Saturday, September 13, 2014

Guest Post : Small Man Europe Is Now In “Effective State Of War” With Russia

Small Man Europe Is Now In “Effective State Of War” With Russia

According to Some Interested Parties
These are easy to identify. Among them we can note David Cameron's UK, Hollande's France, Tusk's Poland and the president of formerly Soviet Lithuania,  Dalia Grybauskaite who has said, August 30, that Moscow was “effectively in a state of war against Europe”. All of these EU28 leaders who at present do not include Angela Merkel amongst them, are not only calling for more sanctions against Russia, but in some cases also for larger supplies of military aid to the Kiev government.

Backing down from that, even in the Europe of “soft power” is becoming difficult.
Europe is on the cusp of a Triple Dip recession. Being aggressive with Russia, and trading with Russia, make difficult bedfellows. French president Francois Hollande knows this well, like the others. Last week he stressed that a failure by Russia to reverse a flow of weapons and troops into eastern Ukraine would force the EU bloc to impose new economic sanctions, but then he went on to say:"Are we going to let the situation worsen, until it leads to war? Because that's the risk today. There is no time to waste."  France's sale to Russia of Mistral-class “invasion platform” fighting ships could soon be collateral economic damage, and it will hurt.
Amusingly, Germany has been a leader in calling on France to cancel its Mistral contract, worth more than 1.25 billion euros including training and allied services, for reasons that could include the recent lack of success by German weapons exporters to Russia. Germany has been a laggard, even extremely so, in upping the ante in the EU sanctions game against Russia, to include mainstream manufactured and industrial products of the type enabling Germany to run a trade surplus with Russia, in this sector, of more than 20 billion euros-a-year
What a surprise.
David Cameron's deindustrialized UK running a massive deficit with the rest of the world, including Germany, on manufactured products therefore prefers additional financial and banking sanctions against Russia. His latest call is to “kick Russia out of the SWIFT payment system”.
Economic Winter Is Coming
In summer, the Europeans could handily forget they get around 33% of the natural gas they consume, from Russia. As the days get colder, this will be a reminder that their fragile talk about “energy independence”, or even a magical gas pipeline from Qatar across Syria to serve them, by about 2025, does not apply to the real winter of 2014. Russia also supplies them about 33% of all the oil they consume, also.
Making war against Russia would rather certainly and surely lead to a total cut-off of both.
Commission president Manuel Barroso, this weekend, again said there is “political will [in Europe]”  to find a political solution to a crisis that he says is due to President Putin blaming Kiev for attempting to “turn the ex-Soviet state away from its former master”. Barroso also said he was “not looking for foreign military intervention” and that he expected progress toward peace as early as Monday – but he added that failure to do so could push the conflict to a point of no return: "Let's not try to spark the new flame of war in Europe”.
The key term is Cold War – without Russian gas and oil, this winter, it would be cold. The Cold War meme or theme is also totally unrelated to the deliberate attempt to incite Vladimir Putin to send the Red Army into eastern Ukraine – which is a Hot War.
Making that unfortunately more possible, this weekend the European Council elected “war hawk” Polish prime minister Donald Tusk as the new president of the European Council and EU, to replace Belgium's Herman Van Rompuy. With the unknown quantity of Italian Foreign Minister Federica Mogherini replacing Britain's Catherine Ashton as Europe's foreign affairs supremo, the replacement of Barroso as President of the Commission by the arch-conservative former Luxemburg premier Jean-Claude Juncker, completes the unknowns, but the conservative imprint is clear.
As also underlined by analysts and commentators, horsetrading for jobs in the new Commission, Council and Executive is now frenetic.  Germany, France, Britain, Italy and other countries are competing to see their nominees secure important portfolios in Juncker's team, such as economic affairs, trade, and energy. Apart from this being able to cause “policy paralysis” concerning Ukraine, and as Italian prime minister  Matteo Renzi said on Friday, there is an urgent need to tackle “the really worrying economic situation” across Europe, with the implication that the strong euro currency may be heading for a fall.
The Short Man Syndrome
Not unrelated, a Sunday 31 August leading article by Henry Kissinger, published by 'Wall Street Journal' accused Europe of making its “soft power” approach to foreign relations an attempt at creating “a vacuum of authority internally and an imbalance of power along its borders”. He meant Ukraine.  Kissinger did not use the term “Napoleon complex” to deride the Europeans, but came close to it.
Also called the “Short Man Syndrome” this concerns basic overcompensation for being small and being taken as unimportant. Some historians and psychologists say that France's Napoleon, who stood 5 foot 2 inches high, or low, compensated by extreme aggression.  In fact, research at a large number of universities and centres tends to show that this supposed complex or syndrome may be a myth. Smaller persons are often more discreet, timid, and less likely to lose their tempers than tall and large persons. In the specific case of Napoleon, however, he was naturally aggressive – whether tall or short.
The downsized “soft power” European Union is therefore likely programmed to stay what it is in foreign affairs – timid to the point of cowardliness – whatever it might be encouraged or incited to do by the uber-aggressive and small-sized John McCain of the US, and his likeminded ilk. Americans are always more courageous when it concerns a war that is not fought on their own homeland territory. Such is greatness!
We therefore have to ask why the Short European Man is being so aggressive with Russia over the Ukraine? On current trends, with already existing sanctions, the EU already shot itself in both feet. The supposed prize of “anchoring Ukraine to Europe” is a sure and certain loser for the economy.  Upping the ante with new economic sanctions will cause further hardship – including the real possibility of pushing Germany into recession, with a massive ripple effect across Europe..
To be sure the Small Man Napoleon was also suicidal – because of his insane aggressivity – but the European Union is in no way obliged to commit suicide.
By Andrew McKillop
Contact: xtran9@gmail.com
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

