It is said that Alex Salmond was once an economist at RBS. Why then, asks EVAN WILLIAMS, are the SNP’s economics so dodgy? 


Q.1: What is 90% of 84%?

It’s a nice simple question, with a nice simple answer,  kind of reminiscent of the answer to the ultimate question, of life the universe and everything from ”The Hitchhikers Guide to the Galaxy.”

Do you remember how Michael Moore was ridiculed for suggesting that an independent Scotland would have struggled to bail-out RBS during the banking crisis? I hold no brief for Michael Moore, but the way the SNP set about explaining how stupid everyone else was for thinking it might have been an issue is a great illustration of Eck-onomics at work.

So here are the facts – and just so there can be no dispute that these are the facts they come from an unimpeachable Nationalist source understood to be close to the first minister; Joan McAlpine’s blog “Go Lassie Go” – you can check them here and you will see that Joan has helpfully labelled them as “the truth about the banking crisis. ”

  1. “The bail-out of RBS and HBOS actually cost £66bn in shares and loans.”
  2.  Quoting  Andrew Hughes Hallett, Professor of Economics at St. Andrew’s University “By international convention, when banks which operate in more than one country get into these sorts of conditions, the bailout is shared in proportion to the area of activities of those banks. In the case of the RBS…roughly speaking 90% of its operations are in England and 10% are in Scotland.”

Well that’s it then: an independent Scotland would only have had to find £6.6bn(i.e. 10% of Joan’s figure). In fact Joan goes further “So an independent Scotland could easily have bailed out our banks.”

Excellent! all sorted except, of course, to bash a few unionists for talking Scotland down and probably for being quite stupid into the bargain.

Except, mebby naw, there’s a wee bit mair going on here.  In exchange for the bailout Wales, Northern Ireland Scotland and England (collectively as the UK Government) took possession of a good chunk of equity 84% in the case of RBS. If, in an independent Scotland, our neighbours in England coughed up 90% of the cost of the bail out wouldn’t they get 90% of the equity? Which is where the sum right at the start comes in. 90% of the 84% equity stake in RBS is of course equal to 75.6%.

This isn’t an argument that Scotland couldn’t survive as an Independent country, its not an argument that RBS couldn’t have been bailed out within an independent Scotland. All it is an illustration that by the SNP’s own  analysis an independent Scotland would have seen a foreign power coming to own more than 75% of RBS. If that foreign power used its equity stake to relocate RBS to Cardiff, for example, and secure future tax receipts for their own treasury Scotland would in effect have spent £6.6bln bailing out foreign banks.

There is a theory which states that if ever anyone discovers exactly what the SNP want an Independent Scotland to be like and how it would be governed the arc of prosperity will instantly disappear and be replaced by something even more bizarre and inexplicable.

There is another theory which states that this has already happened. It’s called Eck-onomics. 

Evan Williams is an environmental economist and lives in Paisley.

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37 thoughts on “Beginners Eck-onomics Part 1.

  1. Not a great deal I would quibble with here—except to point out that the same UK govt has done nothing to “move RBS HQ to Cardiff”. Nor would it have done in the independence scenario.

    Similarly, the National Australia Bank has not moved the Clydesdale Bank to the Antipodes (nor even to Yorkshire where it owns another bank).

    So aren’t we stretching the last speculation more than just a bit?

    1. Wow, the nationalists will be pleased with that poll.

      *Support for Devo Maxx / FFA = 69.6%
      Against = 25%

      (wow unionist parties are out of touch with the electorate; its 7 in 10 every time!)

      *Tight on independence even if Devo Maxx being bandied around:
      Yes = 37.2%
      Would like but unsure = 13.1%
      No = 49.7%

      So neck and neck, as per recent ICM etc.

      (*I understand from tables, IPSOS will likely confirm soon)

      Effect of independence on…

      Personal finances:
      Stay the same or get better = 57%
      Get worse 36%

      Job security:
      Stay the same or get better = 69%
      Get worse 26%

      Economic conditions:
      Stay the same or get better = 47%
      Get worse 45%

      Scotland’s world standing:
      Stay the same or get better = 63%
      Get worse 33%

      So a majority are consistently content (stay same) or positive (get better) about an independent Scotland economically.

