Tag Archives: Sir Donald MacKay

About that drink?

It has been a week now and I have to wonder how paranoid the week had made me. You see, the revelations of Natixis and how large its financial power is, still boggles the mind for now. This also has a lesser effect on my sanity. Whenever I see any political ‘advice’ from a bank, I wonder whether there is a Natixis link and for the top banks they are all linked. So, when I saw the article of the RABO show up, I just had to wonder (at http://www.theguardian.com/business/2014/sep/16/scotch-whisky-scottish-independence).

So, how does yesterday’s news affect Scotland? Well, the issue now is how trade affects a new nation when it becomes independent. The first issue is “Whisky is Scotland’s second-largest export behind oil and gas and is worth £4.3bn a year to the local economy, but sales could be hit if the country loses access to the EU’s free trade area and to markets in the rest of the world where Brussels has forged trade deals“. First of all is that information true and/or correct? You see, we the people (most of us) want to drink Whiskey and real Whiskey comes from Scotland. If it does not come from Scotland, it is called bourbon (at http://www.woodfordreserve.com/)! The rest tends to make it to the menu as an ‘alternative’, as some might say.

So, should we have a go at the Rabo?

It is never a bad idea to have a go at a bank, but they do have a point here. What is a major issue is the fact that we see these 11th hour messages, of feigned pressure. Why is Scotland (if they select independence), not immediately allowed a temporary membership into the trade agreements the UK is already a member of? The quote “A new Scottish government would face ‘a mountainous task’ in striking trade deals beyond Europe. Scotch is exported to about 200 countries, with major markets in the US, Singapore and South Africa, while Chinese consumers are also getting a taste for it“. You see, this article sounds nice, but the term ‘Chinese consumers are also getting a taste for it‘ means that if they get the bulk of the shipment, European customers will not be happy at all. Instead of embracing a new European adult as it left the arms of mother Britannia is just good business. Legally seen, the Rabo is absolutely right; Scotland will be its own master now and as such will have to apply for trade agreements. Yet, if we look at several sources, we see that the US is the number one destination and Singapore (with all over Asia) is on number three, if these two markets could be ‘enticed’, we would see a shifting balance. With France in second place, Spain in fourth (but due to economic issues decreasing vastly and Germany in fifth position, we see a market in motion. The spirited market is not an easy one and the Chinese changes on ‘gifts’ would also hit the drinkable gifts department and as such Whisky will get a painful dip. So, is there an option for the golden juice of the highlands? I believe that if an economy is truly about improving then this unique situation should receive its own merit. The BBC view (at http://www.bbc.com/news/uk-scotland-26987262), which they made last April shows that this ‘stalling’ need is partially on economy and partially on events and none of them are linked to the independence of the Saltire.

But I am also a person who needs to take a step back. The issues for Scotland are not small and several are out in the open, but these issues should have been resolved or at least addressed to some extent long before the vote was days away. When I looked at the initial facts and wrote the blog ‘The cradle of Whiskey‘ the issues discussed and read from both Professor Sir Donald MacKay and Ronald McDonald show no issues on trade agreements whatsoever. With their golden ambrosia so high on the export list, I feel uncertain why there was no more visibility on this. I do not remember seeing it on any decently regarded news site. Now in the 11th hour a Dutch bank comes with this? Is this intentional demoralisation or is this a case of clear cut evidence that Scotland is not ready to be independent? I remain on the fence. I have been in the ‘stronger together‘ camp for several reasons, but that has always been for pressure from outside economic issues. This is a first clear internal reason for not going independent.

So, as we see the articles piling up in the papers in the UK, the Guardian foremost, how come that several serious issues did not get the forefront until now?

It is nice to see quotes like “Alex Salmond urged tens of thousands of yes activists to ‘get to it’ by seizing the extraordinary chance for a “new dawn for Scotland”, as the final batch of polls before the vote confirmed the referendum hung on a knife-edge” (at http://www.theguardian.com/politics/2014/sep/17/scottish-independence-alex-salmond-david-cameron-resign), yet the issues of trade as well as the 11% deficit Scotland could face in year zero are no laughing matters. There are other issues that come to mind too. What happens to Scottish students in tertiary education? What of their international placements? If we look at the legal ramifications of trade, then we should also look at any long term plans that were there for the Scottish students, if they fall away, then Scotland will soon face economic bashing on more than one level. It is possible that these issues were looked at, yet the guardian piece as the Rabo bank is quoted implies that these matters seem to have been ‘stalled’ until after the elections, yet this impact has not clearly be shown on several fronts, which beckons the question, ‘why not?’.