Guest Post : Ukraine Standoff Signals Global Power Shift

Ukraine Standoff Signals Global Power Shift

Power Shift
Following from and related to the economic proxy war, by sanctions, engaged by the EU28 and US against Putin's Russia, and counter-sanctions by Russia against the “Atlantic Alliance”, we do not have to look very far for sequels. Plenty of EU28 banking groups are now on a short fuze, for example on the borrowing of PKO Bank Polski, Poland's largest lender. Able earlier this year to raise over 2 billion euros this lender's timing was very lucky. Even “EU28 core” private banks, including BNP of France and Deutsche of Germany may soon face “unexpected difficulties” recapitalizing their bad debt. Banks of the “southern tier” or Club Med countries will soon face serious difficulties, like Portugal's Banco Espirito Santo group's “unexpected difficulties”.

http://www.telegraph.co.uk/finance/financialcrisis/...

Attempts at maintaining blissful ignorance of reality feature the “equities strategy” of steamrolling daily and continued increases of nominal share values on European stock exchanges. The EU28 economies are now forced to continue and intensify the unreal blowout of house price and real estate nominal values – as a fragile alternative to economic growth in a shrinking economy.

As any sane economist will conclude, this is only “pre-crash” arranging of the deckchairs on the Titanic.
Lessons From the Ukraine Crisis

Historians still trying to piece together the puzzle of World War I and its origins, 100 years after the event, often apply the well-known saying that “My enemy's enemy is my friend”. Before 1914, relations between the Ottoman Empire, the Austro-Hungarian Habsburg Empire, pre-Soviet Russia, the future “Atlantic alliance” of France and the UK partly-allied with the USA, and east Europe-leaning Germany, featured beggar-my-neighbor feints and lunges. The game especially used the unstable and fractious Balkan states and its ethnic communities as a handy lever for limited conflict, including military, but the game was always complicated and got more so.

Several historians say this dance to war developed “escape velocity” or runaway momentum and then generated World War I, with its dramatic sequels. These included World War II, the creation of Israel and the Middle East of 2014.

Today in the Ukraine standoff between “the Western powers” and Putin's Russia it can count on high level diplomatic support from China and possibly also from India. Russia also has arms-length diplomatic support from Iran and Turkey, equivocal in the case of Turkey. Public opinion in some EU28 states, especially Germany, is knife-edged balanced on the Ukraine issue. Outright hostility to Russia over Ukraine is concentrated in “the Atlantic powers” of the US, France and UK, and most ex-Warsaw Pact countries of east Europe. 

