Final Week.....
http://www.zerohedge.com/news/2014-09-15/why-scotland-has-all-leverage-one-chart
http://www.thesundaytimes.co.uk/sto/news/uk_news/ScottishReferendum/article1459005.ece
*****
http://hat4uk.wordpress.com/2014/09/14/scottish-indyref-icm-puts-yes-vote-ahead-by-seven-points-without-removing-the-dont-knows/
http://www.zerohedge.com/news/2014-09-15/why-scotland-has-all-leverage-one-chart
Why Scotland Has All The Leverage, In One Chart
Submitted by Tyler Durden on 09/15/2014 08:09 -0400
- Albert Edwards
- Deutsche Bank
- Eastern Europe
- Eurozone
- Evans-Pritchard
- Federal Reserve
- fixed
- Great Depression
- Greece
- Ireland
- Italy
- None
- Portugal
- Reality
- Trade Deficit
As Scotland prepares to vote for or against Independence from the Union on Thursday, it appears everyone has an opinion on what may, what should and what will happen. At the basis of every such opinion is some basis in fact, misguided as it may be in most cases, about who has all the leverage, with the dominant one being that Scotland would make a horrendous mistake if it says goodbye to the UK and puts a border around what is currently a third of UK's landmass.
Some, such as Deutsche Bank, the bank that has the single greatest derivative exposure in the world and is therefore most leveraged to maintaining the status quo, saw its "Chief Economist & Member, Group Executive Committee, Deutsche Bank AG" David Folkerts-Landau personally put pen to paper on Friday and in rambling, demagogic terms, explain why it would be a "Wrong Turn" for Scotland to seek self-determination.
He says that, "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. These decisions – well-intentioned as they were – contributed to years of depression and suffering and could have been avoided had alternative decisions been taken." Sure, there could have been no gold standard and the Fed could have gone full-Bernanke, and it would only have kicked the can a few years leading to an even greater depression, as the recent paradigm of "bubble to bubble" transitions, described by none other than Deutsche Bank, is where the world finds itself. In fact, it is DB that admitted last week that without a bubble, the western financial way of life is finished.
DB's Landau concludes with the following outright propaganda:
Most importantly, the world as it is evolving in the 21st century is a highly uncertain place with unstable geopolitics and a stressed economic and financial outlook. Why anyone would want to exit a successful economic and political union with a G-5 country – a union which another part of Europe so desperately seeks to emulate – to go it alone for the benefit of... what exactly, is incomprehensible to this author.
Well, maybe let's ask what is increasingly a majority of Europeans across the ill-fated and artificial Eurozone, whose fixed currency means the only devaluation possible is internal, read crashing wages. But of course, the head of something or another at Deutsche Bank has nothing to worry about in this regard.
And yet, as always, the bottom line is about leverage and bargaining power. It is here that, miraculously, things once again devolve back to, drumroll, oil, and the fact that an independent Scotland would keep 90% of the oil revenues! As we showed several days ago, Scotland's oil may be the single biggest wildcard in the entire Independence movement.
It is this oil, and its interconnectedness within the UK economy, that as SocGen's Albert Edwards shows earlier this morning, is what gives Scotland all the leverage.
From Edwards:
it is increasingly likely that it too it will be joining Scotland in permanently exiting the EU club. First of all, consider the vulnerability of sterling after a Yes vote for Scottish independence. Even without North Sea oil revenues, the UK current account situation is a mess. The left-hand chart below is one I put up at the end of our flagship conference in January this year. The point I made was it is absolutely extraordinary for the UK to be beginning an economic cycle with a current account deficit of around 5-6% of GDP. Normally this is a level the UK or any other developed countries get to at a height of a boom after years of overspending on consumer imports. I think I described the UK position as an economic abomination of the highest order and that this economic cycle was likely to end some years from now in a calamitous sterling crisis - just like we used to have in the past.Our specialist macro salesperson, Richard Walker, thinks that it is in the rUK's economic interest to retain some sort of currency union with Scotland after independence as he points out Ireland did after its own independence in 1922 until 1979. He believes the maths for the rUK just don't add up - on the basis of an independent Scotland keeping 90% of the oil revenues the rUK current account deficit for the full year would have been around 7% of GDP instead of 4½% (also see right-hand chart above).