Forbes have been active too (at http://www.forbes.com/sites/chriswright/2014/09/15/if-scotland-goes-a-mistake-as-big-as-the-great-depression/), they are showing other sides that did not make the news in several ways. One massive point is one that has definitely been kept from the Scottish voters: “Deutsche says the symbiotic relationship between Scotland and the rest of the UK is older and deeper than the Yes camp dares to admit. Five, it says that the idea of replicating something like Norway and Denmark – similar population sizes, links to oil (particularly in Norway) – is disingenuous. Norwegian oil and gas fields are deeper and expected to last much longer than Scotland’s which are already in decline, and Norway has its own currency; Denmark’s economy is totally different, and has a better fiscal position”, so not only is Scotland depending on oil, which still keeps them 11% in deficit, but the decline of their fields will soon become a more visible issue, then what happens? So, I remain in favour of Scotland becoming one nation (just not now), but in light of these mounting issues, we must ask the question, why is Alex Salmond not openly dealing with the issues we see here and as such, why are these facts kept from the voters?

This gets me to the final point and perhaps the only truly unacceptable view that the Guardian is giving us (at http://www.theguardian.com/politics/2014/sep/17/scots-final-call-rallying-political-engagement-votes). The headline “Scots’ final call: can rallying beneath the radar save the day?”, first of all, as this massive change hits 5.3 million wavers of the Saltire, this should be out in the open. Below the radar implies dealings for the benefit of a few, which is the one thing the Scots should not allow for. There is genuine anguish in the article as we see a few emotional turns, yet it is the end of it that should grip us all. “As Patrick Harvie, the Scottish Green party co-convenor, told Wednesday morning’s rally: ‘Nothing is going to be the same again, whichever way it goes.’”, I disagree,

I think that it is out in the open in new ways that Scotland is getting ready to be the new adult at the Commonwealth table, we the other members Australia, Canada, India and New Zealand should aid in setting in motion that transition, by allowing Scotland to sign trade agreements with all the perks of growing their economy to become solid. In addition, I still believe that India could be a large key player here, as I stated in my blog ‘the Cradle of Whiskey’ on the 16th of August. “As a solution, I still believe that India has options here. As the Indian generic pharmaceutical industry grows for Europe, it will need alternatives for both manufacturing, shipping (read distribution) and perhaps to a smaller extent research. Whilst everyone seems to stare blindly to London area’s where prices are through the roof, Edinburgh offers a much cheaper and no less sturdy solution”. This could still be a long term option for Scotland and if there is any truth in the statement that Scotland’s oil production was in decline, it is no longer a maybe, it is a given and an essential step to get several industrial changes going as well as opt for a few new ones. We just need to make sure that those ‘new’ players are not coming in under the flag of ‘friendship’ whilst collecting under the banner of greed, because that will never be a solution.

We have looked at shortages and surpluses for so long; it is time to see how those two can be connected to find the balance leading to progress. There has however been too many drum beating under the ‘honest’ statements on how bad it all is for others and how bad it is for Scotland, even the IMF weighed in on that. I think these people were slightly off the boil and I feel that the wording in Forbes was better, more sincere and a lot more correct “But if it happens, economies and investment patterns will adjust as they always have done. Deutsche is right that there are greater challenges facing the Scottish economy under independence than most people there have probably understood. But the idea of national pride is a powerful one, and some people are prepared to compromise a great deal to achieve it”. This is definitely true and it feels more sincere. It also seems to indicate how ‘flawed’ David Folkerts-Landau was when he stated “A ‘Yes’ vote for Scottish independence on Thursday would go down in history as a political and economic mistake as large as Winston Churchill’s decision in 1925 to return the pound to the Gold Standard or the failure of the Federal Reserve to provide sufficient liquidity to the US banking system, which we now know brought on the Great Depression in the US”, is that true Mr DFL? (the fact that he was stated in the Urban Dictionary was just a coincidence). We could see him, not as ‘flawed’, but as ‘shoddy’, ‘scant’ or ‘lacking’, but I leave that up to the readers. There were several issues involving the Great Depression of the US, and gold was there too, yet it was the inaction of President Herbert Hoover that were at the centre of this, he did set up the groundwork that led to the acts by President Roosevelt that would create the new deal and fix a lot of the issues that were around then. Now, as economies are a lot more intertwined the issue of trade pacts and the delay in signing up nations seem to be at the centre of this, so as Scotland ends up in the ‘stronger together’ field, we must acknowledge the need for change, the need for an independent Scotland, it is a side of freedom we all deserve. Is it so bad to help our sibling into becoming the stronger partner? That is what I find missing at the core of all the newscasts, the option to enable Scotland to become independent, preferably when economies are moving in a better direction, as to ensure the long term health of the land below the waving Saltire.