For purely ideological reasons notably concerning the Syrian crisis, anti-Russian sentiment is also significant in Saudi Arabia and the Arab Gulf states
Economic Proxy War 2014

During the second World War Stalin realized that he needed the Western allies or Atlantic powers to thwart and defeat German Nazi invasion. In turn the Allies realized the Soviet Union was necessary for their war effort but under any other scenario the Allies would have been arch enemies of Stalin and vice versa, as shown by the Cold War of 1948-1989 rapidly following the defeat of Nazi Germany.

As a direct consequence “proxy war” was declared. The Soviets and China aided North Korea during the Korean war, and aided the Viet Cong during the Vietnam war, and the Soviets directly aided Cuba and the MPLA movement in its war against western-backed South Africa for the control of Angola. The US and its “Atlantic allies” then aided Islamic terrorists opposed to the USSR in Afghanistan.

Moving up to today, Putin has applied counter-sanctions on food exports from the EU28 the economic impact of which was initially and often under-estimated (see Statista table below)

http://www.marketoracle.co.uk/images/2014/Aug/russia-trade-ban.gif
These initial estimates, only dating from a few weeks, have been updated and completed by national trade and agriculture agencies and associations, and in some cases have been massively increased. As one example, the major food exporter France now estimates the likely annual cost to France of the Russian food import ban to exceed 1 billion euros or $1.32 billion, tripling the Statista estimate. Denmark's estimated likely economic losses have also been increased by a large amount. Finland's estimated losses are now placed at nearly twice the earlier estimate of $367 million per year.

To be sure Russia will also suffer serious economic loss from “economic proxy war”, including food price inflation. This explains the rapidity of Putin's action to seal trade and economic relations agreements with other BRICS countries, Iran, Turkey and SE Asian nations. When or if economic sanction are extended to industrial and manufactured goods, and Russia applies counter-sanctions, Germany will be especially hard hit.
Economic War Can Turn Hot – Or Cold

The cold war's proxy war process resulted in many dictators being propped up, and many others changed, in a long list of often-disastrous “local civil wars” or the shoehorning to power of outright oppressors. On the western side of the ledger this would include Mobuto Sese Seko of Congo, Augusto Pinochet of Chile, the single-name Soeharto of Indonesia, Saddam Hussein of Iraq and the current royal families of the Arab Gulf states and Saudi Arabia. Soviet-backed one party states of east Europe were sometimes repressive and little better than the western-favored dictatorships.

This only concerned the overarching politics of the 1948-1989 Cold War and its sequels. It ignores the economics of long-term standoff and the “economic proxy wars” that were generated. Arguably and today, it is economic proxy war that is the most important – and able to shift either way, to outright military conflict or the end of conflict. This is especially the case in the Ukraine crisis.

In the last 5 months, we can list these events:
  • Russia and China sign $400 billion gas deal, previously stalled for years
  • Russia, China, Iran and other countries agree trade currency swaps to bypass the dollar
  • The BRICS group agree on a development bank to start operating by 2016 and replace western institutions including the World Bank and US Ex-Im Bank
  • Russia signs historic $20 billion oil deal with Iran and India removes sanctions on Iran trade
  • Nigeria's Central Bank will move more of its reserves to Yuan
Short Fuze

Historians will readily admit that for example before World War I, the role of “economic proxy war” was low or even absent. Trade and commerce between rival and opposed powers was often almost entirely unaffected, and was only (and massively) hit by the direct effects of war. This makes the reverse process of warmaking preceded by economic war very different, today.

Among the present-day dangers however, mainstream media and political treatment, in the west, of the Ukraine crisis has willfully distracted attention away from the easily-predictable economic, and then political impacts in Europe of running an economic proxy war with Russia. Perhaps unlike the USA (although this is in no way certain) everything is in place for the dreaded Triple Dip of the European economy. The negative political sequels will be sure and certain, and especially negative for the “incumbent governments” and ruling parties.

To the extent that Europe's present ruling elite is either nihilist or self-destructing, this degenerate elite could say “Putin Godsend”. Supplying a ready-made and instant excuse for the Triple Dip, increased austerity, further unemployment, more bankruptcies of enterprises, more bank failures – and so on.

