If history is anything to go by, political leaders making solemn vows on devolving power to the northern lands is not going to end well…
One of the arguments around the Scottish referendum on independence is centred on its banks. These are, simply, ginormous at around 1200% GDP. There is no way that an independent Scotland could, if push came to shove, bail them out. QED, don’t take the risk. Stick with the Treasury and the UK…
Hmm. Not quite as simple as it seems when you look at Ireland.
The Irish banking collapse of 2008 saw us borrow money hither and yon, from the IMF, the EU, and …the UK. The UK lent us money to defray this, as did the Danes and the Swedes. Why? Bilateral trade. These nations trade a lot with us and we with them. And its not good for your exports if the trading partner is utterly bankrupt, so best to lend a hand. A soft hand.
Ireland accounts for about €27b of uk exports, Scotland for about three times that from the rest of the UK. So, and independent Scotland would be a large and important trading partner with the rUK, and not one whom the Treasury would wish to see go under. Hence, were push to come to shove, despite all the warnings and threats, it would be in the best interest of the rUK to extend soft loans to Scottish banks and the government in the event of a rerun of 2008. Nothing political, just business.
The next week is going to be fascinating. I have no idea how Scotland will vote, for or against independence. I have no idea how I would vote were I there. Economically, there is probably a somewhat stronger argument for NO than YES, if you believe the politicians promises. But national self determination is not about economics alone. Ireland has seen a massive crash, from its overblown banking system. How bankers and other vested interests responded to that is very instructive for the scottish debate
The madness, it seems, has returned. Perhaps like those insects that lay eggs that can survive drought and then swarm back, it never left, just lay dormant. Santayana’s maxim of the inevitability of repetition if one comes from a position of ignorance could be the warcry of Irish policy “ we repeat our mistakes, and we’re proud of it. Vote us” And we do. Continue reading
Infrastructure investment is a huge business. Worldwide there are estimates that upwards of a trillion dollars extra per annum are required in investment in water, power, sewerage etc. Total global infrastructure needs are estimated to be of the order of $60tr over the next couple of decades. The changing regulatory environment, combined with weaker banking systems, and the need to find attractive returns for pension funds are also combining to make financing of infrastructure more complex and involving more partners. Globally infrastructure has been a good bet for investors. Infrastructure and related indices are consistent outperformers over equity and bonds. So what does all this have to do with Ireland ? Continue reading
So, public sector pay is back on the radar. The publication by the CSO of the recent public/private sector pay comparisons has given rise to the usual outpourings from the organs of media billionaires. The facts on the face of it seem stark : see the graph. However, beyond the bilious soundbits of bitter hacks, a different, complex, story emerges. That there is a wedge, whereby public sector pay is on average greater than private, is a fact. The issue is why : some may simply think it to be capture of the coffers, others might note that one is comparing apples and tomatoes.