 

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The cradle of Whiskey

There is a matter that is of interest to the commonwealth at large. As time progresses we see more and more in regards to the Commonwealth upcoming baby brother Scotland. For now still part of the motherland of the British Empire, our baby sibling is about to stretch its own feet. The need for junior to become its independent member is one that has been voiced (especially by the local population) for a long time. I in all honestly remain on the fence. I have nothing against this change, but as I state before, the timing is not right. However, in all fairness, it is likely never to be a great timing is it?

Yet, the Guardian will give us our daily ‘need’ for information. There are however a few issues that also rise at those events. Let’s take a look.

The first one is in regards to yesterday’s news with former PM Gordon Brown (at http://www.theguardian.com/politics/2014/aug/15/gordon-brown-independent-Scotland-neocolonial-ties-uk).

Here it is stated “An independent Scotland that kept the pound would have a neo-colonial relationship with the rest of the UK because it would have no say over key economic and monetary decisions, Gordon Brown said on Friday“. I find it had to disagree with that. And let us be fair, would we want this? Absolutely not! Yet, will Scotland start its own currency? It is the statement from Professor Ronald McDonald (yes, the economist, not the clown) which is the strongest voice “Professor Ronald MacDonald, a currency expert who advises the International Monetary Fund and the European Central Bank, said the Scottish government’s plans to use sterling after a yes vote were fundamentally flawed, even if Alex Salmond’s proposals for a currency union were accepted by the UK. The Scottish economy would shrink by up to £100bn by 2023, MacDonald said” (at http://www.theguardian.com/politics/2014/aug/14/independent-Scotland-economy-crash-sterling-ronald-macdonald).

It is in opposition to this quote “During ill-tempered exchanges in the Scottish parliament, Salmond cited evidence from Sir Donald MacKay, a former economic adviser to the UK government, that a currency union was ‘perfectly possible’ and was in the UK’s long-term interests” I am not sure how Sir Donald got to this, and his history in economy is a lot stronger than mine (my economic education level is ZERO). Yet, as an analyst I foresee several issues, logistics being the strongest but not the biggest one. If any currency union was to occur, then it can only happen as Scotland and the UK are 100% open about ALL economic events. How about (even if we ignore little issues like ego), that the chance of this happening is absolutely 0%?

There is also the small notion that independence is about, being by yourself, a currency union is not that. So I tend to agree with Gordon Brown. There are other issues where unions are to be maintained to some degree, so is there true independence or a new ‘state’ of autonomy?

This is on the front of my mind. I am pretty sure that Mr McDonald, or to take the image of the bad food clown away let us call him the Behavioural Equilibrium Exchange Rate Model Expert (BEERME for short, I need to avoid becoming too serious here), then there are several other issues that I have not even begun to comprehend and are likely secondary reasons on this man’s mind.

logUsScotland

If the professor is even half right, then a 50 billion shrinkage of Scotland’s economy would sink it, which is also extremely counterproductive, so what can Scotland do?

 

Delay for another few years? Even though this is the most likely event, Scotland would not be Scotland if it stopped without a massive fight, considering that one Scotsman tends to toss a log that requires 10 US Marines to carry is not a nation that whinges at the first hurdle.