Certainly never, ever reported by mainstream media or mentioned by any western politician who wants to stay high up the greasy pole of power, action such as the creation of the BRICS development bank was firstly in no way at the initiative of Vladimir Putin, and was secondly dictated by rising alarm over “western sabotage of the global economy”. This is the exact accusation, made several times this year, by India's central bank chief (and former chief economist of the IMF). The development bank, for sure and certain can be followed by “the BRICS-MF” or alternative to the western-dominated IMF, charged with protecting the monies of the west's new enemies, chosen by the west for purely political and totally irrational reasons.

Whether or not the escalating economy proxy war of the “Atlantic alliance” against Russia achieves escape velocity and “decants” into military war, the economic war phase will have major and lasting sequels – all of them negative for the west.
By Andrew McKillop
Contact: xtran9@gmail.com
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

Friday, September 12, 2014

Guest Post : Countdown To Global Islamic False Flag Terror

Countdown To Global Islamic False Flag Terror

King Abdullah Says
Speaking on FOX News, August 30, Saudi King Abdullah said he thought that ISIS terror attacks in Europe would take 1 month to start, and 2 months to start in the US. He also said that the sight of ISIS psychopaths, some in their teens, joyfully carrying severed head on spikes was proof that “they know no humanity”, but King Abdullah did not admit the role of his security services, and of the other Gulf states in turning the Syrian civil war into a cesspit of horror from which ISIS crawled out

The game plan is now set for Islamic terror attacks in Europe and the USA, and these attacks do not have to be directly related to ISIS..They have to be “Islamic terror flavored”.
False flag terror attacks in the Middle East-North Africa region have a long track record, and King Abdullah knows plenty about them. So does Israel. Recent disclosures by “persons with direct knowledge of the subject”, of course speaking on condition of anonymity about Israel's Mossad and its false flag Islamic terror campaign, give the example of Libya. Here, for more than 25 years, Mossad operated false flag terror. Until 2001, this was Islamic jihadist flavor. After, it was al Qaeda flavored. Gaddafi had to be unseated.
The net result was nothing like the intended one. Gaddafi was able to set himself up as an Arab leader “with democratic leanings” who was fighting the Islamic extremist menace, including al Qaeda. Mossad's terror campaign reinforced his power and NATO was needed to winkle him out of power, and kill him, in 2011.The “persons with direct knowledge” of this 25-year-long campaign said that Mossad used its own staffers, and recruited, trained and paid agents picked among Shia radicals, and among Sunni radicals in the Middle East-North Africa region to do the dirty work. Their safe houses and apartments in Tripoli, Benghazi and elsewhere were equipped with as much as 100 kilograms of high explosive. If the safe house or apartment was raided, it would blow up taking the entire building with it, destroying everything.
Destroy Everything
ISIS was described as “nihilist” by Obama and it lives down to that non-doctrine. Destroy everything. Its direct challenge to “Core al Qaeda” is already the meat for a flurry of false flag action, and real statements and pronouncements, most recently by Al-Qaeda leader Ayman al-Zawahiri.
In a video message, September 3, he announced the creation of an Indian branch of his militant group to "raise the flag of Jihad" in India. This is a clear attack on Hindu nationalist Prime Minister Narendra Modi who says that India's 100-million-plus Muslims are a “fifth column”. For Modi they are the enemy within. India's total population is well over three times the population of the USA and more than twice the total population of the EU28 group.
In his 55-minute video posted online, Zawahiri pledged renewed loyalty to Afghan Taliban leader Mullah Omar and made a scarcely-veiled snub at the Islamic State (ISIS) militants. Announcing the formation of "al-Qaeda in the Indian Subcontinent" using a mixture of native Arabic and Urdu, widely spoken in Pakistan, Zawahiri appeared active and eager to regain the limelight in worldwide terror operations, correspondents say.
He urged the "umma", or global Muslim nation, to "wage jihad against all its enemies, to liberate its land, to restore its sovereignty and to revive the Caliphate". This is the exact-same claim of ISIS, which now controls an area larger than the size of Belgium in Syria and Iraq. US security sources say that ISIS “now has about $2 million-a-day of revenues” from oil, bank robbery, extortion and theft of property. It has accumulated a “war chest' of about $2 billion to date, according to the BBC, Sept 4.
False Flag Strategy and Wildcards
Opening the South Asian Front by al Qaeda, despite its previous lack of success in the region also extending to Bangladesh, Burma and Indonesia, is logical given the ultra-rapid growth of ISIS and its leader Abu Bakr al-Baghdadi, describing himself as the "Caliph" or head of state for all Muslims. The main problem is this vastly extends the theater both for “real Islamic terror” and for false flag attacks attributed to either ISIS or al Qaeda.
While US and European covert and false flag action in Afghanistan featuring terror incidents are relatively well known, Chinese and Indian proxy war rivalry, using the same lever of false flag terror in Afghanistan is less well known, but real. Spilling this out and across the Indian Subcontinent can vastly extend the “operating theater”.
The now near-global terror war will certainly draw in more “players”.Taking Pakistan, Saudi Arabia has every interest in thwarting the protest movement led by Imran Khan, threatening Saudi access to nuclear weapons produced by Pakistan and available to “the Kingdom” on demand. India also has every interest preventing this. Israel certainly has an interest in this subject, like Iran.
In the European and US theaters for false flag and real Islamic terror attacks, the scene is set for rapid escalation along the timelines set by King Abdullah. August 30. As a fierce opponent of Russia in several proxy war theaters, such as Chechnya, Saudi action to destabilize and weaken Russia, by terror attacks inside Russia, are probable rather than only possible. They can be blamed on ISIS or al Qaeda.
The main danger for the agents and paymasters of Islamic terror, both false flag and real is that a sufficient number of atrocities in Europe and the US will drive the west to forget about Ukraine and their newly found enemy – Vladimir Putin – and draw on Russia's long experience in destroying Islamic terror networks and their operatives across Russia. The growing potential is for a semi-global North/South proxy war, using real and false flag Islamic terror.
Wild cards in this scenario and forecast are so many that prediction is difficult. They will certainly include Pakistan, and Israel which may or may not choose to “up the ante” and pursue its strategy of intensifying western anti-Russian and anti-Arab public opinion, policies and military action.
By Andrew McKillop
Contact: xtran9@gmail.com
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