      Averages (exluding don’t knows):
      Stay the same or get better = 63%
      Get worse 37%

      And the average is your referendum result, which will be the same as Y+Y in 1997 (62.5% Y on Q2). As shown in the last SASS survey, the Greens, SNP etc don’t need to persuade Scots the streets will be paved with gold on independence (nobody believes that!); a majority will say YES so long as they believe things will not be worse (SASS if economic situation to ‘stay the same’, 59% would vote yes, likely higher if the unsures said yes as they normally do in such situations).

      As an aside, Labour voters the most negative about Scotland as a country economics-wise; even more negative than the Tories!:

      Economic situation worse if independent:
      48% of Labour voters
      46% of Tory Voters
      42% of Lib Dems
      26% of SNP voters

      It is so sad Labour have so little belief in their own country.

      1. Effect of independence on…

        Personal finances:
        Stay the same or get worse = 71%
        Get better 22%

        Job security:
        Stay the same or get worse = 76%
        Get better 19%

        Economic conditions:
        Stay the same or get worse = 58%
        Get better = 34%

        Scotland’s world standing:
        Stay the same or get worse = 54%
        Get better 42%

        So a majority are consistently content (stay same) or negative (get worse) about an independent Scotland economically.

        Averages (exluding don’t knows):
        Stay the same or get worse = 65%
        Get better 30%

        Amazing what you can prove with statistics.

      2. Q.If things are so positive for the Gnats why is your man sitting on his hands for 1,000 days ? A.He realises this is his last 1,000 days in the spotlight and he’s then heading to the Lords.Trying talking to people on the doorstep face to face and see how keen they are for Separation – crock of shit comes to mind.Slainte.

        1. ” Hugh J arse “,
          Funny enough most people I talk too, are either fully for Independence or some form of devo-max, I cant really think of anyone who favours the status quo.
          You will have noticed I used the word ‘Independence’ instead of ‘separation’ and surprise surprise the world did not end. Perhaps if you used that word ‘Independence’ next time you speak to someone on the doorstep they will know what you are gibbering about.

          Just a thought, you have a familer style to a number of other labour posters, is it a class on blogging that you all attend together ?? or are you the same person using different names ???

        2. Sorry! but “Nats” don’t do the unelected bit,aren’t you aware of that?

          They much prefer to be a proper party… know….elections and stuff!

          But I don’t reckon that there will be quite so many in the second chamber in the future.Have to find ways of saving money….Mr Osborne said so!

  2. The Fed’s Secret Liquidity Lifelines

    Royal Bank of Scotland Group Plc, whose 45.5 billion-pound ($74 billion) emergency capital injection from U.K. taxpayers was the world’s biggest announced bank bailout, also got more secret loans from the U.S. Federal Reserve than any other foreign bank. On Oct. 10, 2008, as the bank’s stock price plunged 21 percent in a single day, Edinburgh-based RBS was borrowing $62.5 billion from the Fed through its U.S. broker-dealer, $11.5 billion through its New York branch, $10 billion through its RBS Citizens NA bank and $500 million through Citizens Bank of Pennsylvania. The Fed aid exceeded even the 36.6 billion pounds of emergency liquidity the Bank of England supplied in secret to RBS in October 2008. The BOE disclosed the aid package in November 2009, more than a year before the Fed aid was revealed.

    Now who really owns RBS a private corporate business?

  3. And? Would Scotland have been bankrupted or not? What exactly is your point? Other than to say “I hate the SNP”. The myth peddled by many Unionist politicians was, and is, that Scotland is too wee and too poor. Hughes-Hallett has thrown light on this and revealed it as idiocy at best, and plain malicious lies at worst. Come on, Evan, get to the real nub of the matter. Just ONE positive case for the Union. Send it to

    1. The Positive Case is the electorate don’t want Separation and want to continue being part of the UK #jobdone

      1. The range of your ‘mind reading’ powers are astounding, how do you do it?
        ah I know, you dont, you dont actually have a clue. Just shout something out and hope the rest of the Scotland will believe it, is that the positive unionist message of labour we have been waiting for ???

        Sorry it just doesn’t seem to be working. #jobundone.

      2. Never knew the Referendum had already been, or are you just blethering?

        Wait until the electorate are in that wee booth, then we’ll see.

