Economics - Anti-Capitalism

2007 - 2021

Banking and a New Deal for Scotland

An epitaph for an age of irresponsibility symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees“. – Chancellor, George Osborne

What do we do with bank robbery and broken Britain? What’s the connection between the British State and the rotten financial system?

As I write the BBC’s Nick Robinson tweets: “Chairman of proposed banking inquiry told me it will be “A ring-fence job not trying to work out how to reform the whole banking industry”. Of course it will be. Another Leveson – another bloody inquiry headed by some establishment figure to cover up the whole rotten system is the last thing we need.

Last year Bob Diamond said “There was a period of remorse and apology for banks and I think that period needs to be over”. Today that comment looks just a wee bit premature.The reality is that the restoration of integrity in the City will not happen without serious criminal sanctions against venal traders, and this is not going to happen.

Earlier this week Lesley Riddoch posed the question would Scotland be economically ‘viable or vulnerable’ under independence? – and argued: “We are currently witnessing the collapse of de-regulated Britain. All we can anticipate is a welter of sticking plaster solutions when we need fundamental change. Radical change requires firmly held, widely shared moral beliefs so that any new reforming government is empowered to avoid shortcuts and dispense with stop-gap solutions. Britain needs a New Deal. But only the Scottish part of British society may be capable of seriously considering or delivering it.”

Over at Our Kingdom Tony Curzon Price writes: “Britain really did become a large hedge-fund with a small country attached to it. No country in the world faces as large an imbalance as we do, and rebalancing will take much more than resignations. Or public inquiries.” According to the IMF, the British stuck £1.2 trillion behind the finance sector. Read that again: well over a trillion pounds in bailouts, and loans and state guarantees on bankers’ trading. That means each one of us has forked out twenty grand to the banks – to banks we don’t control at all.

So is it time for more radical ideas about breaking up the banks and imagining a more equal Scottish economic system?

Here’s Manufacturing Consent co-author Ed Herman on global finance and power structures in an interview with America’s Real News with a few ideas:

Maybe it’s time to consider the economic questions not within the narrow prism of Euro versus the Pound but what sort of economy do  we actually want? What sort of currency would best maintain that economy? What would banks look like in a Scottish society not predicated on greed, avarice and corruption?

We need to be asking more fundamental questions: what is money for?

Comments (10)

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  1. David Moynagh says:

    Before considering fundamental questions on the role of money we first need to make the fundamental decision in Scotland to demand independence from a corrupt system of westminster rule. That is simply to demand independence from a tory led bunch of weasels and parasitic snobs.

    1. fourfolksache says:

      I think you may have it the wrong way round!
      Stating what the vision is including importantly finance should provide the rationale for an independent Scotland?

    2. Scots Citizen says:

      That’s true, but I do think it’s important to sound out ways that we could change the current system. Because there are a lot of folk that have settled for acceptance, thanks to the futility of voting within the UK set-up we’re lumbered with and aren’t able to see that an indy Scotland would be any different. Demonstrating what changes could be made and that all we need is the powers and ambition to do so, is an effective way of winning more over to the Yes side.

  2. bellacaledonia says:

    The question of currency can’t be left to “after Independence”. This isn’t just another policy decision – such as who runs the railways – it is central to the nature of Independence and who controls the Scottish economy.

    What we need is a clear statement in the government’s referendum white paper that explains there will be a transition period following the referendum and that during the transition period Sterling will need to be kept as Scotland’s currency.

    As has been said many times before this means that interest rates and the money supply will be controlled by the Bank of England. This is not Independence.

    The current SNP position that Scotland retains Sterling until conditions favour entry into the Euro is no longer fit for purpose because it excludes the option of a separate Scottish currency.

    The hows, whys and wherefores of a Scottish currency need to be explored now, examined and explained, the pluses and minuses weighed up realistically and calmly. On Bella we will be doing just that rather than keeping shtoom for two years.

    It is pretty clear now that the UK banking and financial system is not fit for purpose for an Independent Scotland. It’s time to create a new one.

    Kevin W

    1. biowrite says:

      Well said, Kevin! I hope the debate will draw inspiration from and !

  3. John Souter says:

    With Westminster in thrall to the City and the EU gobbling up national sovereignty for the benefit of the financial shamans Scotland may be best served by the Scandinavian model of EFTA and Groat.

    1. bellacaledonia says:

      I tend to agree John. Ever since I read Jim Sillars 2009 paper which discussed the benefits of an Independent Scotland joining EFTA and having its own currency I’ve gradually come round to it. The other four EFTA countries – Iceland, Norway, Switzerland and Lichtenstein have all benefited from not being part of the EU/Eurozone.


  4. I too have a natural affinity to the thought of the EFTA option and a Scots Merk/Oun/Groat.

    The main problems I can see surrounding which currency route to follow post Independence are the unforseen implicit in the current World economic bordelle.

    I have no idea where the Euro is going and, as far as I can see, nor does anyone else except the Jackals having around the peripheries waiting the inevitable sick and slow.

    I do not have the figures to hand but a substatntial part of Scotland’s agricultural exports go South and maintaining some sort of stability with whatever currency London uses makes some sense, if only in the immediate short term. Similarily the Former United Kingdom Residual State, FUCKReS for short will, if the bollox that is Nuclear Power is ther chosen route for their projected electrical shortfall, will be found wanting. They will need and want a reliable supplier at a price that will be stable and affordable. Again this is a commodity supply win from Scotland along with water.

    Thus a close association in exchange rate makes sense, at least for a period, the length of which is unclear.

    Having the £STG as a common currency has some logical traction but if London wants to play sill buggers it offers substantial pitfalls, if they are stupid enough. I believe this particulat Leopard cannot change its spots and jiggery pokery is their profession, especially if Scotland prospers and FUKRS does not.

    A fixed Scots currency against £STG would put pressure on the Scots version as a safe haven from speculators and the City would love buggering away at this. Scotland would be forced to try to hold down our currency and thus by £STG essentially supporting it.

    We need to be in a larger currency group which brings us back to the € or some other association. This is where I am stuck as I haven’t a clue which one to advocate, at this time.

    EFTA is a political solution not an economic one but by implication economics would be central to any decision to take that route. It appeals to me but, as I say, is fruaght with problems in the short term anyway.

    What chance a loose currency union with the existing EFTA Scandinavians and especially if, when the € shakes out with others who may wish to join, Denmark, Sweden, Finland, Netherlands (?) and why not Canada. However this would need to be very carefully constructed and maintained, as the current € implosion amply manifests.

    It all depends what is best for Scotland at that time and what is better as Scotland and its relationship with the rest of the World progresses.

    It is quite a close economic call but politically I am with John on an EFTA type political association with what the European Union becomes but when and how remain difficult to tease out.

    We must keep all options open and not be afraid to reassess our position as the World changes.

    Remember, who cares which colour the Cat is, so long as it catches the mice.

    Beware perfidy from the FUKRS, always.

  5. cirsium says:

    Thanks for this introductory essay. I am looking forward to discussions on this important issue.

    In the light of what has happened over the last few years in the UK and EU, I have come to the view that, post-transition, we must have monetary sovereignty to safeguard our independence. Also, the currency should be issued by the Scottish nation not private banks.

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