Guest Post : Scotland's 26.35 Tons Of British Gold

Scotland's 26.35 Tons Of British Gold

Massive Threat to England
Proving it isn't yet the end of summer and its silly season, at least for journalists (and politicians), reports from sources including Reuters -  “Ownership of UK gold up for renegotiation if Scotland votes Yes”, September 9 - say that independent Scotland could lay claim to a part of the United Kingdom's 310-tonne gold reserves if votes go in favour of the "Yes" campaign. Ownership of Britain's bullion hoard will be up for negotiation along with other assets. How about the debts and liabilities?

On the basis of how Scotland and England would, politicians claim, officially share out and divide UK national debt upon separation of Scotland – with 8.5% for Scotland based on its population and GDP – the same divvy-up of remaining Bank of England gold reserves would give Scotland 26.35 tons. This is certainly more than World Gold Council estimates for the bullion hoards of several African low income countries, but for example is around one-tenth of Libya's gold hoard under Gaddafi, most of which “disappeared” when he disappeared. Unlike him, the gold stayed in this world.
When Tunisian dictator Zineddine bin Ali fled the country in 2011 to a safe house and warm welcome in Saudi Arabia, journalists covering the event reported his Airbus had around 20 tons of Tunisia's national gold bullion holdings on board. So an independent Scotland is better off than Tunisia!
Put another way, the UK's heavily shrunk and downsized “hoard” of gold places this fiduciary gold holding at 18th in the world by national holdings. Scotland's 8.5% would rank it so low by world bullion holdings that its role backing a new and separate money for Scotland is not even worth talking about.   Trying another comparison,  Scotland's gold “hoard” at current gold market price levels would be worth a princely $1.7 billion.
The Scottish share of UK debt is placed at about 120 billion pounds or $190 billion!
A Nice Line of Patter for FX Speculators
Quite amazing by its stupidity, both FX-foreign exchange dealers and both English and “No” vote politicians including Gordon Brown and Alastair Darling are working “the Scottish threat to UK gold”, to their hoped-for political profit, and to the direct profit for FX dealers speculating against the GB pound. The gold “hoard” that is threatened by the now-dangerous Scots sounds very, very impressive to an average idiot.

