Do you want to see wholesale panic on the world’s financial markets?
Do you want to see terror, despair, and mayhem?
Do you want to see grown men desperately stuffing their money under the mattress, riots in the streets, banks set ablaze, and women running down the road screaming and flapping their hands in terror?
If so, take a look at this chart.
It shows the panic in the financial markets at the risk of Scottish independence.
The chart shows the exchange rate of the British pound against the European euro. All that panic and terror? Look closely at the blip on the right.
Can’t see it? Grab a magnifying glass. The “mayhem” and “turmoil” are that tiny flicker, when the pound dips from 0.80 euros down to 0.79 euros and then back up again.
Aaaaaaarrrrrrrrrrggggggghhhhhhhhhh! Save yourself, Alice! Run for the hills!!!!!!!
Ridiculous, isn’t it?
Yet in the past few days all sorts of people, some of them serious, have been trying to terrify the Scots into rejecting independence with threats that it will lead to financial and economic catastrophe.
The standout so far is the chief economist for
Number of World War Two dead? About fifty million. That’s ten times the entire population of Scotland. This would be quite a feat.
Scots would do well to remember the wise words of Warren Buffett, the world’s third richest man: Most professional economic forecasts compare unfavorably with the fortune-telling you can get at any circus.
When I heard of the report I was so fascinated that I hunted it out online. You can read it here. I was interested to see the detailed Deutsche Bank analysis that led to their alarming conclusion.
And?
The report is simply a series of suppositions and hypotheses. It is an exercise in the subjunctive mood.
If Scotland declares independence, some Scottish people might panic and move their money into English or other foreign banks, the economists say.
Some overseas companies might think twice about investing in Scotland, especially now that it’s is no longer regulated by the likes of Westminster’s magnificent Department of Timidity & Inaction and the Serious Farce Office.
If a Scottish pound existed and if it got into trouble on foreign markets, a Scottish government might have to tighten its budget to prove its mettle to the world, hurting the economy.
If the oil runs out, and over the next thirty or forty years Scotland never produces new industries or enterprises to replace it, they might end up in trouble.
Well, er, yes. But there is no reason to assume any of this is actually likely to happen.
The Deutsche Bank report also suggested that Scotland was dicing with the fate of Ireland, Spain and Portugal, arguing that their recent crises were caused by a threat of leaving the Euro bloc.
Actually, the reverse is true. If Ireland, Spain and Portugal had been truly independent, and kept their own currencies, they would have avoided the boom and busts of the past twenty years. Instead they were cemented to a larger financial bloc, and had to suffer interest rates and exchange rates imposed on them from the center.
The mention of the European woes is timely.
The same arguments being marshaled against Scotland now were pretty much the ones marshaled back in the 1990s against Britain keeping the pound.
If Britain stays out of the euro it risks economic disaster, we were all told.
The big financial institutions will all leave London for Frankfurt, said the wise heads. London will end up as a backwater.
Foreign companies will think twice about investing in the U.K.
You simply cannot go it alone, said the great and the good.
Britain might be forced to impose austerity to establish its credibility on foreign markets.
In the event, none of these things happened. Quite the reverse. Keeping the pound proved an economic boon. It allowed interest and exchange rates to be set locally.
Today the people who wisely rebuffed these arguments from Brussels are now some of the same people wielding them against Edinburgh.
Life no longer imitates art. These days, it imitates irony.