        Not sure Labour/Tories/Lib dems should just keep ramping up the cry wolf stories so early in the game. I think you’re gonna run out of puff. People are turning away from you already.

        Keep it up, though!

  4. “Scotland would have seen a foreign power coming to own more than 75% of RBS”

    And your point is? RBS is a multi-national company, like most big banks. It’s not Scottish, not owned by Scotland, not run for the benefit of Scots…it’s run for its multi-national shareholders, like most big businesses. What would it matter to Scotland if it was 75% owned by rUK? If they ran it in a way that Scots didn’t like, we have other banks to choose from. If they moved the HQ to Cardiff, it would make very little difference to the Scottish economy. And Scotland would still have a 25% stake, which would eventually have been worth more than the nominal bail-out amount. What an absolutely desperate bit of Unionist scare-mongering. Has no one in Labour got anything positive to say about the Union, or even an independent Scotland?

  5. An environmental economist as opposed to a real one!

    Environmentalist economists, as ever, don’t really understand ’cause and effect’ on real national scales. It was New Labour who were central to the UK banking crisis; this was never a Scottish crisis.

    How did we get here? Neo-Liberalism was the new kid on the block in 80s and 90s and it was welcomed with open arms by New Labour. It was New Labour who adopted casino capitalism as one its own. Debt was good. Profit was good. Wealth was good. Greed was good. No need to save for a rainy day – it was all boom, boom and boom. New Labour was indeed Thatcher’s child.

    What good all that when the banks too big to fail crashed and New Labour were forced to bail them out? We are all paying a high price for the Labour party’s failure!

    If you are really an environmental economist then you should be studying the impact neo-liberal thinking had on developing countries and the very real damage done there. Get some real national perspectives from abroad and stop dealing in perceived failure at home.

  6. No mention of who was in Government up until the time of the banking crisis, nor what controls that government did or did not put in place to protect us from the Banks failure. Of course it’s all Eck’s fault, he’s the only Eck onomist in the country. The Chancellor of the Exchequor couldn’t have done anything to prevent it, nor could The City (That would be the London one) It’s all Ecks fault.

    I love the Unionist RBS argument. IF this, then blah blah blah.

    Well it didn’t. It went bust on your watch and you paid for it. Bad luck. I’m pretty confident it’ll not happen again any time soon which means Scotland might not be able to prevent a big corporation like RBS from becoming foreign owned, but that’s okay, because it wont have to.

  7. This appears to be the usual ‘ if maybe, could be, imagine this, dont look behind you,’ negative argument’s that we come to expect from the unionist parties.

    But the thing about this article is, it just didn’t happen.

  8. Difficult to see the point of this, other than having a bit of a sneer. Where does Evan think the equity of this bank lay before it was largely nationalised? Not in Scotland, thats for sure. The shares have been outside Scottish ownership for a long, long time. As have many companies operating here, from whisky to shipbuilding. Devro anounced it was moving from Lanark to London just this week. Does Evan think this is good? Its happening within the Union after all. Private companies move south, all the companies that Labour nationalised became headquartered in London. Scotland has a deficit of indiginous companies, which leads to few white collar jobs and low R&D investment. I think its a problem, Evan thinks its a laugh, apparently.

  9. You’re wrong there you see because the first thing that would have happened in an independent Scotland is that the banks would have pulled out. We know that because Labour told us that over and over again. The banks would pull out, the financial service sector would collapse, all would be doom and gloom until …. the banks went bust, the financial service sector collapsed and seamlessly we segued into – well you know an independent Scotland would never have managed to bail out the banks you know.

    It’s all moot anyway. The banks didn’t go bust in an independent Scotland. They went bust in the UK.

    Mind how you go now. Watch out for flying dolphins and geranium pots.

  10. Oh my goodness, surely labour voters aren’t taken in by this constant sneering and smearing ?

    RBS was not Scottish, except in name. Head office in London operating in the ‘City’ with all the practices we have heard about for the past few years.
    (When I say ‘we’ I obviously don’t mean labour politicians)
    They were operating under rules set by Gordon Brown Labour MP then PM !!!
    A financial operation that took risks with huge financial consequences.

    Scotland does not have this kind of system, in fact the whole stushie in Europe with David Cameron’s ‘Veto’ was because he was being asked to apply similar counter-balances in the ‘City’ as exist in the other major financial institutions throughout Europe.