There's that pesky "mathematics" again. Here is what the math reveals:
Personally I don't believe that the rUK will conceive it possible that any continued currency union is feasible after independence having observed the eurozone mess. That means the yawning fault line in the UK's economic situation will be revealed for all to see. Indeed since we used that chart of the UK's current account mess in January this year, the deficit in Q3 last year was revised from 5% to 6% of GDP! That horrendous deficit persisted in Q4 at just under 6% of GDP but improved somewhat in Q1 of this year to 4.4% of GDP. That improvement though to me looks erratic and liable to reverse, most especially as the trade deficit through July continued to deteriorate. So, if rather than the 2013 full-year UK current account deficit of 4½% of GDP; the underlying situation is more reflective of the almost 6% deficit seen in H2, then the rUK current deficit will be nearer to 8 1/2% of GDP! The UK is due to release its 2014 Q2 Current Account data on 30 Sept.For the UK as a whole the current account deficit is awful. For the rUK it is simply untenable. If investors are selling sterling in anticipation of a Yes vote, the economic reality of a rump rUK will see sterling quite rightly plunge into the abyss way before the end of the economic cycle (where we previously expected the turmoil would come).
Which also means that contrary to the UK's fire and brimstone, it is the UK that has much more to lose in a world in which Scottish oil output is suddenly unavailable to plug current account deficit gaps, something the US has been able to do in the past 5 years courtesy of the transitory shale boom.
The vulnerability of sterling in a rUk world is made much worse as investors come to grips with the increasing prospect that the rUK will be leaving the EU. Capital will not be moving from north of the Scottish border to the south. It will be moving out of the UK altogether.And, with the rUK needing to attract capital at an unprecedented avaricious rate for this point in the cycle, this ain't going to be pretty. Interest rates, which are probably set to rise next year anyway, may be set to rise a whole lot faster than anticipated if we get a good old-fashioned sterling crisis, with the good old-fashioned inevitable recessionary consequences thrown in.
The bottom line, at least to Edwards, is that Thursday's vote will set in motion the independence not only for Scotland, but for the UK from the EU club:
So in the event of a Yes vote in the imminent Scottish referendum I would expect both Scotland (involuntarily) and the rUK (voluntarily) to find themselves outside of the EU club.
And should that happen, all bets are off for the continued existence of the greatest "unionization" experiment in modern history: Europe itself.
We saw similar trends towards political extremes to a greater or lesser extent in the beleaguered GIIPS (Greece, Italy, Ireland, Portugal and Spain) during the crisis. As Dylan has previously explained, political extremism becomes a very attractive proposition when a country comes under stress. Europe has a long history of such tendencies. Separatist and nationalist movements throughout Europe are gaining a stronger foothold with nationalist fault lines previously thought dormant awakening in unison right across Europe - see for example this interesting article from Ambrose Evans-Pritchard - link. The outcome of a Yes vote in Scotland may have as unpredictable consequences as did events in Eastern Europe in the late 1980s. A yes vote will send the EU bicycle (or if you prefer, shark) into reverse for the first time since the 1957 Treaty of Rome, with wholly unpredictable consequences.
Good luck, Scotland. The fate of a century of globalization and wealth-transfer efforts suddenly lies on your shoulders.
http://www.thesundaytimes.co.uk/sto/news/uk_news/ScottishReferendum/article1459005.ece
Leave and you go
forever, PM tells Scots
DAVID CAMERON will launch a last-ditch bid to save the
Union tomorrow after violent swings in the polls showed the
referendum on Scottish independence heading for a dead
heat.
In a fresh blow to the Unionist campaign, an ICM survey gave
Alex Salmond’s nationalists a shock eight-point lead, with
54% to the “no” campaign’s 46%.
