for being insufficient but heavily berated by a number of eminent economists such as Jim and Margart Cuthbert and Andrew Hughes-Hallett as "seriously flawed" and "unworkable". The Cuthberts said:

"Our view is that the Calman proposals on income tax powers are seriously flawed, and pose a major danger to the Scottish economy..

"Implementation of the Calman proposals on income tax would be extremely dangerous; with a real risk that the perverse incentives implicit in the proposals would push Scotland into a worsening cycle of increasing Scottish income tax rates and relative economic decline."

The Scottish parliament's Scotland Bill Committee which is to scrutinise the bill, is chaired by former Labour leader in Scotland, Wendy Alexander. Controversially, Ms Alexander was forced to resign in 2008 owing to allegations of financial corruption.

The probity of the entire process leading to the Scotland Bill was further questioned after it emerged that Jim Gallagher had been invited to be a key advisor to the committee. Mr Gallagher, who was chosen by former Prime Minister Gordon Brown to oversee devolution, is known to be hostile to the Scottish parliament gaining more powers and oversaw the writing of the Bill meaning he has overseen the Bill from all points of input. He recently penned an article for The Telegraph with the title: "Why the Scotland Bill is good news for England"

Despite the polling evidence, current Scottish Secretary Michael Moore, who launched the Scotland Bill at the end of last month described it as: "The settled will of the Scottish people." A reference to former Labour leader John Smith's famous quotation in relation to Scotland's desire to have its own parliament.

Commenting on Lord Forsyth’s call for a referendum on the London parties’ Scotland Bill proposals, SNP Campaign Director Angus Robertson MP said "any referendum must include the options of independence and financial responsibility since polls show the ambitions of the Scottish people go beyond the limited ambitions of the Bill."

AV Referendum

Michael Forsyth's plan to table a referendum in the House of Lords will draw attention to the controversial AV referendum which will be held on the same day as the Scottish and Welsh parliamentary elections. The choice of May 5th for the referendum caused outrage in Scotland and led to claims of disrespect from the UK government.

It sees a curious situation where a widely sought referendum on independence is denied Scots whereas a referendum on the AV voting system, which few support, is forced upon the nation. The move has raised questions over the democratic conduct and legitimacy of a UK coalition government. The Tories and the LibDem parties registered third and fourth place in terms of votes cast in Scotland at the last Westminster election.

This democratic inconsistency has lead to a campaign by the Bella Caledonia outlet which calls on Scots to spoil their AV referendum ballot paper by writing the word 'Independence' across it. Spoiled ballots must be counted and the 'result' announced and the team behind the campaign hope that by spoiling their ballot papers then Scots can turn the tables on the Tory/LibDem coalition and force their own 'independence' referendum on London.

Scotland needs exit strategy as Sterling tumbles and UK tax receipts collapse

2010-12-29T12:55:00.005+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

This month, in a single week, the British pound fell 3 percent against the US dollar.

There are varying accounts among financial analysts as to the causes of sterling's fall. One reason given is the UK bank's exposure to Spain, which Moody’s has warned could soon be downgraded. Others point to the UK economy's integration with and heavy debt exposure to Ireland, which Moody’s did actually downgrade last week by 5-levels to Baa1. Such a grade is just shy of the 'junk' category.

No doubt sterling’s weakness is partly attributable to these factors, however the brutal reality is that the real underlying problem is the growing realisation that borrowing by the British government has spiralled out of control.

On Tuesday last week the Office for National Statistics (ONS) said that UK government borrowing for the single month of November was £23.3bn. The figure is a record outstripping the previous highest month at £21.1bn by £2.2bn.

The following chart illustrates the magnitude of the problem as UK government debt nears £1 trillion:

Graph courtesy of www.FGMR.com

Earlier this year, UK government revenue (the blue line) once again began to grow. The media reported this as an indication that the British economy was on the mend after the shock of hundreds of billions of pounds being spent bailing out Northern Rock and the UK government’s rescue of most of Britain's major banks in the aftermath of the collapse of Lehman Brothers.

But facts are chiels that winna ding - the figures tell another story. The chart above shows that expenditure (the red line) remains on the same upward trajectory, escalating unrestrained every quarter.

Stimulus

Some argue that the government should borrow and spend in order to 'stimulate' the economy. It is. However government debt is now rising at roughly the same rate as revenue growth and the gap is not closing. We might deduce from this that increases in government revenues are now dependent on increasing the government's deficit. If true then the £10.2 trillion (forecast UK debt by 2015) question is what happens to government revenues if the markets, believing these debts are not going to be repaid without devaluing the currency further (quantative easing), stop lending to the UK government?

Clearly, Britain PLC is running straight into a brick wall.

Austerity

The ConDem government believes that austerity is the answer and have planned £81bn in public spending cuts along with a hike in VAT next month. However, as we see above, if government borrowing stops government revenues will decline. To make matters worse putting tens of thousands of public sector workers on the dole will mean less income tax revenues and a larger social security spend. Reducing public sector payroll and benefit payments will be mean less expendable income and so a drop in VAT receipts and retail sector performance.

Public confidence in the ability of austerity to solve Britain's sovereign debt crisis is plummeting with more people now believing it will have negative economic effects (43 percent) than positive (40 percent). Indeed the evidence from countries around the world who have taken the austerity medicine such as Argentina is that austerity dramatically worsens economic performance.

Devaluation

Is there a third option for the UK treasury?

The ConDem government could cut expenditure by ending Britain's military involvement in Afghanistan and Iraq, scrap Trident, declare its banks insolvent, repudiate the bailouts, renogiate PFI and change to a non debt-based system of money.

These policies will, one imagines, be resisted and so the UK government's third option is quantative easing (QE) also called money printing or devaluation. This policy inflates away debts (monetisation). If a government has no money to pay its debts it can simply print more and pay that way. This devalues investments denominated in sterling and so it would only be a matter of time for the markets to calculate that UK debt will be repaid in money that is losing value. These international investors are sophisticated and will move to currencies or other investment categories which yield not just nominal returns but actual profits.

Are there any benefits from currency depreciation? Well, despite a recent 20 percent devaluation against key trading partners there have been no discernable benefits at all (see above table). At the same time the euro which has been relatively stronger has nevertheless seen Germany's unemployment figures reach record lows.

Scotland's Exit Strategies

With Britain PLC on the brink, Scotland has now no choice but to review its options.

On the table is the Scotland Bill which is the product of the Calman Commission's recommendations. World-renowned economists and business leaders have called these proposals "dangerously flawed" and "unworkable". This Westminster legislation will leave Scotland exposed to the UK economy and some observers speculate that that's what it's meant to do.

Also on the table is economic independence. This policy is supported by Scotland's eminent Council of Economic Advisors (CEA) and means Scotland taxes itself to pay for its own public spending. Scotland would be protected from the UK's deficit and so the surplus in Scotland's accounts (GERS) would stay in Scotland and could be reinvested in public services and support Scotland's university sector which because of the UK austerity measures now faces serious budget cuts.

The most serious downside to this option comes from the UK's monetary policy. If the ConDem government and the Bank of England continue to devalue sterling which seems likely then all imports into Scotland will become more expensive and this will drive up inflation meaning a serious diminution of Scots' standard of living. This problem will multiply as UK interest rates are raised to curb inflationary pressures.

Perhaps the most sensible exit strategy for Scotland may then be independence. With independence Scotland could issue its own currency creating the economic stability that Scottish businesses and institutions need in order to plan for the future with confidence.

The post-independence Scottish government would need to launch a national debate and referendum on which currency Scotland should use. The euro is under extreme pressure and there are increasing forecasts of its imminent demise. Perhaps the best example to follow then would be the Norwegian kroner. With a world-class oil fund Norway has no need to devalue its currency and so can guarantee the wealth of its citizens - the second richest in the world.

Holyrood Elections

As 2010 draws to a close and minds turn to the Holyrood elections in May, the stakes could not be higher. As the realities of austerity are internalised by the electorate the SNP will point to the failure of the unionist 'UK umbrella' argument where Scotland is supposedly protected from global market volatility by the scale and prestige of the UK economy. The Labour party in Scotland will argue that independence is merely a constitutional argument unrelated to economics and draw attention to the ConDem austerity cuts.

With the Scottish electorate increasingly worried about job prospects and paying the rent the economic case which holds the most water will determine who forms Scotland's next government.

Tommy Sheridan's Show Trial

2010-12-26T13:50:00.011+01:00

Like an old fashioned public hanging, Tommy Sheridan's show trial was about beating down on the radicalised poor and reducing them to docility, capable only of reading Ruper Murdoch's News of The World.

Soon we'll get to see him been wheeled away to prison. What a shame for Rupert Murdoch that we no longer use the guillotine as that really would terrorise people out their wits. In the end though, it may well be to Rupert Murdoch's benefit that we don't given that our economy is heading into French revolution territory.

Now, I've heard various justifications for his verdict but they are all based on opinion. There have been some rancourous exchanges between Tommy's followers and and others in Tommy's former party - the SSP. The SSP have pointed to the verdict arguing that they've been vindicated after years of persecution.

I'm afraid the SSP will never shake this off. The way the trial was conducted casts serious doubt over the verdict as pointed out by Ian Hamilton QC. Ian's comparing the miscarriage of justice in the Sheridan case with that of the Lockerbie case is unfortunate and shows, I think, Ian's rightful distress at the verdict.

Many will and have speculated that Sheridan is guilty of perjury but guilt must be PROVEN not believed if a person is to be found guilty of a criminal charge. In the case of Tommy Sheridan the jury was directed to accept evidence, the reliability of which is more than dubious, as hard.

The Lockerbie case does show that the Scottish justice system can be lent on to provide favourable results for the powerful. And you don't get much more powerful than Rupert Murdoch.

If the SSP were to be taken seriously they'd realise that this verdict sends out a message to the wider population. The message is a threat to all of us. We must not seriously challenge authority or we get the same treatment as the Sheridans. This is the type of behaviour we expect from totalitarian regimes. The hounding and harassment of political figures shows that a society is in deep trouble.

We now live in times where banks extort trillions of pounds of taxpayers money from the government and are protected while at the same time a left wing politician is villified for his alleged sexual proclivities by the gutter press and then subjected to investigations costing the public millions of pounds and a show trial with an unsound verdict.