    This is a City of London problem that has left the whole of the UK in the crapper
    London and ‘The City’ has enjoyed the huge benefits from these institutions for a number of years, but now that it has imploded, the whole nation is suddenly finding that we need to have job losses and cut backs to pay for this disaster.

    But Why you might ask….simples.

    In the past the labour party and the unions would be up in arms and they would both be the focal point for the nations anger. they would be on TV etc ranting about the torys and how they are making the working class pay for their friends in the city’s lavish lifestyle etc.

    But no ! If anyone needs to know how much the labour party has sold out the very people it was started to represent it is this matter.
    Just today the Unite union suggested that they would lead a campaign to point out that we were paying billions of pounds for London Olympics while cutting jobs and services AND THEY HAVE NOT BEEN SUPPORTED BY THE LABOUR PARTY !!!

    I wonder what Johanns thoughts are on this matter ?

  11. “analysis an independent Scotland would have seen a foreign power coming to own more than 75% of RBS. If that foreign power used its equity stake to relocate RBS to Cardiff, for example, and secure future tax receipts for their own treasury Scotland would in effect have spent £6.6bln bailing out foreign banks.”

    I’m not sure I see any loss here other than jobs + future tax take if RBS was moved (and changed its name of course); something which happens all the time in the world of business*. Unless you are implying that the rUK would default on the £6.6bln Scotland had contributed to the bailout? That would have serious implications for the rUK credit rating so I couldn’t see it happening.

    *e.g. Prudential may be off to Hong Kong:

  12. Here are the ACTUAL facts starting with the LABOUR/CONSERVATIVE-WESTMINSTER McCrone Report which I QUOTE – “An independent Scotland in control of all her oil revenues would have the strongest currency in Europe with the exception of Norway and What is quite clear is that the balance of payments gain from North Sea oil would easily swamp the existing deficit whatever its size and transform Scotland into a country with a substantial and chronic fiscal surplus.” AND “It can be credibly argued that Scotland would be more prosperous should the Union of 1707 be repealed”. This report was CLASSIFIED by the LABOUR (James Callaghan) government of the day to (their words) stop the SNP from gaining Scottish independence.


    Interesting comment Paul Singapore Wrote: I am not a Scottish Nationalist but this article is the biggest load of baloney that I’ve read yet about this issue. Rather than rebutting every lie that it propagates lets focus on one part of the ‘Scottish’ economy, it’s 90-95% share of North sea oil and gas. This sector has been widely reported to contribute no more than 11-12billion per year to the UK economy and thus won’t make that much difference to an independent Scotland. The real figures are more shocking. I enclose an excerpt from a commons debate initiated by the Conservative MP Nicolas Soames in 2011. This is just one thing that Scotland with 5million people (8% of the UK total) gains on independence. NICHOLAS SOAMES SECURES ADJOURNMENT DEBATE IN THE HOUSE OF COMMONS ON NORTH SEA OIL AND GAS HC 1018-i and -ii.] “The taxes forecast to be raised from the industry in 2011-12 include some £6 billion in income tax, national insurance contributions and corporation tax paid by the supply chain companies, with an additional £11 billion from taxes on production itself. That amounts to 25% of all the corporation tax received by the Exchequer. The production of indigenous oil and gas improved the balance of payments by £35 billion in 2011, thus halving the trade deficit, and the supply chain added another £5 billion to £6 billion with exports of oilfield goods and services. Incidentally, that is an aspect of the industry that is doing extremely well here and overseas, and it is flying the flag for Britain effectively”. Also in the same debate the he mentions that this industry employs over 400,000 people in the UK with more than half outside Scotland. Thus North sea oil and gas (UK export no: 1) and Scotch Whiskey (UK export no: 3) contributes more to the UK economy than the city of London (financial products and insurance) . Combine this with the fact that Scotland will have 55% of Europe’s total oil reserves, 25% of Europes wave power and 25% of Europe’s wind power (all for a nation with less than 1% of Europe’s population) and any suggestions that Scotland will not be financially secure can be viewed as utterly risible (or deliberately mendacious).