A Panelbase survey for The Sunday Times found the “no”
campaign holding a wafer-thin lead on 50.6% to 49.4%.
http://hat4uk.wordpress.com/2014/09/14/scottish-indyref-icm-puts-yes-vote-ahead-by-seven-points-without-removing-the-dont-knows/
SCOTTISH INDYREF: ICM puts Yes vote ahead by seven points WITHOUT removing the Don’t Knows
Neck and neck, but signs that the undecided 10% are veering towards Yes
There’s another new internet-based poll on the Scottish Independence vote out today from ICM. It shows the Yes campaign on 49%, No on 42%, with 9% of don’t knows. I hate to be an anorak about this, but as consumer research used to be my metier, I feel it important to make telling comment.
Previously, there have been two critiques of such internet polling: (1) it isn’t representative; and (2) the Barker Poll of last week left out the Don’t Knows.This latest ICM study casts doubt on both those viewpoints.
As for internet polling being unrepresentative, you would be hard-pushed to find anyone under 70 these days who has never used the Web: in fact, 95% of all people aged over 65 in the UK do so. So as I said in the last Slogpost on this subject, to call such a survey unrepresentative is daft. On the other side of the coin, if pc users are near-universal, is the No campaign suggesting that it’s ‘lead’ is entirely down to Neolithics who aren’t computer literate? In which case, boy do we need to worry about those voting No in such a manner as to be decisive: some of them may well all be prototypes for Rab C Nesbitt that never quite made it off the drawing board.
****
Turning now to the second bitch with the Barker poll, this new ICM survey includes Don’t Knows. Put another way, not only is this race too close to call – the Don’t Knows could easily turn it decisively one way or the other. Furthermore, the idea that ‘forced choice’ made the Barker poll worthless is given the drubbing it deserves: here is another methodology saying the same thing: neck and neck.
Meanwhile, a Survation Poll shows the No vote clearly in the lead, but with the Undecideds still at 10% and thus sufficient to wipe it out.
The ICM poll was commissioned by the Sunday Telegraph. So as it’s their poll, you’d think they’d lead with that one – not the Survation one.
Is the Telegraph leading with it today? It is not. Instead both polls are quoted – and given less space – although to be fair to the Biffo Barclay Boys, they are at least taking The Slog’s lead and using the phrase ‘too close to call’. (And the predictable demise of David Haines was more than enough to hog the front page).
****
What’s more, if you place all polling done so far in series, the No Vote is not winning the battle of the Don’t Knows – it’s losing it: the margin is narrowing.
There is an old adage which asserts, “There are lies, damned lies, and statistics”….but I have long maintained that this is quite untrue. There are only statistics, and discernible mendacity in interpreting those statistics.
In this case, we have one ‘result’ confounding the bollocks about leaving out Don’t Knows…and then more ‘results’ showing that, as we go down to the wire, signals that the Yes bandwagon is enthusing more of the neutrals.
****
Scotland.....
Notice desperation on behalf of the " No " Vote side ?
#McClatchy reveals: On #Scotland vote, White House hopes for a united #United Kingdom http://www.mcclatchydc.com/2014/09/15/239859/on-scotland-vote-white-house-hopes.html …
What Happens When "Scotland" Comes To Spain? http://tinyurl.com/kzel2wf
UK's Cameron Warns Scots "No Way Back" As Independence Vote Remains Too Close To Call http://tinyurl.com/kzk3fkq
Retweeted by YES Scotland
HOW DARE THEY!!! Official complaint being made now. You don't get to use fallen heroes as political fodder. #indyref
Retweeted by YES Scotland
Last night in #Barcelona 1.8M people marched for #independence
They carried the Saltire! pic.twitter.com/MEdTmoSMWz” #goforitscotland #VoteYes
Retweeted by YES Scotland
"A TOP businessman who advised the No campaign on defence now plans to vote Yes" #indyref
http://www.scotlandnow.dailyrecord.co.uk/news/independence-referendum-backing-no-would-4193182 …
Latest poll puts Yes camp ahead by 8% - that's 54 for Yes and 46 for No once the undecideds are taken out
Retweeted by YES Scotland
Darling and Cameron both said No when we asked them to take part in our HotSeat interview slot, so it's only Alex Salmond this week #indyref
Retweeted by YES Scotland
The big guns of the British state come out for Yes - former ambassador and top naval intelligence officer both back independence #indyref
No matter what the result - The Sunday Herald has inspired people & given hope that not every publication is subservient to London - thanks!