Why are we even interested in Tommy's sexual conduct? Jealousy? Our own sexual repression? Who cares what Tommy got up to? As to the cost, the police don't respond to burglary calls in housing schemes for hours yet here we have millions being spent on a perjury investigation.

Is Scotland entering a period of McCarthyism? The reality is that we are. Hyped stories of terrorists everywhere, perpetual wars, wealth confiscation are all signs that Britain is now in its death throws, controlled by extreme kleptocrats and so thoroughly corrupted it is unable to function for the public good. Democracy is over.

Just like the French Revolution the kleptocrats are trying to keep control and how better to do that than have the people fight among themselves. We now see the English being driven to hatred of the 'parasitic' Scots so as to deflect attention from their misgovernance. This is where Murdoch's powers lie. He can turn the people against the government at the flick of a switch. They are terrified of his power.

Political organisation of the poor must be battered down. This is the real motivation behind the Sheridan show trial. Don't get me wrong, his politics doesn't grip me and his vanity less so, but Sheridan threatened the Glasgow power-base of the Labour party. This power base is what ties Scotland to the union. Tommy was eating into Labour's Glasgow colonies suits the British establishment. Labour get the votes as long as its voters remain poverty-stricken and beaten into submission. This is done using popular leftist language about sticking it to the bosses. The poor in and around Glasgow are proud and defiant and that language keeps them believing they are still stuggling against their oppression. The trouble is the party which pretends to protect them sold out long ago. Tommy was taking on Labour from the left and had to be stopped at ALL COSTS.

In the end Tommy Sheridan had numerous powerful enemies. The Scottish justice system delivered him on a plate.

One wonders what leverage Murdoch had over the Scottish justice system. The truth behind the Lockerbie Show Trial? Just who is the Scottish justice system now beholden to?

The manner of the raid of the Sheridan family home was a disgrace and raises further questions about Britain becoming a police state.

Watch the police interview of Gail Sheridan below. This is the wife of a public figure, former party leader and MSP. and yet she is being intimidated by a police detective who tells her she's behaving like a terrorist!

I'm sorry but this is unacceptable. The conduct of our police and justice system is an attack on the dignity of all Scots. If we do not unite against this outrageous series of events then we are nothing but pathetic excuses of citizens.

What self-respecting nation would let the News of The World drag it through the gutter the way it has. The case of Tommy Sheridan is now being flaunted in our faces. The message? Don't forget who's boss!

I suspect Tommy Sheridan will, once more, achieve martyr status. The press hounds are trying to bury him already but this story is not over. Like Wikileaks hero Julian Assange, also labelled as a pervert, the frothing establishment realised they went too far and could not keep him locked up lest he become more powerful.

It wouldn't be a surprise if Tommy's appeal, now lodged, will be gladly upheld.

video with thanks to Moridura

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Update:
Here is very interesting article on the Tommy Sheridan trial by Kenneth Roy Why the Sheridan case may return to haunt Scottish justice

UK "Totally Insolvent" as Deficit Balloons to Record High

2010-12-25T23:09:00.002+01:00

A piece I did for Newsnet Scotland:

by Alex Porter, Economy Editor

Britain's public borrowing exceeded all forecasts in November hitting a record £23.3bn the Office for National Statistics (ONS) said on Tuesday.

The figure, which excludes financial interventions by the UK Government, is a significant increase on last November's borrowing requirement of £17.4bn casting doubt on claims that the UK economy is experiencing a recovery. Indeed, the figure soared past the previous borrowing record for a single month of £21.1bn recorded in December 2009.

In Scotland by contrast there is a surplus in the national accounts according to the official government figures (GERS). This surplus will go to the London treasury as Scotland faces £1.3 billion in austerity cuts next year.

This most recent indication of the divergence between the Scottish and UK economies comes after calls by world-renowned economists such as Andrew Hughes-Hallett and business leaders for the Scottish parliament to assume significantly more economic powers in order to help create a climate of certainty for Scotland's businesses. The SNP have argued that economic independence is necessary in order to protect jobs and public services. The nationalist's policy would also enable funding for academic institutions such as universities as they would not be affected by decisions taken by the UK coalition government.

These swelling UK borrowing requirements are further evidence that the previous Labour governments' strategy of 'stimulus' was mistaken. The claim then was that stimulus would create more jobs and stabilise the British economy. This policy clearly hasn't achieved that objective and so the public would be correct in wondering why Brown's government borrowed so much money, on their behalf, to finance it.

YouGov economic trackers show that one year on from Gordon Brown's 'stimulus' measures almost 70 percent of the population rate the UK economy as 'bad' with a large majority afraid of losing their jobs or not finding work over the next two to three years and 43 percent fearing losing their house over the same period.

The larger-than-expected November borrowing figure will be seen by Chancellor George Osborne as demonstrating the need for deep austerity cuts; already planned is an £81bn cuts package and a hike in VAT next month.

However YouGov's trackers reveal that the UK Population feels austerity, like Gordon Brown's stimulus policy, may deepen Britain's economic crisis with more Britons, 43 percent, believing that the cuts will make the economy worse and 40 per cent better.

Net UK government debt now stands at £863.1bn, the equivalent of almost 30 times the Scottish government block grant, and represents almost 60 per cent of the UK's gross domestic product (GDP) – another monthly record. However this figure does not include newly created money (quantative easing) or off-balance sheet debts which combined are in the region of trillions of pounds. PricewaterhouseCoopers has forcast that the UK's debt will be £10.2 trillion by 2015.

Although government spokesmen and City analysts point to the fact that the UK government debts are less, relatively, than the amounts faced by Ireland, Greece or Japan, the UK's debts in total are 466% of annual economic output once consumer debt is included. That's second only to Japan. However Japan has the comfort of a sound manufacturing and export base as well as the fact that the majority of its debt, unlike the UK, is owned by its own citizens.

The parlous state of the UK economy is causing consternation among many international investors such as the world-famous investment guru and former Quantum Fund partner of George Soros, Jim Rogers who, in an interview on US business TV channel CNBC, talking about European debt problems said: "Greece is insolvent, Portugal has a liquidity problem, Spain has a liquidity problem, Belgium has been cooking the books for a long time, Italy has been cooking the books for a long time and the UK is totally insolvent."

In the run up to the Holyrood elections in May the UK's sovereign debt, economic and currency crises will be key issues in the economic debate. The SNP will argue for economic independence to shelter Scotland from the UK's economic instability. Iain Gray has the unenviable task of promoting the Calman proposals which have been described by experts as "dangerously flawed" and "unworkable".

With Gray's party being blamed by the electorate for creating the mess in Britain's public finances, Alex Salmond will be hopeful that recent polls showing support for economic independence for the Scottish parliament will be converted into votes for the SNP.

The Dark Side of Unionism

2010-12-22T11:42:00.007+01:00

A piece I did for Newsnet Scotland:

by Alex Porter

The Boy Who Cried Wolf

Professor Tom Gallagher works in the Department of Peace and Ethnic Conflict at the University of Bradford. When he deliberates on the issue of racism in Scotland it is our duty and responsibility to listen to his views and examine our collective conscience on the matter.

It is crucial that figures such as Professor Gallagher command authority and respect on this issue. Our nation needs such wise counsel in order that those who have suffered racism feel their dignity and rights are protected. Scotland's international reputation also depends on it having an informed and mature national dialogue on the subject.

When Professor Gallagher describes a Scottish Government Minister's policy as "nothing less than racist" it raises real fears of racial persecution. If an individual is being racist it is cause for concern but if it is government policy a nation is in real trouble and the alarm bells start ringing. Such a nation could expect sanction and ultimately expulsion from the European Union if its government is so overtly racist.

In a single letter, in a single paragraph to The Scotsman Gallagher has implied that Education Secretary Mike Russell (born in Kent, England) is racist and the BBC of being complicit:

"One test of the BBC's editorial values will be the extent to which it gives a voice to those who think that education minister Michael Russell's decision to single out English students for a massive financial levy is nothing less than racist."

If a government and a state broadcaster are accused by an eminent academic of raising the spectre of systemic racism then the European Union and indeed the United Nations would be remiss in not investigating the matter.

Gallagher was very clear about how Mike Russell's legislation should be characterised: "Indeed, it was exactly this kind of thing that regimes hostile to particular ethnic and religious minorities got up to between the two world wars."

The implications are clear, Professor Gallagher is equating the German Nazi "regime" with the SNP government. Mike Russell's policy initiative which imposes tuition fees on English students who wish to enter Scottish universities is similar to the type of Nazi Party policies which, as we well know, ended up in the holocaust and the global conflagration that lead to the deaths of tens of millions of people in the second-world war. That's what we're being told to conclude.

Upon examination Mike Russell's policy was seen for what it was. A reasonable policy, in keeping with tradition but with an unfortunate anomaly caused by asymmetrical devolution. It is a welcome relief that Gallagher himself ackowledged this in a subsequent letter to The Scotsman: "On closer inspection, I freely admit that the weight of evidence does not support my claim (Letters, 18 December) that the planned imposition of much higher tuition fees on English students is ethnic targeting."

Am I missing something here? An eminent academic has compared the Scottish government to Nazis and accused a government minister of implementing the kind of policies which lead to genocide and at the same time the BBC of capitulating. The best case scenario here is that Gallagher had a rush of blood to the head and so when he realised he was wrong, should he not have issued a sincere apology so that the nation could move on?

No, no apology and his retraction was qualified: "I am glad to find myself in the wrong on this occasion.."

The words "On this occasion" are clearly meant to exonerate himself. You see, the gravity of the matter stands because the SNP typically does conduct itself in such a manner that it should rightfully be equated with nazism. "On this occasion" means that set against this context we all relate to a minor mistake which is all too understandable and forgivable. "On this occasion" the SNP were caught out not behaving like nazis for once and all reasonable people will conclude that that's not Professor Gallagher's fault.

One could be forgiven for wondering if Tom Gallagher had some kind of agenda. He has.

Tom Gallagher is the author of a book called: 'The Illusion of Freedom: Scotland Under Nationalism'. Tom needs little encouragement and has attacked Salmond before in an article, written by Ron Brown of The Herald, with the title: "Salmond accused of tapping dark side of nationalism" where he is quoted as saying: “The SNP chief sometimes finds it difficult to resist the emotional forms of mass manipulation associated with Europe in uglier times.”