  13. ignore the bit that says “Interesting comment Paul Singapore Wrote: I am not a Scottish Nationalist but this article is the biggest load of baloney that I’ve read yet about this issue.” I posted it in response to a comment in another article elsewhere and forgot to cut that part out.

  14. Why does this website not promote labour values/inspirations, etc for Scotland, we dont want to hear constant nat bashing, you people are driving Scots to voting YES!!!

  15. “an independent Scotland would have seen a foreign power coming to own more than 75% of RBS.”

    You are no doubt aware that RBS is traded on the international markets and as such it is probably impossible to know just who owns it day by day. 25% Scottish owned is probably an improvement on what it was 10 years ago.

    Just a shame that when it was paying so much corporation tax, it all went South to Westminster. Yet when it went bust, you try to punt the debts North.

  16. Shot down again.

    Despite the constant attempts by Scottish Llabour to talk down Scotland and Scotland’s people and the abilities and intelligence of the Scottish people intelligent people in Scotland are beginning to fully understand that RBS was about as Scottish as morris dancing, was less than 5% Scottish owned, had less than 5% of its business in Scotland and was a big London run bank doing as the Labour Government encouraged it to do. The worm is beginning to turn on this one. The truth always eventually prevails

  17. I believe that Alex has more grasp of economics than anyone in Westminster or the author of this article.

    ‘Britain on path of bankruptcy’

    A prominent professor says UK’s economic and financial model is a failure amid Chancellor George Osborne’s announcement that the country has run out of money.

    Press TV has conducted an interview with Rodney Shakespeare, professor of binary economics, to further discuss the issue.

  18. Does anyone know the nationalities of the shareholders in RBS immediately before the collapse? It seems to me unlikely that the shareholding was largely Scottish. Indeed I’d have thought a lot of the richer sort shareholder – whatever their nationality – failed to deal with the corporate governance aspects of their Board of Directors.

    Just saying.

  19. I’m always fascinated by the sheer density of Nationalist denial when you point out a flaw in their “logic” in support of “independence”. Just reading all the excuses for keeping their eyes covered and their ears blanked is truly educational.

    Evan’s argument is perfectly clear. If the HQ country bears the brunt of a failed bank debts, an RBS type failure destroys the Scottish economy.

    If a foreign ountry bears the brunt, we bail out a bank that then becomes foreign owned and based: we lose the money we use for the bail out and we lose the benefits (tax, employment, control, prestige etc.) of having the HQ in Scotland.

    If you cannot see this you’re probably not very bright. If you can see it, but won’t admit it, you’re probably a Nationalist.

    1. Does the bailout not follow the incorporated subsidiaries? Dexia springs to mind. Where was the corporation tax accounted for, 90% of them didn’t contribute to the GERS income figures for Scotland.

  20. Oh, I do look forward to staying in the union, so that I can live in a country that owns its iconic companies.

    After all, Jaguar Motors or Land Rover would never fall into foreign ownership, would they? Indians you say, Tata to that theory.

    Certainly not Manchester United – 100% British surely? Yankee, surely not, they don’t even play football.

    I hope we don’t have these nasty Europeans owning Britain’s railways! And certainly not the energy companies we rely on to keep the lights on, that would be too terrible.

    You don’t tell me, these are all owned by a selection of Johnny Foreigners, how awful. Too, too sad.

    Now, I wonder who owns BAA – that used to be the BRITISH Airports Authority you know. What, Spaniards you say? But isn’t Spain one of these PIGS countries that we are all so superior to?

    Evan, help me out here. What was the point you were trying to make, I seem to have got it wrong. I thought you meant any country that couldn’t protect itself from foreign ownership was too wee, too poor, and too stupid to be independent. But, that means the UK is too!

  21. The UK bailed out RBS and HBOS to the tune of £64bn.

    The Federal Reserve has released details of more than 21,000 transactions after being forced by the Dodd-Frank Wall Street Reform Act to disclose which institutions it had bailed out in the financial turmoil since December 2007.

    The data reveals that British-based banks accounted for $1 trillion (£640bn) of the money the Fed issued to prop up the financial sector.

    Royal Bank of Scotland borrowed $446bn (£280bn)
    Halifax Bank of Scotland $181bn (£114bn)

    Total = £461bn

    Evan if what you say is true why did the USA bail out both banks if they were indeed Scottish?

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