NOW IS THE TIME - YOU ARE THE GENERATION: SUNDAY HERALD DOUBLE SPREAD
@WingsScotland @theSNP @NaeFear @colinfoxssp
Hello Catalan, not as big as your parade but very large for Scotland. YES will win Independence next week VOTE #YES pic.twitter.com/zckYOITsRk
This Sunday Telegraph article seems to suggest a new ICM poll shows 8% lead for YES. Unconfirmed though http://www.telegraph.co.uk/news/uknews/scottish-independence/11092495/Whatever-happens-nothing-will-ever-be-the-same-again.html … #indyref
#Glasgow absolutely buzzing today/this evening. Something is definitely in the air :) #Scotland #indyref #voteyes #YES
Thoughtful piece by @RoryStewartUK about grave implications of #indyref http://bit.ly/1qMJ66B @jamiemaccoll
Senior bankers have dismissed claims that independence could trigger a great depression as “preposterous” #indyref
http://bit.ly/1uAF8Os
Scotland's banks threaten to leave
September 11 - CNNMoney http://money.cnn.com/2014/09/11/news/economy/scotland-independence-banks/ …
Professor: #BBC's anti-Scottish independence bias increases as vote draws closer http://bit.ly/1oH8FBa
#Scotland’s First Minister accused London of 'abuse of power' over treasury leaks http://bit.ly/YGhvtk
Is Scotland Big Enough To Go It Alone?
Submitted by Tyler Durden on 09/12/2014 - 18:16
As Scotland goes to the polls to decide on its own separation from the United Kingdom, the tone of the campaign is high on passion and secessionists are inching toward the magical 50 percent line. One core debate is whether Scotland is too small and too insignificant to go it alone... The answer, perhaps surprisingly, is resoundingly “Yes!” Scotland’s big enough to “survive” on its own, and indeed is very likely to become richer out of the secession. Nearer to the small-is-rich Ireland than the big-but-poor Britain left behind.
Credit Suisse Warns Of "Self-Fueling Negative Feedback" In Scotland; Here's Who Is Exposed
Submitted by Tyler Durden on 09/12/2014 - 21:36
Credit Suisse warns of a self-fuelling feedback loop of rising risks and costs to the Scottish financial and sovereign sectors, and a steady migration of capital, activity, jobs and taxes if the Scots vote "Yes". However, if the vote is a close "no", they warn "the cat is out of the bag," and risk remains.
Knock on effects.....
Buoyed by Scotland's example, Catalan independence activists press ahead http://on.wsj.com/1tycjk7
Catalán demonstration in the streets of Barcelona. Scotland isn't the only one dreaming of secession pic.twitter.com/nBt4SvpeNN
Catalan delegates petition #Cameron for their own referendum http://www.thetimes.co.uk/tto/news/uk/scotland/referendum/article4205682.ece … via @thetimes @RaholaOficial @tonialba @moncapsa
http://blogs.lse.ac.uk/politicsandpolicy/the-domino-effect-from-scotlands-referendum-is-increasing-demands-for-independence-in-italian-regions/
The ‘domino effect’ from Scotland’s referendum is increasing demands for independence in Italian regions
With the UK focused on the independence referendum in Scotland, other countries across Europe who are also facing demands from regions for greater autonomy or secession are also paying attention. Eve Hepburn writes on three such movements in Italy: in South Tyrol, Veneto and Sardinia. She argues that the result of the Scottish referendum is likely to shape the immediate future of these regions, with regionalist parties either calling for official independence referendums or greater devolution of powers.
Something peculiar is happening in Italy. A country that was reluctantly soldered together by the efforts of Mazzini, Cavour and Garibaldi in the late nineteenth century looks like it’s beginning to come apart at the seams. And I’m not just talking about Italy’s struggles with political corruption, organised crime, economic malaise, institutionalised gender inequality and social inequality. Though that does have something to do with it. No, I’m talking about the increasingly restive regions of Italy getting tired of being stuck on board the Italian mothership. From Veneto and South Tyrol in the north to Sicily and Sardinia in the south, Italy’s regions want full autonomy and constitutional change. And they want it now.