Scottish Unionism's Weapon of Choice

There is no doubt that racism exists in Scotland and should not be tolerated. A major impediment to rooting out this despicable and dangerous form of intolerance though is a stong tendency towards false and inflated charges of racism such as Tom Gallagher's. His insincere retraction and lack of apology reveals some attitudes which we must observe closely.

Firstly, in this case, he is not entirely motivated by preventing the consequences of racism - he has done nothing but harm. More importantly though his 'retraction' serves to reveal an insecurity in British political culture.

The political class and the media have spun out of control. Manipulating perceptions has been a persistant aspect of British political culture - Orwell was a product of it after all. However, Britain now faces a crisis economically, politically and socially. Fraud, corruption and media manipulation are now endemic. Perceptions are now all that matter. Honour and honesty are no longer supportable.

It is deeply regrettable that many in Scotland bandy about the word 'racist' like confetti. It is a particular habit of the left in Scotland. Not just on the unionist side of the fence but irritatingly, the independence leaning left are often culpable too, demonstrating a problematical insecurity. Accusations of racism should be rigorously evidence-based and not merely an impulse of self-rightious demagogues. This tendency causes hurt in those accused and demeans the cause as well as the victims of racism.

For generations now the SNP have been accused of anti-Englishness. Like all political parties extremists will manage to obtain party membership but the SNP have taken strong measures to deal with the matter. It has shown its internationalist credentials not just by successfully engaging with Scotland's Asian population, encouraging English membership through the SNP's 'New Scots for Independence' group but in opposing Dungavel detentions, extraordinary rendition flights and crucially by opposing the UK's involvement in illegal and imperialistic wars and nuclear weapons.

In modern Britain the SNP government have become an exception - it acts responsibly and in the interests of the people it is elected to SERVE. That is what is at stake at the Holyrood elections in May.

Accusations of racism have a powerful viral effect. Many English people actually believe that many Scots only want independence because Scots hate them. This fear affects the brand of the Scottish independence movement. People naturally don't want to be associated with a party which is intolerant towards Scotland's nearest neighbour where many Scots have family and friends. There is therefore a motive for unionist parties to stoke up this racial fear and tension - party advantage.

Unfortunately the case for retaining the union is almost always about being against independence. And so the case for independence is to be seen in a dim light casting scary shadows - Wee Willie Winkie for adults. Seperatists want to 'break up' the 'United Kingdom' and 'divorce' are demons sent to place doubt in the minds of Scots. If the Scottish electorate does not understand that independence is an extremist's agenda it must be made to.

Accusations of 'racism' do the same job as Labour's David Cairns demonstrated when he labelled those who support the SNP as "swivel-eyed, bigoted, anti-English lunatics". If you vote for independence you are anti-English is the inference. Again the SNP are extremists. We are led to believe that the unionist parties by contrast are moderate and inclusive - yet the net result of these inferences of racial prejudice about the independence movement are that of actually frightening potential victims.

The only conclusion we can reasonably take out of all this is that unionism is comfortable with aggravating racial fear and tension because the political advantage is the only thing that matters to them. Otherwise, where are the leaders with calm heads who immediately dampen down such base propaganda? We have to assume that unionism's leaders are deliberately silent because they quietly approve.

Consider the negative stereotypes perpetuated by union supporters about Scotland. Scots are characterised not only as racist but as too small, stupid and poor to govern their own nation. They are tight-fisted, benefit-leeching, subsidy junkies dependent upon handouts from our English cousins. That is a dominant image of Scotland as presented to the English. It is an image which rightfully angers Scots and causes resentment in a nation which currently sacrifices the surplus in its national account for the common UK good.

This stereotype has been deliberately reinforced by Scottish unionist parties and over a period of generations. Government statistics have been deliberately massaged to misrepresent Scotland's contribution to and take from the UK treasury. Take the example of Scottish Labour MPs cheering upon the news that a Scottish bank had been sold.

The stereotype of the parasitic Scot is an image born out of Scottish unionism and its attempts at manipulating the 'perceptions' which Scots have about their own country. The lesson Scots are supposed to take from these relentless national briefings is that their nation has no viability as an independent state in the international arena. Enquiring minds will have noticed BBC Scotland's comprehensive analysis of the Irish bailouts. Coverage of foreign affairs is unusual on BBC Scotland and so the intensity of the coverage in the case of Ireland was a curiosity. The subtext was that Scotland could expect the same from statehood - soveriegn bankruptcy and international humiliation.

Scottish Unionism has become almost entirely about media manipulation. Scotland is being carpet-bombed with anti-SNP propaganda. The media witch-hunt of Stewart Stevenson was just another example of it. The appointment of Tom Connor as editor of the BBC Scotland website comes as no surprise. Tom was previously censured by the BBC for offering media training to Labour party candidates.

Will the Real Scottish Unionists Please Stand Up?

At Newsnet Scotland we believe that unionism is a legitimate political aspiration. We will provide a platform for any articulate, evidenced-based and well-argued defence of maintaining the union and indeed we now reiterate our invitation to submit to us such-like contributions for publication.

If unionism is confident in its politics let it eschew these underhanded tactics. Scotland deserves better than the petty and dangerous false accusations of racism which mars public debate and alienates citizens. The nation deserves better than being bombarded with images of itself as incapable.

The SNP is to be commended for for the determined efforts it has made in terms of its civic nationalism. It is now time for Labour and the other unionist parties to stop the chicanery and rise to the occasion. The political spoils should not go to those who connive to undermine confidence and harmony. Scotland's next step on its long journey should be the result of an honest appraisal of the best case that both sides of the debate can make.

Only then will there be a settled will of the Scottish people.

Read previous essays written by Alex Porter for Newsnet Scotland:

Scotland's Choice: Calman's Gulag or Economic Independence

Scotland versus Britain
Part 1, Part 2

LABOUR'S BANKRUPT BRITAIN

Rediscovering Oil – A From Rags to Riches Story
Part 1, Part 2, Part 3

Would an independent Scotland have a viable economy?

Debt and Mass Emigration

2010-12-21T23:30:00.004+01:00

Great video of Mike Hudson in interview explaining why countries should reject bailouts.

Massive debt drove large swathes of people from Britain and other parts of Europe to the USA for over two hundred years. That debt is back and includes the US. Where will the next mass emigration be to?

Wikileaks, Tesco and Wendy Alexander

2010-12-20T11:56:00.005+01:00

Interesting video below looking at how the world works and in view of wikileaks.

I wonder if wikileaks is just the beginning of a fightback against what is, a system.

In Scotland we need as many leaks and whistle-blowers to come forward as we can. We know corporate interests have a worryingly close relationship to government in London. That grip extends through its Scottish branches such as the Labour party in Scotland.

With Wendygate still simmering, Purcel and all sorts of local government shenanigans there's a dam waiting to burst out there.

When New Labour came to power, Gordon Brown decided to bring in a tax on car-parks, something that would have cost Tesco £20 million a year. Tesco got an exemption and at the same time gave £11 million as a donation to Peter Mandelson's Millennium Dome. Remember that? Tesco hired the services of Lobbying firm 'Lucas, Neil Lawson and Mendelsohn' (LLM) who had a very close relationship with New Labour.

As I remember, Wendy Alexander brokered a deal to have Tesco buy the site of St. Mirren football club in her constituency..

How refreshing it is to see John Swinney bringing in taxes on supermarkets! How refreshing it is to see the SNP bring forward legislation on organised crime.

I'm beginning to understand the visceral hatred Labour has for the SNP. They want rid of the SNP government badly.

Bail Out London City or Bail Out Of The UK?

2010-12-18T20:28:00.007+01:00

Jim Corr of the Irish band the Corrs isn't pulling his punches (see video below).

Scots should take note. He believes that Ireland's problem is that it ceded sovereignty to the EU. He wants Ireland to leave the Euro and have it's own currency.

Scotland has a similar problems with monetary union. Policies to suit the English economy decimate Scottish jobs and public services. Now with many thinking the EU is in its death throws, Scotland should do the responsible thing and consider plan B.

Corr believes that Ireland is suffering from a top-down engineered crisis and that austerity is damaging helping only the super rich.

The pound sterling has been devalued by 20% against its trading partners and has nothing to show for it. By contrast Germany's unemployment is the lowest it's ever been.

Devaluing currency makes people poorer because you can buy less with the same amount - it's a wage cut.

A currency debate in Scotland is now urgent. Scots want more powers to control taxation but with London printing trillions of new pounds the money we raise in tax in Scotland will be worth less. We need, not just 'fiscal responsibility' but economic independence.

It is not time to bail out The City, it is time to bail out of the UK.

Scotland's Choice: Calman's Gulag or Economic Independence

2010-12-18T18:34:00.002+01:00

An essay I did for Newsnet Scotland:

by Alex Porter, Economy Editor

With recent polls revealing that people in Britain believe austerity will make the economy worse the question of why the policy has been adopted becomes salient.

This is especially so in the case of Scotland where the national accounts (GERS) show a surplus.

The Scottish electorate has shown in the recent Scottish Social Attitudes Survey 2010 that it would like the Scottish parliament to assume more powers, including full control over taxes (57%) and benefit payments (62%). With economic independence there would be no need for such swingeing cuts and so Scots might wonder why they must face austerity at all when Scotland already subsidises the rest of the UK.

If, as the electorate believes, austerity will exacerbate the UK's economic soveriegn debt, financial and currency crises then concern in Scotland will not be limited to asking why Scots should bail out England. The greater question is what damage an economic medicine prescribed for south of the border might do to the Scottish economy.

The logic of austerity is that government deficits created by the last UK Labour government will be brought under control through cutting public services and welfare benefits. The problem with this prognosis though, is that if you cut benefits there's less money spent in the shops meaning less VAT revenue for government and at the same time retail sector jobs are lost adding to the burden placed on the benefits' system.

By cutting public services people will have to rely on private service providers instead, meaning less expendible income causing less consumer goods to be bought and so consumption takes a battering again. The huge cuts in public sector employment targeted by the ConDem government will see salaries taken out of the main street economy but it will also trigger mortgage payment defaults and less demand for home-ownership which in turn will lead to further declines in house prices.