So what if it uses the UK coin for now? Is that such a large issue, as Scotland grows its independent economic power? Consider this final quote from the article “They were already different, he said. Excluding oil revenues, Scotland had an average trade deficit of 11% over the last 15 years, which became a trade surplus of 2.7% if a geographic share of North Sea oil was included”. So the grace of Scotland is their oil reserves and what happens afterwards? This needs to be tackled first, because if Scotland is to avoid falling apart in the first setback (oil issues being just that when it happens), then Scotland must take care of its 11% deficit. In my view, that deficit must be turned to a 3% surplus (without oil) for Scotland to be a contender at the Commonwealth table, so how to go about it?

First it needs to change its political look on matters (not change its politicians). I will admit that the next part will sound a little dicey, but please hear me out. The headline “Scottish Tory leader Ruth Davidson: ‘I’m quite a cussed person’” (at http://www.theguardian.com/theguardian/2014/aug/15/ruth-davidson-interview-Scotland-tories-leader) reads nice, but there is a massive issue when we read the first part “Ruth Davidson is 35, a working-class Glaswegian, a kick boxer and a lesbian. Are these unlikely credentials just what the party needs to rescue it from 25 years of stagnation?” Why was there a reference to her Lesbianism? I personally do not care what her life’s choices are, truly I do not. But is this a political lesbian or a lesbian politician? Why could she not have been just a conservative? Did we see a headline on “Gordon Brown is a 63, working class sport less hetero sexual” Did we ever see that headline?

It seems that Ruth Davidson has supported state-funded Roman Catholic schooling in Scotland, and she also seems to believe (as far as I could tell) that the Church of Scotland should open its own faith schools as well, which seems a decently pragmatic approach to the ‘dangerous’ controversy called ‘Churches in the UK and Scotland’.

Because she is only 35, her most important events and achievements are still in front of her. She could be the inspiration the Scots need. Time will tell whether this is so. Yet there are issue with this article, there is little on her stance in regards to Scottish independence. If that is next on the agenda, should Scottish Tories not be outspoken about her views in that future? It seems to me that the journalist doing that interview kept the interview way too shallow, especially in this day and age.

There are a few other issues, like Ferguson, the last of the Scottish shipbuilders to shut down, so where are the economic options for Scotland, when we ignore oil. You see, I have nothing against the oil, yet the fact that a new nation will be totally dependent on only ONE product, such a place would need to have several alternatives if something went wrong there, so that is why it should not rely on the oil industry.

As a solution, I still believe that India has options here. As the Indian generic pharmaceutical industry grows for Europe, it will need alternatives for both manufacturing, shipping (read distribution) and perhaps to a smaller extent research. Whilst everyone seems to stare blindly to London area’s where prices are through the roof, Edinburgh offers a much cheaper and no less sturdy solution. Its harbour would allow for direct access to the Netherlands (Rotterdam), which would then grant access to Germany and Eastern Europe, there is access to Scandinavia as well as the option to nurture South American trade routes. All of them are markets that India could become the main supplier to.

It could change the Scottish deficit from 11%, to less than 3% in one blow, once the South American routes are a given, the deficit would turn to surplus. The stronger the growing need for generic medication, the more powerful this branch will grow in Scotland. After that, the tax breaks this industry could have would turn the UK into a much stronger market making for an entirely new dynamic in the pharmaceutical economy. Am I overly optimistic? Perhaps a little, yet so far, my predictions have held up and the current course is not getting us anywhere. It only takes one innovator to truly change the game, Scotland is roaring to be its own wielder of futures and India is roaring to be master of generic medication. Two innovators, a match, which is definitely not made in heaven, but as both want to make it work, the created future could be one that stands long and tall.

But is that with or without an independent Scotland? This is where the shoe starts getting a little tight for the dance floor. I personally do believe that this is not the best moment to become independent. I do believe that for now ‘better together‘ is the way to go. Consider the despair when Scotland does go it alone and within 24 months, both Japan in full and US in part become insolvent? I still believe that the US course is one that will sink its future, especially as the mention of well over 500 billion in undocumented spending in healthcare could set America well over the 18 trillion mark (the fact whether the healthcare billions were part of the deficit could not be confirmed), which makes for a dangerously unstable situation. So whether these facts stop Scotland from going independent is to be determined, yet that should not stop Scotland to become a lot more autonomic in growing its economy into the strong version it requires when the Scotland becomes one independent nation under this sky within our large Commonwealth.

Whether in the end there is a yes or no to independence, the fair question remains how to grow the Scottish economy, which will be a good thing for the entire Commonwealth.

 

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