Little of this will come as any surprise to anyone familiar with Italian politics. The grievances and demands of regionalist and nationalist movements have long been a part of the political scene in Italy. However, something has changed in their discourse in the last couple of years, and with it, so have their demands. No longer content with trying to seek reform ‘from within’, for instance by creating stronger forms of regional governance in the semi-federal Italian state, many regionalist parties have now abandoned those plans altogether in favour of outright secession.
‘Why now?’ you might ask. Well, that’s a good question. Ten years ago I would have told you that it might have something to do with European integration. Italian regionalist parties – like so many across Europe – had their hopes of a post-sovereign political order dashed with the failure to create a ‘Europe of the Regions’ in the early 2000s. Some turned against Europe. Others radicalised their demands, realising that independence – and not some nebulous form of regional autonomy in Europe – was the only way to get what they wanted: real self-determination.
But if you asked me today, I would say it had something to do with inspiration from foreign shores, or in more social scientific language, ‘policy transfer’. Italian regionalist parties have been watching with fascination the independence debates unfolding in Scotland and Catalonia, and they are wondering why they can’t implement the same model at home. Certainly, there are some challenges for direct policy transfer: there’s the small issue that any referendum on independence would be illegal under Italian constitutional law. But when has that ever stopped anyone?
Indeed, in the last year, three regions in Italy have held their own ‘unofficial’ referendums on independence, inspired by their Scottish and Catalan counterparts.
South Tyrol
South Tyrol went first, holding an online referendum on secession from Italy and annexation to Austria last year. This may sound a little strange to those unacquainted with South Tyrol politics, so let me explain: Südtirol is a northern Alpine province in Italy which used to be part of the Austrian empire and was annexed to Italy after the First World War. Despite Mussolini’s attempts at Italianisation, the majority of the population remains German-speaking and claims an Austrian/Bavarian heritage.
The South Tyrol question has been the source of bitter rivalry between Austria and Italy, but an agreement was reached in the 1970s when the region was given considerable self-rule and it has since been governed by the pro-autonomy hegemonic Südtiroler Volkspartei (SVP). However, in the last few years, calls for secession have been on the rise and a new party, Süd-Tiroler Freiheit, organised a referendum in October 2013 on the reunification of South Tyrol with Austria. Of the 61,000 people who voted (out of a total electorate of 400,000), the result was a clear endorsement of secession from Italy: 92 per cent voted in favour. In response, the Austrian Prime Minister, blushingly, had to deny any moved to annex the territory, and the ruling SVP has said it is firmly in favour of maintaining its ties with Italy. Despite this, Süd-Tiroler Freheit has subsequently done well in provincial elections and separatism appears to be gaining traction in South Tyrol, especially for young people. This may mean that we see more demands for independence in the future.
Veneto
Turning to another northern territory in Italy, Veneto has also been making moves towards independence this year, holding an online referendum on secession in March 2014. Veneto, like South Tyrol, is one of the wealthiest regions in Italy and it has its own dialect, culture and history of previous statehood. When the post-war constitution of Italy was created in 1948, many Venetians were frustrated not to have been given an autonomous special statute and a regionalist movement – the Liga Veneta (Veneto League) – emerged in the 1970s demanding self-determination.
The Liga, which is now part of the Northern League political group, has recently gained momentum and is the largest party in the regional government. In March 2014, the President of the Region, Luca Zaia, gave support to an unofficial referendum on independence for Veneto, in which 89 per cent of participants voted yes. Although the poll has been strongly criticised as illegitimate (as many Latin Americans of Venetian descent were found to have voted), subsequent polls carried out by researchers found that a majority of Venetians – about 55 per cent – did want independence. With President Zaia’s support, the regional council approved two bills in June 2014: one on increased autonomy for Veneto in the form of a special statute, and a second passing legislation on an independence referendum – which will be held in due course.