Evidence from around the world is that austerity makes the economy worse. Argentinians were told this economic medicine would help and their economy imploded.

UK Austerity Gulag

How did we get to the stage where austerity is being rolled out in defiance of public opinion? Whose interests does austerity really serve? Meaningful questions for the people who will be affected most by the cuts in public services - the poor, the low paid, the students and the heavily indebted home-owning working class.

When governments run into debt they borrow from banks. Private banks can borrow from the Bank of England, currently almost free of charge (quantative easing) and then they can multiply that money (leverage), legally creating new money and lend it out at interest. Governments can therefore borrow from banks (with a promise to repay with interest = bonds) which create that new money at the flick of a switch.

The reason banks got into trouble was precisely because they can create this new money. They created it and they gambled it and they lost it. When they lost it all they had to pay it back. They couldn't as it was hundreds of trillions of dollars. It will never be repaid. They multiplied the money they borrowed dozens and sometimes hundreds of times over and lent it out creating an irrational and distorted economy.

When that bubble economy crashed the debts were enormous and the banks should, under the core principles and rules of capitalism, have been liquidated as they were, and still are, insolvent. The banks' owners lost their money which they should never have invested. Had they followed the usual business practise of due diligence - checking their investments were soundly managed - they wouldn't have.

Oops, did I say the banks' owners lost their money? My apologies, they didn't. You, the taxpayer bailed them out. Private losses were transferred to the public. This is an enormous confidence trick but political parties, economic commentators and the media played along. Why? Let's not get into the theological aspects of modern 'neo-classical' economics - it's nearly Christmas for heaven's sakes.

Why is there a crisis in Britain's public finances? You paid those private debts - why? If someone burgled your house would you track them down and voluntarily offer them your life-savings as well? This was and is criminal fraud across the entire financial sector. Yet you said and did nothing. For your generosity you now get the bankers' one-two; austerity. Yes, the government is heavily in debt because you went along with bailing out wealthy investors. So, how do they propose to control these debts? The answer is you pay twice.

Why?

The trick in understanding 'why' is in identifying the piper that has to be paid - banks. Follow the money. The government is so dependent on banks now that the banks call the shots. In short, they now run government economic policy. Much the same way as the IMF runs economic policies when they give 'assistance' to bankrupt and desperate countries.

As the financial sector is still insolvent and heading into another solvency crisis - quantative easing (welfare benefits for the supremely wealthy) is running out - they know that they will not get credit from other banks. The media and politicians focus on credit rating agencies in order to assess a bank's credit worthiness but the reality is that what matters to banks is how other banks rate them. When the next financial crisis hits who's going to bail them out? Not other banks but YOU, AGAIN. You got the jab, the cross hook and now you get the upper-cut. They need the government's credit rating which is derived from your endless ability to work and pay taxes. Oh, and your unborn grandchildren's too.

As the political wing of the banking sector, the government has to scale down its debt through austerity and reduce government taxes on big business - bank customers - and of course tax finance less. That all makes sense to the bankers.

To leave as much cash around as possible for the next round of bailouts they have to deprive you of more money. The banks see themselves as the real economy. How can this be? They are extractive not productive. The brutal truth is that they don't actually care for anyone but themselves.

High finance thinks that lowering wages will help for a start. If austerity leads to depression it will lower wages by maybe twenty percent and government/banks believe that that will make the economy more competitive. They think that this 'competitiveness' will cause employers and banks to make more profits/bonuses/dividends. To enrich the corporate world they must impoverish the real economy. This is the thinking that caused Britain's industrial economy to decline and its empire collapse.

The real economy, production and consumption, gets floored because bankers and their middle management administrators (Brown/Cameron/Clegg) believe that it is the extractive part of the economy, finance, which is the driver. The belief is that a depression will help the financial sector survive its crisis. It won't.

To pass the burdon on to the taxpayer you have a heady mix of strategies: Consumer debt, tick. Lower wages, tick. Increased VAT, tick. Benefit cuts, tick. Public service cuts, tick. Tighter regulation on banking, cross. Increased taxation on financial transactions, cross. Increased capital gains tax, cross.

Why are all the crosses against the ones who caused the crisis? Why are all the ticks against the ones who didn't?

Corporate logic is that there are two corrosive costs to business. Firstly, the cost of labour and producing goods. Secondly, tax. They want to shift the tax burden from finance and to some extent industry entirely on to labour. It's bad economics but received wisdom in business circles. Employees are not assets, they are liabilities.

This whole process releases finance from having to contribute to the treasury whilst they splash out using their gCard - their flexible friend, the government's credit facility (quantative easing) to bail themselves out all over again.

PricewaterhouseCoopers has forcast that the UK's debt will be £10.2 trillion by 2015. Debts which can't be paid won't be paid and key players in the UK's financial sector realise this - they're a lot smarter than the UK's captured and clueless political class. Quantative easing (money printing) and bailout money is going to bondholders and shareholders who are now investing abroad. You bail them out and they bail. The game is up and they're printing money, extracting what's left of the population's wealth, and converting the UK's creaky old once-nearly-democracy into a debt gulag. That's the exit strategy of the big finance houses. The money has largely gone already.

If you thought austerity was madness, now you know you were wrong - it's a systemic wealth transfer undertaken by people who are legally of sound mind.

By printing more money and reinflating the bubble economy house prices will be maintained a while longer while at the same time wages fall meaning more debt will be sought in order for people to house themselves. By indebting people further the consumer economy falls off a cliff. Does the real economy matter to them? Sorry if you thought the people in charge were ethical and motivated by the wider public interest. These people will shoe-horn you into PFI schools, turn you against each other using tabloid propaganda and send you to war in Afghanistan before you can say the word 'emigrate'.

The question which arisis out of all this is, if the peope think austerity will make things worse why don't they do something about it? Well, this is where high finance gets smart. If you miss a credit card payment your interest rates go up, you get bank fees for missing mortgage payments and refinancing, you lose your house if you miss payments. These are the punative measures which keep people obedient. If you go on strike, complain about working conditions and get sacked you're closer to being homelessness than you've ever been in recent history. The economic and social gains made by society since the war are being rolled back.

Debt has driven down wages despite productivity rises in recent decades. The benefits of these productivity advances have been extracted by the financial sector (which makes nothing). Growth has been siphoned off. All surplus goes on banker bonuses and much of the population has just less than enough money to pay for the basics of life and so are effectively in indentured servitude to a new neo-feudal class.

Having sucked the UK dry the parasite will be off to the next host. This time in the developing economies such as Brazil, Russia, India, China and so on. Britons face being shackled with generations of debt - no longer of any value to international capital. London City financiers? They who Gordon Brown lionised in his 2007 Mansion House speech?

"So I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London."

Where will these financial oligarchs be in five years? They'll be living in the manner they've become accustomed to in Shanghai, Beijing and Taipei.

Economic Independence

This is why Scotland is paying for austerity despite its surplus. This is why all discussion of economic independence is suppressed and resisted. This is why the BBC is so obviously anti-independence. Using the oil money to invest in the establishment of a decent national economy simply gets in the way of the next bankers' bailout fest.

If you want to know where the money and improving standards of living are, look to where the currencies are strongest. Countries which do not transfer private debts to the public have real governments which behave responsibly. If you want to know where generations will be sufficated by debt look to which currencies are quickly being debased to feed the financial sector - pound, dollar, euro.

Now is the time to discuss whether Scotland should remain manicled to the pound or move towards a more stable currency of its own. Sterling has been devalued by 20 percent against its key trading partners yet its economy has not benefited at all. By contrast German unemployment is at an all time low despite a relative rise in the value of the euro. Who then is benefiting from devaluation? Devaluation reduces the purchasing power of your money. It's a pay cut and again hits consumption and contracts the real economy.

Much is at stake then in the forthcoming Holyrood elections. Scots must consider the Calman Commission proposals aka the Scotland Bill - a Westminster piece of legislation. It has been slated by world-class economists and business leaders as 'dangerously flawed' and 'unworkable'. The Scottish parliament's Scotland Bill Committee is chaired by Wendy Alexander who as leader of Holyrood's Labour party oppostion group resigned in 2008 due to accusations over an illegal donation. Continued accusations leave that wound open.

Further questions over the probity of the whole Calman process are raised by the appointment of Jim Gallagher. Gallagher, a civil servant, was appointed by Gordon Brown to oversee devolution and is known to be hostile to increasing the Scottish parliament's financial powers. Last month Gallagher penned an article for The Telegraph with the title: "Why the Scotland Bill is good news for England". An independent advisor? You decide.

The case for a national debate on economic independence must be persevered with between now and the Holyrood elections in May. The opinion polls show Scots are enthusiastic about this policy. Perhaps this enthusiasm is more a survival instinct. It should be carefully nurtured. The Scotland Bill is an exercise in heading off momentum for economic independence. It is designed for Westminster to keep control over Scottish affairs. Ultimately it is about extracting Scotland's surplus and more to pay for the next round of financial sector bailouts.

Already, Scottish universities fear for their future funding because of the UK government's austerity policies. With economic independence, they needn't. Austerity measures are causing real pervasive fears in Scotland because the consequences are so hugely uncertain. Such volatility and uncertainty means Scottish businesses and institutions must budget for the worst case scenario. With economic independence they needn't.

If Scotland is to avoid austerity and generations of debt it must reject the Scotland Bill, as it stands, outright. While the unionist media machine ignores those calling for a debate on economic independence - such as Scotland's prestigious Council of Economic Advisors - commentators and activists in civil society must struggle to keep this inspiring ambition alive at the top of the Holyrood election agenda.

The decision facing Scotland is one of epic proportions. Every Scot must ask themselves, as the elections to the Scottish parliament draw near is, the question: do I want myself and my nation to live in a state of neo-feudal debt peonage or do I want economic independence? That, for all it sounds theatrical, is the true moment of destiny - individual and national - awaiting inside Scotland's polling booths on 5 May next year.

Read previous essays written by Alex Porter for Newsnet Scotland:

Who Has Control? Banks or the People?

2010-12-18T16:22:00.005+01:00

Two interesting vidz for your satisfaction today.