Things were rather different for Scots-born Gordon Brown in 1999-2002 when as UK Chancellor he engaged a disastrous and massive sale of UK bullion at a near-ultimate-low for world gold prices. Brown “disposed of”, which is the right term, almost 400 tonnes of the United Kingdom's gold via a series of auctions, at a sale price for gold at 20-year lows. Now he is terrified of or appalled by the prospect of an independent Scotland laying claim to 26 tonnes!

How can we not believe him? The same applies to Darling, who regularly uses the claim – as “No” vote propaganda – that he personally intervened and saved the “Scottish” banks RBS and HBOS. The only problem is these are private international banks which, when it suits them, suddenly discover their “national identity”.Their liabilities and debts didn't concern the 7.84 billion pounds or $12.6 billion total value at today's gold market rates for the total 310 tonne remaining gold “hoard” of the UK.

They concerned rather a lot more than that – close to 100 times more, and that “doesn't count the derivatives” which all private international banks are constantly inventing and trading. Private international banks, in the UK case calling themselves “English” or “Scottish” when it suits them – and only then – are themselves right now and with no shame speculating against the GB pound in their FX trading divisions. Their commodities trading divisions are speculating for high oil prices – until the moment that traders decide to “pull the plug” on the oil price !
The High Risk Events
 Again amazingly the first one, supposedly, is the risk that an independent Scotland lays claim to UK gold. This risk is nothing to do with private bank liabilities! The patter is strictly kept in the domain of “assets” or so-called assets – but never concerns real debts and liabilities.

The asset-talk then quickly shifts to North Sea oil, isn't it surprising, but more surprisingly almost never mentions whisky. When are the English going to make claim to the small parts of the Scotch whisky industry they do not already own” Or at least accuse the Scots of wanting to steal it? And what about salmon, cod, herring and the Wee Haggis to which all-England has been emotionally attached “for over 300 years”.

The real high risk event is that today's incredible, unjustifiable and unsustainable equity price levels, in the UK or anywhere else, will crash. Only their extreme-high levels temporarily prevent the private international banks from again declaring themselves “semi-bankrupt” and in need of national bailouts – because after all they do have “a national identity”. When it suits them.

The so-called debate on North Sea oil and gas has long flown over the cuckoo's nest. What are the risks? To be sure and certain Scotland exports a lot more oil than Kurdistan (or Libya on bad days and weeks) but it is high-cost oil drugged on and by high market prices for oil, and the world oil price is “looking for a correction” although ace speculator Andy Hall doesn't think so. Theoretically and rationally, an independent Scotland run by the SNP should cut back on oil production – but this would be “a horrendous event”. Almost high treason.

One thing is sure, the “No” movement is not going to be telling us about the Scottish oil “we have known and loved for 300 years”. The very detailed analyses and reports on British North Sea oil and gas by for example Euan Mearns, who himself sympathizes with the “No” movement, signal that it is almost impossible to scenarize a recovery in total production – at any oil price.

The real problem here as elsewhere is deliberate and sheer ignorance. The high risk event for North Sea oil is either a crash or erosion of the oil price to say $75 a barrel, investor retreat from the high cost North Sea province, and accelerated decline of output. Among the collateral damage, you might have guessed, will be the oil related assets-becoming-liabilities of the private international banks – becoming “Scottish” or “English” when it suits them.

None of this is particularly “No” vote or “Yes” vote oriented and flavored because it concerns that strange thing called the real world. At this late stage in the “independance debate” we cannot expect anything better.
By Andrew McKillop
Contact: xtran9@gmail.com
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

Guest Post : Will The 300 Year Old UK Survive?

Will The 300 Year Old UK Survive?

No Longer Certain “No” Will Win
Unsurprisingly to me, the Yes voters in Scotland are getting more affirmative and less secretive about their preference for an independent Scotland. Because its a classic “first past the post” voting system and process, a minority will decide what happens – but few complain about that time-worn electoral process in Britain, except for example the Lib Dems who want proportional voting because it would give them more seats in the Westminster parliament. 