Sardinia
While the demands for independence made by political actors in South Tyrol and Veneto were made on economic grounds (to stop sending their hard-earned cash to ‘corrupt’ officials in Rome) as much as identity concerns, the situation is quite different in another Italian region. Lying 200km off the Italian coast, the island of Sardinia is one of the poorest regions in Europe. Sardinia had a history of semi-independence through its position in the Kingdom of Sardinia, and the island was granted special status in the Italian constitution of 1948.
This was largely due to the formidable inter-war nationalist movement, which won 36 per cent of the vote in Sardinian elections in 1919. The Partito Sardo d’Azione (Psd’Az) demanded self-determination within a federal Italian state and the recognition of Sardinia’s distinctiveness. But although the Psd’Az was a catalyst for recognition of Sardinia’s specialità , its electoral fortunes have waned and other parties in Sardinia have taken up the banner. In particular, three new nationalist parties that seek independence – the Partito dei Sardi, Rossomori and Indipendentzia Repubrica de Sardigna (iRS) – are currently in coalition government in Sardinia with the centre-left, and are trying to re-write Sardinia’s special statute (constitutional law) to give it more powers.
Moreover, several days after the Veneto plebiscite in March, the Psd’Az declared that it was going to hold its own referendum on independence – having now moved to supporting secession. The Psd’Az also pledged to bring another motion to the regional assembly calling for an official referendum on independence. The Psd’Az had already tried this before in 2012, when the motion had failed by one vote. Next time, however, given the popularity of independence referendums in Scotland, Catalonia and Veneto, we may expect to see a plebiscite on independence approved in Sardinia too.
The ‘domino effect’ on Italian independence movements
What these three independence-seeking movements clearly have in common is their growing confidence in holding a plebiscite on independence in light of the growing success of such movements elsewhere. The Sardinian nationalists have made numerous references to Scotland in their discourse and demands for independence, and some parties – such as Partito dei Sardi – have been forging ties with the Scottish National Party. In Veneto, the cross-party organisation ‘Veneto decides’ – which includes the Liga Veneta and other independence-seeking parties – make multiple references to Scotland and Catalonia as the two ‘most important nascent republics’ in Europe other than Veneto. In South Tyrol, the regional media and independence-seeking parties make frequent references to the referendums in Scotland and Veneto. And across Italy, the national media has focused on the Scottish and Catalan referendums in terms of their potential impact on regionalist fervour in Italy.
This is a salient issue. For it is undeniable that the referendums in Scotland and Catalonia are raising the question of what this means for Italy. So what might happen in the case of a ‘yes’ result in Scotland on 18 September? Well, SNP success in winning independence for Scotland will likely give strength to independence-seeking movements elsewhere. In particular, it may encourage some of the more ‘moderate’ regionalist and nationalist parties seeking forms of devolution and autonomy within the state to radicalise their demands in favour of secession. A ‘yes’ result in Scotland may also give succour to those in Italy who oppose the constitutional stipulation that Italy is indivisible and secession is illegal. Instead, a peaceful negotiation of Scotland’s exit from the UK may give legitimacy to consultative referenda on independence in Italy (and elsewhere – including Spain).
And what might the effect be in the event of a ‘no’ vote? It is very likely that this will strengthen the arguments of anti-independence actors in Italy, who may similarly articulate that regions are ‘better together’ within the larger Italian state, especially in times of economic recession.
However, a ‘no’ vote in Scotland may not herald the end of constitutional change, either in Scotland or elsewhere. The pro-UK parties – Labour, Lib Dems and Conservatives alike – have all promised to grant the Scottish Parliament further constitutional powers in the event of a ‘no’ result. If they play their cards right, independence-seeking parties in Italy may use this fact to put pressure on the national government to do the same for Veneto, Sardinia and South Tyrol. In particular, it will likely give strength to demands to create a special statute of autonomy for Veneto, and to increase the powers of the Sardinian and South Tyrol devolved institutions. Whatever the outcome of the Scottish vote, therefore, the end result is very likely to be constitutional change – be it independence or devo-max – not only for Scotland but for stateless nations and regions seeking stronger forms of self-determination elsewhere.
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