The first looks at why the global crisis is caused by banks controlling the supply of money and how they control government through controlling the money supply. Central banks are privately owned and they create money as a debt. There are example of government taking control of money such as the US colonial script was used by Americans to develop their economy and help release them from the yolk of the UK. The currency worked well until Britain counterfitted and flooded the US with their own currency.

The second video is a speech by Bill Still about how bankers conspired to take over global control of the media using a front organisation called the Council on Foreign Relations

Austerity: Paying twice for other people's debts

2010-12-17T00:17:00.004+01:00

Bankers. They don't own the banks, they just run them which is why they also rob them.

The owners, shareholders and bondholders, are mostly big private investment houses. These guys did not do check that their investment were safe and so got burned by the financial fraud that brought the 'crisis' about. That and Gordon Brown's distaste for regulation.

Reverse a second, did I say the investment houses got burned? Ooooooops. Actually they didn't, you did. The bailouts and money printing mean money gets transferred from you to those who gambled and lost. The amount? Mmmm, 2 trillion quid. Yeh, that's about 70 (SEVENTY) times Scotland's block grant. Yes, benefit allowances to rich investors would pay for 70 Scotlands.

It gets even better. They gamble and lose and you pay. Then because you (taxpayers) have bailed them out you owe lots of money. So, you get austerity cuts meaning you pay all over again. Less benefits and less public services hits the taxpayer. How else could they save money? Eh, get out of Afghanistan and Iraq? Decomission nuclear submarines and weapons' systems? Can't have that, ooooooh no.

Yep, you pay twice.

Now, as austerity cuts scythe down benefits and public sector jobs to plug the deficit holes punched by Gordon Not So Prudent now Brown there will be a reduction in VAT revenues and more people on benefits not able to pay mortgages (house prices fall..). At this point the government will start selling off government services. You'll be charged to get in to hospital, road tolls, school bills etc.

You'll pay again - a third time.

The following video shows the process of you - pay 1 and 2. It is an excellent presentation. Cynical Highlander brought it to my attention.

The UK population now believe austerity cuts will make the economy worse. Scotland has even more reason to resist as our national accounts (GERS) show a surplus!

Please circulate -

UK Economic Umbrella In Crisis

2010-12-16T09:00:00.001+01:00

A piece I did for Newsnet Scotland:

by Alex Porter

Public confidence in the UK economy remains at rock-bottom according to YouGov economic trackers. (1)

Asked about the state of the British economy only 5 percent of UK citizens surveyed responded that they believed it is 'good', 22 percent that it is 'neither good nor bad', 69 percent that it is 'bad' with 4 percent in the 'don't know' category.

The British population continue to be distressed about their personal welfare over the next two to three years with 67 percent of the population feeling 'worried' that they will not have enough money to live comfortably, 63 percent that they will either lose their jobs or have difficulty finding one whilst 43 percent fear losing their home.

Such deep pessimism caused by UK government debt, financial and currency crises is seeing Scots becoming increasingly skeptical of the unionist argument that Scotland is protected from global market volatility by the UK economic umbrella.

In terms of apportioning blame the YouGov trackers show that people across the UK, 41 percent, believe the last UK Labour government is responsible for impending austerity cuts, 23 percent the coalition while 24 percent find both current and former governments equally culpable.

With such a huge question mark hanging over the issue of the economic competence of Westminster governments the SNP's policy of economic independence has gathered momentum in Scotland ahead of the forthcoming Holyrood elections.

A recent survey shows that a large majority, 62 percent, of Scots want the Scottish Parliament to assume substantial new powers. This year's Scottish Social Attitudes Survey also reveals that 57 per cent of Scots want Holyrood to have control over taxation and 62 percent control over welfare benefits. Another survey conducted by TNS on St Andrews day shows that only a minority of Scots, 44 percent, now support the union.

Recent calls for economic independence by Scotland's prestigious Council of Economic Advisors (CEA) and Scottish business leaders were dismissed by the Scottish Secretary Michael Moore.

Austerity

More people across the UK, 43 percent, now believe that the UK government's policy of austerity cuts will further damage the British economy while 40 percent believe the opposite according to the YouGov economic tracker.

The findings raise the question of why Scotland, which has a surplus in its national accounts (GERS), must suffer cuts to its government's block grant from Westminster. These cuts must be factored in to financial planning by Scottish businesses and institutions such as the university sector hitting employment, training and higher education courses.

With the UK government targeting deep reductions in public sector jobs and benefit payments there is a growing concern that a depleted workforce will mean more mortgage defaults whilst less expendible income will reduce the government's VAT receipts and have a negative effect on retail employment.

The worry for the UK's ConDem government is that if austerity fails, like stimulus did before it, the public will demand an end to expensive foreign wars and nuclear weapons systems as the best option to reduce Britain's unprecedented budget deficits.

(1) http://today.yougov.co.uk/sites/today.yougov.co.uk/files/YG-Archives-Trackers-Economy-141210.pdf

Economic Growth, Colonisation and Scottish Unionism

2010-12-15T00:05:00.009+01:00

A fantastic visualisation of economic growth below by Hans Rosling for BBC4.

It shows how life expectancy has changed over the last 200 years and more for 200 countries. Interestingly he shows how it can be broken down into regions and rural:urban areas.

One interesting focus is on how independence helped former British colonies improve their health dramatically in a short space of time. Scotland's role in the British empire was and is shameful and we haven't even begun to atone. While there are encouraging records of Scots mutiny against orders, examples of disgrace are legion.

In more recent examples of imperial adventure we can point to evidence of abuse in Afghanistan and Iraq. The process of dehumanisation can and will turn many morally upstanding citizens into colonising soldiers who abuse subjugated populations. Studies show that it is not difficult to have people administer pain to another by convincing the subject that it is good for the victim.

This is not an attempt at justifying or excusing those aspects of Scotland's shameful imperial record but understanding the process that lead to it.

I believe that much of the blame for Scotland's involvement belonged to its aristocracy (which is really part of a small club called British) - democracy was still a long way off.

This Scottish elite which prospered so much from empire under the patronage of Lord Melville formed the basis of modern Scottish unionism. It undermines the aspiration of the people by attacking it along the lines of both class and identity. It does this job and takes the consequent kick-backs.

In Northern Ireland colonisation was effected through the process of turning those from a specific population into second-class citizens and by educating them that their culture was of limited value. This policy was rolled out across the empire.

When the class struggle looked like it might be lost this Scottish elite absorbed the Scottish Labour movement into enough of its trappings to have them do the job for them.

Watch the video and consider the average life expectancy of certain areas of Glasgow and how it is among troubled third-world nations like Ghana. Perhaps we should consider these parts of Glasgow as Labour colonies kept in a state of abject poverty in order to beat their votes out of them. At the same time their history, language and culture were denigrated as part of the pincer movement.

Guards posted to suppress personal volition - the oldest imperialist trick in the book:

Only a minority of Scots now support union according to new poll

2010-12-13T19:16:00.002+01:00

Another piece I did for Newsnet Scotland:

by Alex Porter

A new opinion poll conducted by TNS shows that less than half of Scots now support Scotland remaining inside the union.

The poll, conducted over St Andrews Day and surveying a large sample of almost 1000 people, shows that only 44% of those questioned are against the Scottish Parliament "having the powers and responsibilities to enable independence".

Whilst those in favour of Scotland taking the path to independence was still slightly behind at 40% the poll showed that the gap had narrowed significantly as the recent trend towards independence continues.

The most worrying aspect of the poll for supporters of the union is that a full 16 percent of respondents "didn't know" and suggests that a clear majority of the population are now either in favour of independence or are prepared to consider the option.

The poll, conducted for the SNP, follows findings by the Scottish Social Attitudes Survey which shows that support for Scottish independence rises to almost half (45 per cent) if taxes were to go down by £500 – with 62 per cent also saying that the Scottish Parliament should take the most important decisions about welfare benefits, while 57 per cent say the same about taxes.

Together with this survey the TNS poll shows the unionist case that Scots view the constitution as irrelevant to the UK economic crisis is not convincing the electorate. Recent calls by business leaders and world-renowned economists such as Andrew Hughes-Hallet (Prof. of Economics: George Mason University, Washington DC) for economic independence are resonating with the Scottish electorate which faces austerity cuts at a time when the Scottish national accounts (GERS) show a surplus.

Mounting pressure on the unionist parties' stance came this week from the publication of Scotland's prestigious Council of Economic Advisors's (CEA) third annual report. It concludes that the Calman Commission, set up by a unionist party coalition of Labour, Tory and LibDems which forms the basis of Westminster's Scotland Bill "does not go nearly far enough" and that the Scottish parliament needs "full financial responsibility" with "control of the major tax levers" which represents Scotland's "best chance" to maximise its economic potential.

With the Holyrood campaign now a mere few months off, party strategist will vie over the key issue of economic competence. While Labour are still blamed for the parlous state of the UK's public finances, the SNP have successfully established their policy of economic independence for Scotland in the minds of the electorate.

With the Calman Commission proposals facing increasing forensic criticism, accused of being "dangerously flawed" and "unworkable" by economic experts and business leaders, Labour and their Calman coalition allies will be under pressure to explain why they want to deny the significantly increased powers to the Scottish parliament voters believe will improve the economic prospects of the nation.

Referendum

The TNS poll findings also will fuel further calls for a referendum on independence to be held. In poll after poll a large majority of Scots have been shown to favour holding a referendum on independence whether they are for the proposal or against it. However a unionist party coalition of Labour, Tory and LibDems has manoeuvred to deny this democratic right to Scots. They have opposed attempts in the Scottish Parliament at bringing forward legislation to hold such a referendum - one of the SNP government's key manifesto pledges.

Adding insult to injury the UK government has decided to hold a referendum on the Alternative Vote (AV) system which, furthermore, is to be held on the day of the Scottish and Welsh parliamentary elections. The system is not proportional and the plebiscite will distract attention away from the election campaigns for Scots and Welsh voters to decide which parties they want to form their next respective governments.

This curious situation where a widely sought referendum on independence is denied to Scots whereas a referendum on the AV system, which few support, is held will raise questions over the democratic conduct and legitimacy of the UK government. Only a small minority of the Scottish electorate voted for the Liberal Democrat and Conservative parties who at the UK general election were ranked third and fourth place in Scotland behind Labour and the SNP.

Indeed, this democratic inconsistency has lead to the campaign by the Bella Caledonia outlet which calls on Scots to spoil their AV referendum ballot paper by writing the word 'Independence' across it. Scottish and indeed English citizens have never been consulted on whether they endorsed the suspension of their independent parliaments, leading some on both sides of the border to describe the union as a "forced marriage". The denial of a referendum on independence will only harden that perspective.

Scotland's "Best Chance" is Economic Independence claims Council of Economic Advisors

2010-12-13T19:11:00.002+01:00

A piece I did for Newsnet Scotland:

by Alex Porter
Economy Editor

In its Third Annual Report, Scotland's prestigious Council of Economic Advisors (CEA) has concluded that the Calman Commission proposals "do not go nearly far enough" and that "full financial responsibility" with "control of the major tax levers" is Scotland's "best chance" to maximise its economic potential.

Scotland's CEA which is chaired by Sir George Mathewson includes world-renowned economists and academics such as Andrew Hughes-Hallet (Professor of Economics and Public Policy) of George Mason University, Washington DC. Given that the CEA members are of such international calibre, its scathing analysis of the Calman Commission's proposals will concern Scotland's business community, public institutions and the general public.

It is the latest in a succession of criticism faced by the increasingly controversial Calman proposals which form the basis of the Scotland Bill. Figures such as Professors Andrew Hughes-Hallett, Sheila Dow and Rod Cross and economists Dr Jim and Margaret Cuthbert have described the Calman proposals as "dangerously flawed" and "unworkable". Marc Coleman, former economist at the European Central Bank, recently commented that 'Scotland requires immediate fiscal autonomy and Calman falls well short of fiscal autonomy.'

The Calman Commission was set up by the Labour, Tory and LibDem parties and its apparent flaws are viewed by many economists as emanating from a political rather than economic agenda. Calculations show that had these proposals already been in place, Scottish government budgets would have faced cuts to the tune of £8 billion since 1999.

Referring to the challenges Scotland faces owing to the parlous state of Britain's public finances Sir George said: "What happens in Scotland in the near future depends very much on the strength of the global economy as well as the impact of austerity measures imposed by the Westminster Government."

As Scotland's national accounts currently show a surplus, the Scottish electorate would be justified in asking why its government's grant from London should be cut at all. With economic independence it needn't be.

Recently, the world respected Legatum Institute's Prosperity Index 2010 placed the UK 98th in the world in terms of the public's confidence in their job expectations. This ranking is usually the reserve of third-world countries and supports the case for Scotland wresting control over its economic future from London.

One of the CEA report's key recommendations is: "Seeking to obtain tax powers in order to be in a position to influence the rate of economic growth and employment and engaging with the UK Government to make the necessary institutional changes for this to be possible."

The case for economic independence, resisted by the unionist coalition inside the Calman Commission, is increasingly popular with Scots. Last week saw the publication of the Scottish Social Attitudes Survey 2010 which showed that 62 per cent of Scots favour significantly more powers for the Scottish Parliament. On tax (57 per cent) and welfare benefits (62 per cent) - a clear majority, want the Scottish Parliament to make these decisions on behalf of the nation.

Controversially, the Scottish parliament's Scotland Bill Committee is chaired by Wendy Alexander MSP. Miss Alexander, as leader of the Labour group at Holyrood, was forced to resign in 2008 amid accusations of financial corruption. The issue continues to reverberate in public discourse as a result of successive revelations in connection with the matter and raises further doubts over the probity of the Scotland Bill.

With the Holyrood elections now less than six months away and with Westminster austerity cuts looming, the issue of economic competence will be pivotal for an electorate concerned about jobs and the economy. Recent polls have shown that the public blame the last Labour government for the UK's unprecedented budget deficits.

During the campaign the SNP will ask why the electorate should believe that Iain Gray's party can fix the sovereign debt, financial and currency crises that Labour itself created. At the same time the SNP will point to a popular record on governmental efficiency savings, the abolition of prescription charges and the freezing of council tax bills.

If Labour strategists cannot convince voters of the benefits of denying Scotland the real powers that Scots believe will improve their economic prospects, First Minister Alex Salmond will feel increasingly confident about his chances of keeping the keys to Bute House.

Irish Closer To Rejecting Bailout

2010-12-09T22:18:00.006+01:00

A couple of interesting stories on Zerohedge today about Ireland. The first is about how the opposition Labour party are intending to vote down the bailout budget ensuring that the Irish people will not be lumped with the private losses of global investors. In Scotland we have to learn the lesson of not allowing ourselves to be dominated by external powers. The second is a video interview of a blunt Irish financial expert, who works in the US, on the crisis in Ireland:

Remember Europe and that insolvent country which Ron Insana conclusively determined does not matter? It's back on the scene after Reuters reports that the main Irish opposition Labor party has just announced it will vote against the IMF/EU bailout package. Just what spin Olli Rehn will have to use to calm markets after his latest vassal nation continually refuses to go quietly into that good night, remains to be seen.

From Reuters:

The euro extended declines on Thursday after a spokesperson from Ireland's centre-left opposition Labour party said the party will vote against an 85 billion euro IMF/EU bailout package when it is put before parliament for approval next week.

"Labour would vote against it because we consider it a bad deal," she told Reuters. Ireland's governing Fianna Fail party said on Thursday it would seek parliamentary approval for the rescue funds.

--------------------------------------------------------

Update:

The Irish Finance Minister Brian Lenihan is threatening an ammendment to his budget that would see the imposition of a 90% tax on bankers' bonuses:

“As far as the future is concerned I do propose to introduce the amendment to the finance bill to put this matter beyond any doubt and provide a high rate, a 90 per cent rate of charge on any ... bankers’ bonuses,”

Read more.

Amazing what you can achieve when you threaten to reject a bailout. The bonuses will be 10s of millions - the bailout 10s of billions. Mmmmm. Take the tax receipts and reject the bailout too! I hope people are watching this.

An Awakening

2010-12-09T02:07:00.005+01:00

Austerity is not a forgone conclusion. The bankers using their government proxy would like us to believe that the public has to bail them out. We are supposed not just to forgive their fraud, which was an abuse of deposits and savings, but now compensate them for the losses they racked up indulging in it.

We are told it's good for us to accept austerity and have our standard of living slashed because we can't get by without these bankers. Yeh, we need them to commit fraud otherwise our economy will collapse. Well, the financial system went and to bail them out our economies and currencies were sacrificed and yet still the financial system is dead. All that public money is doing is continuing to pay bankster bonuses until there's nothing left.

Well, it's coming to an end. The people have had enough and are fighting back.

Listen to this English schoolboy for example. Clearly, there is an awakening:

Wikileaks Cables: Megrahi Release Fully Supported By Labour Government

2010-12-08T17:09:00.004+01:00

Latest piece I did for Newsnet Scotland:

by Alex Porter

In a sensational development US diplomatic cables, leaked to The Guardian newspaper by Wikileaks, show that the last Labour government fully supported the early release of the convicted Lockerbie bomber Abdelbaset al-Megrahi. Megrahi was released in 2009, on grounds of compassion, after being diagnosed with terminal cancer.

Britain feared "harsh and immediate" consequences, according to the leaked cables, if Megrahi were to die in a Scottish prison. Libya has the largest proven oil reserves in Africa. "The Libyans have told HMG [Her Majesty's Government] flat out that there will be 'enormous repercussions' for the UK-Libya bilateral relationship if Megrahi's early release is not handled properly." wrote the London charge d'affaires Richard LeBaron in a cable to Washington in October 2008.

The revelations exonerate the Scottish government which has faced an unrelenting barrage of criticism for releasing Megrahi on compassionate grounds. The Labour party heaped opprobrium on First Minister Alex Salmond and called for the resignation of Scottish Justice Secretary Kenny MacAskill. Labour politicians claimed publicly that the decision to release Megrahi was an embarrassment to Scotland whilst privately the leaked documents show the Labour leadership were in fact favouring his release.

The cables show that the UK government was aware of dire repercussions should Megrahi die in a Scottish prison:

"GOL officials have warned U.K. Emboffs in demarches here that the consequences for the U.K.-Libya bilateral relationship would be "dire" were al-Megrahi to die in Scottish prison. Specific threats have included the immediate cessation of all U.K. commercial activity in Libya, a diminishment or severing of political ties and demonstrations against official U.K. facilities. GOL officials also implied, but did not directly state, that the welfare of U.K. diplomats and citizens in Libya would be at risk."

The documents also reveal that the US were privately suspicious of Tony Blair's 'Deal in the Desert' in 2007. The cable states:

"Saif al-Islam implied that former UK PM Tony Blair had raised Megrahi with the Libyan leader in connection with lucrative business deals during Blair's 2007 visit to Libya. [Note: Rumors that Blair made linkages between Megrahi's release and trade deals have been longstanding among Embassy contacts. End note.]"

The Guardian reported documents as claiming that: "Anger with the British persists in some American circles, and UK ministers, Labour and Tory, have attempted to distance London from the release insisting it was purely a Scottish decision."

Public reaction is sure to be one of disbelief at the way in which the Labour party have sought to make political capital out of the worst terrorist atrocity ever committed in Britain.

Further cables from the US ambassador to Libya, Gene Cretz, show that the US position was to resist voicing opposition to Megrahi's release at the time so as not to risk Libyan retaliation against US interests.

Mr Cretz warned the US itself should keep quiet in order to protect its interests: "If the [US government] publicly opposes al-Megrahi's release or is perceived to be complicit in a decision to keep al-Megrahi in prison, [America's Libyan diplomatic] post judges that US interests could face similar consequences."

The silence presumably included US Secretary of State Hilary Clinton who later claimed that the decision was wrong and had denied justice to the families of the dead. The US "continues to categorically disagree with the decision" said Clinton. The documents suggest that both the Labour UK government and their US counterparts have unleashed false, and seemingly co-ordinated, furore about the Scottish government's decision since the announcement.

Recently a group of US senators, supported by Labour MSP Richard Baker, pushed for Kenny MacAskill to answer to the US Senate's Foreign Relation's Committee regarding his decision. However many of the accusations levelled against the Scottish Justice Minister by the US politicians included clear falsehoods and misunderstandings based on UK media reports that included innuendo about the Scottish government being influenced by oil giant BP.

The cables also make clear that bribes in the form of 'treats' were offered to the Scottish government by Libyan diplomats but were refused point blank. Further attempts at smearing the Scottish government in relation to seeking finance from Qatar in return for the release of Megrahi have been emphatically denied by the Qatari MFA Minister of State for International Cooperation, Khalid Al-Attiyah, who said "'That is ridiculous. It was not necessary to offer money. It was all done within Scottish law. We offered no money, investment, or payment of any kind."

UK PM David Cameron will also now stand accused of trying to make political capital out of the tragedy as he publicly announced at his party conference in Scotland that the Scottish government's decision was "wrong" and that "nothing like that must ever happen again". It is reasonable to assume that Cameron was aware of the content of the leaked cables before making these comments.

First Minister Alex Salmond is said to have been shocked by a public letter sent by FBI Director Robert Mueller over the release of Megrahi and described it as "over the top" given that President Obama had already commented on the decision. The cables show US officials acknowledging that the Scottish government acted in good faith at all times and had nothing to gain whereas the UK government, according to the leaked documents, gained massively from Megrahi's illness and subsequent release.

The cable states:

"Salmond reiterated that he and his government "had played straight" with both the USG and UK Government, but implied that the UK Government had not. During the meeting, which occurred before the Mueller and Mullen statements, he said he wanted to move beyond the Megrahi issue and deepen Scotland's relationship with the USG."

The cables also reveal that the reaction to the release was more severe than the Scottish government had anticipated and that Scottish opposition parties were trying to capitalise on it for political gain:

"Meanwhile, local Scottish opposition politicians are using the issue to call into question the SNP government's credibility and competence."

"Naysmith underscored that Scotland received "nothing" for releasing Megrahi (as has been widely suggested in the UK and U.S. media), while the UK Government has gotten everything - a chance to stick it to Salmond's Scottish National Party (SNP) and good relations with Libya."

Far from embarrassing Britain the Scottish government is now shown to be the only western government involved in the affair to have behaved with honour and respect. The truth, now out, is that a politcal conspiracy on both sides of the Atlantic, to use the Scottish government as a scapegoat, has been exposed.

The leaks will call into question the integrity of many within the Labour party in Scotland and suggest that the dignity of Scotland is secure in the hands of First Minister Alex Salmond and Justice Secretary Kenny MacAskill.

Good Times Roll For Norway, Scotland Faces Austerity

2010-12-08T17:05:00.001+01:00

Latest piece for Newsnet Scotland:

by Alex Porter
Economy Editor

Norwegian economists are forecasting continued buoyancy in the Norwegian economy based on increased revenues from North Sea oil.

With crude oil prices passing the $90-per-barrel mark economic growth, at an annualised rate of 3.7 percent according to the Norwegian State Statistics Bureau SSB, the oil sector is predicted to boost growth and employment in 2011.

By contrast Scotland, a North Sea oil producer, faces austerity cuts to the Scottish block grant from London next year. The cuts, which the Scottish Finance Secretary John Swinney is compelled to administer, come despite a surplus in Scotland's national accounts already being transferred to the UK treasury.

With figures such as the internationally renowned economist Andrew Hughes-Hallet and prominent business leaders calling for economic independence, the issue of why Scotland must suffer austerity cuts at all will resonate with the electorate. Scots, in poll after poll, have expressed the desire for increased economic powers for Scotland. Economic independence is opposed by a Labour/Tory/LibDem coalition.

In the run up to Christmas the falling value of the pound will also put a major dent in Scottish consumers' purchasing power. The pound has lost 40 percent of its value against the Norwegian kroner in the last 4 years.

This alarming pound depreciation is causing volatility and uncertainty for Scottish business and institutions who are finding it increasingly difficult to plan for the future and employ staff. This raises the question of how prudent it is for Scotland to continue with sterling instead of opting for its own currency.

The impending combination of austerity cuts and the devaluation of the pound is a dangerous mix. Many economists warn that evidence suggests that austerity will cause tax revenues to drop further and therefore increase the already unprecedented deficits in Britain's public finances. Increased government deficits will see Westminster and the Bank of England extend quantative easing (money printing) and so intensify the pound crisis.

The prospect of simultaneous sovereign debt, financial and currency crises will concern international investors. Investment will naturally gravitate towards creditor states in the developing world away from debtor states in the west like the UK.

“For the first time since the finance crisis began we’re in an upward cycle,” Harald Magnus Andreassen, chief economist for First Securities told Dagens Næringsliv (DN). Norwegian optimism has seen the Christmas shopping season get off to a flying start with household purchasing power increasing retail sales by 5 percent compared to the same week last year.

Irish Terrorism - Banksters

2010-12-06T17:50:00.006+01:00

Some are calling them 'financial terrorists'. Ireland's uprising against bankster occupation grows day by day.

Irish Senator (independent) and Presidential hopeful Steven Norris has released the names of the 'bondholders', of the now state-owned Anglo Irish bank, who risked their funds without proper due diligence and who, having gambled badly, are now demanding that the public assume generations of debt in order to cover their private losses.

There are 80 bondholders in all, based in various countries, but Norris only got the names of five of them out before being ruled out of order in the Irish parliament.

In order to compensate these investors the entire population is being forced into debt peonage and if the debts are assumed by the people another wave of emigration is expected to follow leaving a less productive, older population to foot the bill. Austerity is not going to work and unborn generation will be stuck with debt for their entire lives - an entirely immoral proposition. One might conclude that those calling the banksters 'financial terrorists' have a case which needs to be answered.

This whole charade shows how dangerous it is for a nation to relinquish its independence. In this case the problem is monetary union and the Euro. In Scotland we have exactly the same problem with the pound. The difference is the pound is being printed into extinction and Scotland's standard of living will go with it unless we move to a sounder currency.

It is starting to look like Ireland will join Iceland in repudiating the bailouts, sending a message that citizens around the world have had enough of bankster fraud!

Here is the list of the bondholders who are benefitting by piling debt on ordinary Irish citizens:

The bondholder are: Aberdeen Asset Management (London Ltd), AGICAM, Aktia Asset Management, Aletti Gestielle SGR and Alliance Bernstein (UK) Ltd.

The rest of the names were released in a document and are now circulating the net.

For more information read here.

The Scottish Currency Debate

2010-12-03T19:57:00.003+01:00

A piece for Newsnet Scotland:

The world’s industrialised and developing nations are now gripped in a dangerous currency war where major currencies such as the dollar, the pound and the euro are being deliberately devalued.

This is causing volatility in emerging markets and the signs are that more quantative easing (money printing) is predictable. It is an unsettling forecast and so the time has arrived for the Scottish national community to consider what our options are in terms of currency.

There is absolutely no doubt that Britain is following the US’s lead in currency devaluation. In the last three years the value of sterling has fallen against the stagnant Japanese yen by more than 60 per cent. Devaluation happens because the Bank of England and the Westminster government uses quantative easing (money printing) as a monetary tool.

Money printing is dangerous. The policy of money printing in the US has given rise to the following video being circulated by the US National Inflation Association:

Printing money devalues existing pounds and so reduces your purchasing power. Decreasing the value of the British currency does help exporters. However, Gordon Brown’s Labour party policy was to encourage property speculation at the expense of labour and industry. This meant manufacturing jobs left Britain and went to other countries leaving the population to survive on service sector salaries, credit cards and refinancing the family house/home.

As an import economy a devalued pound worsens Britain’s negative account balance with the rest of the world. The only explanation then for depreciating sterling is that Britain needs to print money to pay its debts which technically means bankruptcy. The UK is in a worse position than Ireland but Ireland is in the euro and so can’t print its own currency. A sign that ceding independence is fraught with dangers.

It is difficult to measure how fast the pound is collapsing as the convention is to compare it to rival currencies or a basket. However in a world where most major currencies are devaluing to keep up with the US it is difficult to know exactly how much it has fallen. The best indicator then is the currency ‘safe-havens’ of precious metals (PMs). When currencies fall, investors move out of paper and into gold and silver.

In the last year alone the pound has dropped 25 per cent against gold and 60 per cent against silver. The dollar and the euro have dropped quickly too recording declines against gold of 17 and 35 per cent and silver 51 and 72 per cent respectively.

With quantative easing in the UK now passing £200 billion and set to rise and with government borrowing per month standing at over £15.3 billion per month and climbing there’s clearly more money printing to come. The argument that austerity will help by cutting costs makes sense to an accountant but the evidence is that cutting jobs means less consumption and so a fall in VAT income, more defaulting mortgages and higher social security bills arise. A cut in benefits will hit main street too as expendable income dries up.

There was no need for any of this. Banking fraud caused the financial sector to rack up trillions of dollars of debt worldwide (much of that Britain’s) and when it came time to pay the bill the private debts of wealthy institutional bondholders and shareholders were transferred to the public through bailouts.

The policy of shoring up banks’ balance sheets means the UK now faces simultaneous sovereign debt, currency and financial crises. As austerity bites and the private sector fails to recover there will be a growing discontent and citizens will demand to know why they were shepherded into believing the banks should have been bailed out at all. It is deeply disturbing that the government cuts benefits to the needy whilst their policy of quantative easing sees billions being transferred to private investors and the bill hung around the neck of the people for generations to come.

It is becoming clear, day by day, that the UK economy is going to sink deeper into depression. The loss of manufacturing, debts which can’t be paid and money printing are together a dangerous cocktail and threaten the future of Scottish business and institutions.

It is therefore prudent to plan which currency Scotland would want to adopt. The SNP policy of staying with the pound until alignments permit joining the euro is fast becoming redundant. The entire European experiment is falling apart – monetarily and politically. Spain is teetering on the brink. There is a drop off in capital markets, banks are hiding huge debts off balance sheet, the construction sector which accounted for 40 per cent of government income is dead, unemployment has surged past 20 per cent (50% for young people) and there is a seven year supply of housing on a market which has not yet seen the reduction in prices many believe is coming – perhaps over 50 per cent.

There is simply not enough money to bail out Spain. When the contagion gets to Portugal and then Spain it’s over. The euro-zone, in its current form, will cease to exist. It could happen next month.

Pound or kroner?

For Scotland the choices have narrowed. The pound is sinking fast but the euro life-boat is going to drown with it. The general public have the right to a reasoned debate on a Scottish pound/dollar. The best example there is for an independent Scotland is Norway which has similar size, location and natural resources. Markets will lend money to Norway because it has oil. Norway's responsible governments have turned that under ground asset into an above ground asset in the form of a pension fund which is the second largest in the world valued at £317 billion - the equivalent of more than 10 years block grant to Scotland from Westminster.

Recently the prestigious Legatum Index ranked public confidence in Britain’s financial system at 101 in the world. This is a statistic normally reserved for third world nations. The same survey shows confidence in job prospects at 98 out 110 nations surveyed.

As it becomes clearer that the UK economy faces a highly uncertain future and deficits and government borrowing set to escalate, the temptation for Cameron’s government to print more money will become overwhelming.

Scotland can choose currency devaluation with the British pound or a secure oil-backed currency like the Norwegian kroner (NOK). The pound has dropped 20 per cent against the kroner in the last 4 years.

With the UK financial system insolvent and being bailed out by heaping debt onto the taxpayer, the time to start the debate about adopting a currency of our own has arrived. An independent Scottish currency backed up with North Sea oil is now a responsible and urgent debate which must be had.

Dollar Decline and Scottish Currency Options

2010-11-24T18:35:00.003+01:00

Piece I did for Newsnet Scotland:

On Monday the Chinese Yuan started trading against the Russian Ruble on the inter bank market. This is the latest in a series of moves which will promote the Chinese currency's use in global trade and finance.

With the US flooding world markets with dollars its reserve status is coming under increasing threat. As the dollar is the currency of international trade it means that most countries in the world need to have reserves of dollars to buy goods such as oil. This creates demand for dollars and holds the price up whilst at same time the Federal Reserve is devaluing it by printing trillions more (quantative easing).

Inundating the world with dollars creates volatility in exchange rates and destabilises international trade. It also means that US companies can go on a spending spree with dollars whose value is being held up by other economies. This causes inflation in the target economies. The US is also a huge debtor nation and its creditors see the value of their dollar holdings diminished by devaluation.

As US deficits (including off balance sheet) are now spiralling out of control America's creditors such as China realise they are not going to be paid back. As a consequence they want rid of their dollars and are making deals in all asset categories round the world. They could simply sell their dollars but if they put them on the market all at once the dollar would collapse and their reserves will become valueless.

Dollar depreciation has sparked a currency war which is effectively a race to the bottom. Most major currencies are being devalued and this is indicated by the rise in price of precious metals. Gold and silver are seen as safe-havens at a time of currency volatility. In the last few months silver has risen in price from €14 to €20.46 (50% rise) at the time of writing. This partly reflects a previous rally in the Euro which had been thought of as an alternative reserve whilst confidence in the dollar plunged. However recent sovereign debt panics in the Euro-zone have seen confidence in the Euro plummet.

In pounds, silver has risen 65 per cent since January. This shows the pound is nose-diving as British governments and the Bank of England continue their policy of quantative easing (money printing). The most recent figure for quantative easing in the UK was £200 billion and government borrowing for the month of August was an unprecedented £15.3 billion. With deficits expected to escalate and with Britain's financial sector still in crisis, the UK would be in the same postion as Ireland were it not for the fact that Britain can print more money. Ireland does not have that luxury - unless it leaves the Euro.

With currencies being debased at such a pace countries such as China, Brazil and Russia are pushing for a new global reserve currency. The Chinese seem intent on providing that platform:

"The pace of internationalizing the yuan is accelerating," said Zhao Qingming, a senior analyst in Beijing at China Construction Bank Corp, the country's second-largest lender.

"The direct trading between the yuan and the rouble will help expand trade settlements in the two currencies."

The message in these developments for Scotland and the SNP government is that should Scotland have to escape the pound in a hurry the Euro may well not be a wise alternative. An independent Scotland may instead be advised to choose an oil-backed currency such as Norway's Krone (NOK) - one of the most stable currencies in the world.

As the UK enters a period of traumatic sovereign debt, currency and financial crises, Scotland may be wise to float its own currency and so provide a stable platform for foreign trade whilst protecting the wealth of its citizens.

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Update on CCTV:

Austerity Revolts Begin

2010-11-24T18:02:00.006+01:00

Isn't it great that banks got in trouble and passed that trouble on to us? Private debt was turned into public debt. Some well-indended activists do not support stopping bailouts and they now have to explain why! The bailouts have led to soveriegn debt and currency crises. People's wealth is being diluted including pensions and the banks are still bust.

As we are starting to realise Lloyds and RBS have huge exposure to the Irish banks. Bailing them out is printing money, giving it to the Irish who then give it back to the British banks. This makes sure the debts are hung around the Irish necks when what should happen is the Irish banks are allowed to go bankrupt and let the British banks fight over the scraps.

So much for Brits bailing out Ireland as the BBC would like to have us believe. Where is the intrepid journalism?

And while we're at it. In Scotland the people are now under blanket propaganda by the unionist mainstream media. Scots are being bombarded and being lied to systemically about the SNP government. It is full-throttle Orwell!

I'm sorry if some journalists get caught in the cross-fire but the journalists are supposed to be there for the people not the other way round. Getting the truth to a besieged population is far more important than the bruised ego of the odd journalist who should know what it means to get into that profession, in Scotland, before doing so.

As we know the City of London is extractive not productive. Nothing comes from there, everything is sucked into there including student grants, pensions, savings, public sector, family wealth etc etc.

If Ireland declares bankruptcy as world-renowned investor Jim Rogers advises what would be the hit on British banks?

Lloyds: £21.7 billion in loans, £11.7 billion in impaired loans.

RBS: "Significant" exposure, according to Morgan Stanley, including £51.9 billion in loans.

Austerity is kicking off. Here is what the students think:

Jim Rogers Explodes Bailout Myths

2010-11-22T16:56:00.006+01:00

The legendary international investment guru Jim Rogers, who formerly co-owned the Quantum Fund with George Soros has shown up the bailouts for what they are - economic illiteracy and fraud.

There is absolutely no need for the public to assume the debts of big financial institutions and it will only make things worse anyway.

The Euro would be stronger if Ireland was allowed to go into administration. The logoc behind the bailouts is all about banks manipulating the political agenda. The bailouts will kill the Euro and Europe and severely indebt ordinary people who did nothing wrong except be taxpayers.

The debts which will be hung around the Irish people's necks enslaving them for a generation at least and spark another population exodus. This will leave a smaller working population to pay for public services and guarantee pensions for those retiring.

When will people say we've had enough of this daylight robbery? Stop your politicians trying to engraciate themselves with the bankster class and demand that government takes care of the people before the banksters.

Sinn Fein is right. This is economic treason. Our politicians must know that they will be held responsible. It is time for politicians to decide if they are on the side of the people or on the side of the banks.

Bailout Sparks Civil Unrest In Ireland

2010-11-22T16:17:00.008+01:00

As reported in www.thejournal.ie around a hundred Sinn Fein activists breached the gates of the Irish parliament today:

Sinn Féin activists breach gates of Government Buildings

Here is BBC footage of the demonstration. There are accusation of police kicking protestors who are calling for the immediate resignation of the Taoiseach Brian Cowan who has given interviews recently where he has shown signs of fatigue and in one interview was clearly drunk.

How long before Scotland draws appropriate conclusions about the UK's financial sector, bailouts and auterity?

Economic Treason

2010-11-22T16:01:00.006+01:00

If you were in any doubt about the anger erupting across Ireland then the Sinn Fein demonstration today will set you straight.

People feel betrayed. Folks, this is a flavour of what's around the corner here. Austerity is going to cause civil unrest. The political system is captured by a financial oligarchy and taxpayers are the victim. Normal political channels are not going to help and so the grassroots will have to remind the political class who's boss!

Irish Bailout Already A Failure (For Europe)

2010-11-22T15:34:00.006+01:00

More signs of unrest in Ireland.

Ireland is in the middle of a global political game. The bailouts, as they are eslewhere, are all about banks in other countries making sure they get paid back for loans that they lend fraudulantly and/or recklessly. The Irish are taking the political flack for Germany and the ECB generally.

The 'bailout' of Ireland is supposed to stop a 'contagion' inside the Eurozone. It hasn't worked. According to Zerohedge the bailout has failed and markets are moving on to gut Portugal.

How long can the Euro survive? As Britain is also bankrupt the question is also, how long can the pound survive as it prints more money to QUIETLY bail out Britain's insolvent financial sector.

With currencies being devalued to keep the banks on life-support sovereign debt crises and money printing are seeing the value of assets, savings and investments collapse. Pensions are taking a pounding and will likely be of little value when people retire.

We must stop throwing public money at private debts. Let them fail. A new system can be created, the bailouts repudiated and the money set aside for a new pension fund.

People are worried. In Ireland there are increasing flashpoints where demonstrators are being arrested. Here is another example of tensions rising to the surface in the Irish parliament -

Ireland and The Coming Debt Revolts!

2010-11-20T10:53:00.006+01:00

Gerald Celente is the world's most respected trends' forecaster. His company - the Trends Research Institute - has been, over the years, commissioned by governments, multinationals and others to give an insight into their futures.

Gerald is absolutely furious about what is going on between governments and international bankers. He is absolutely adamant that bailouts are morally and economically reprehensible and predicts that no good will come of them. You can get a wealth of information by subscribing to his Trends Journal.

Below is an interview he gave to an Irish radio programme two weeks ago. It turns out that his message of not bailing out private debts with public money and the folly of austerity was prescient in Ireland. The Irish presenter was already getting at the whole idea of debt repudiation and that's before the latest crisis.

Here's my forecast:

There will be a groundswell of debt revolt in Ireland which will spread to the UK as austerity moves closer. Trust in the political class will diminish quickly. Banks who indulge in repossessions will have their services boycotted. People will withdraw their money from big banks and deposit it in local independent banks or credit unions or they will buy precious metals to protect themselves from quantative easing which is jargon for defrauding the population.

The sooner these options are explored in Scotland the better. Over to Gerald -