In any case, there is no such thing as a “Maybe” or “Don't know” or “No preference” voting choice available for the Scottish referendum.
Yougov opinion polls now report a tiny majority in favour of a Yes vote. In the remaining days before the referendum wildcards will be more important than ever in deciding the result, but the simple fact that the Yes movement has recovered from a 20% lead of the No movement in previous months shows that we have a “tidal shift” under way. The momentum is there.
The emotional appeal for continued Union among the No vote camp is predictably getting strident. We are told by people who haven't lived for centuries that “The UK we have known for 300 years will be gone”. They certainly didn't know it for 300 years!
Dodgy claims by the No camp are that full independence for Scotland will be even more of an economic disaster for it, than for England, are now everywhere. The most interesting point is the No camp now allows itself to say England will also be worse off. Its previous line of patter was that only Scotland would suffer from its foolish vote for Independence.
Suddenly we hear that Arab potentates and Russian oligarchs will no longer be “parking their funds” in either England or Scotland if they separate. The GB pound will plummet but with a much cheaper English pound the potentates and oligarchs should be happy to buy their London penthouses at 30% off the previous sticker price! What is the problem? Oh yes, the economy, debt and money.
Debt and Money
What happens to the pound also affects and concerns “the debt”, and that concerns both English and Scottish private banks. The extreme liabilities of the “Scottish” banks HBOS and RBS in fact concern two international private banks with a very large number of English shareholders, as well as Scottish, and very large liabilities in its English operations. The excesses of these two “Scottish” banks (like the excesses of “English” banks) in the run-up to the 2008 crisis, and subsequently, are well documented – but are these automatically sovereign national liabilities?
At present they are treated that way, and the SNP's Alex Salmond has sought to reassure all parties that an independent Scotland would keep bailing out the banks in the same way as the previous UK and in particular by the BOE-Bank of England..The BOE's ownership and a possible “share for Scotland” of the BOE following independence is a highly charged question!
However, the BOE has limits to the money printing feats it can get away with, whatever its ownership. Depending on how England reacts, politically, to a majority Yes vote this ultra-critical question may be very rapidly answered. The answer may also be ultra-radical. If England forces the hand of the Scottish there may be “unexpected events” in this domain.
SNP spokespersons have many times “caressed the option”, or merely hinted at an independent BOS-Bank of Scotland going it alone, but none of them ever mentioned Argentina!
Emotional spin in the patter from the No movement claims that the SNP's Salmond has already but implicitly-only said an independent Scotland “would dishonor its 120 billion GBP share of the UK national debt”. This is supposedly about 8.5% of the total for UK national debt but is unrelated to and vastly smaller than the total of all private bank (and finance sector) debt in both countries.
These amounts of “theoretical debt” are so massive it is not worth bandying figures around – perhaps it is 2 or 3 trillion pounds - and it is mendacious to pretend that the numbers bandied around, of “Salmond reneging on 120 billion” are anything like the real world of private bank (and finance sector) liabilities hanging on the knife edge of “constantly rising” stock exchange values. Neither Scotland nor England could pay these debts in a “worst case scenario” financial market crash as in 2008-2009.
The Wee Haggis and the Oil Derrick
We should not forget the whisky still, either, to print on the new banknotes of the new BOS central bank which has to go it alone due to English petulance and jealousy. Plenty of No vote hard liners are saying that independent Scotland will have absolutely no right to use the pound sterling – named for a city in Scotland! It will have to go it alone. It will be a disaster for Scotland, somewhat like Argentina but it was all the fault of the Silly Scots.
The subject of British-sector North Sea oil of which Scotland controls about 90% of the declining British production is another intensely-worked theme of the Yes and No camps. The No camp has however been less than forthright in simply admitting that for FX-foreign exchange speculators and traders, having oil behind your money is good, and not having it is bad – for England. The traders aren't very bright on the details and in some ways couldn't care less if your oil production is declining and is high-cost. They need to speculate every day and they know you have oil! Whisky revenues and taxation have been somewhat neglected, but are considerable.
By a rather predictable but extreme piece of hypocrisy, outgoing EC chief Manuel Barrosao, whose Commission has endlessly pleaded with oil-rich Norway to join the Union, has curtly said Scotland would not be welcome in the Eurozone or be able to use the euro. This in fact is nonsense. An independent Scotland could use either or both the euro and US dollar. “Dollarized” economies are in no way a rare or threatened species, and plenty of them have no formal relations with the US Treasury Dept to operate and use the dollar in their economies. Plenty of east European EU states which are not members of the Eurozone such as Hungary, Bulgaria, Romania have “euro-ized” their economies without incurring the wrath of the ECB in Frankfurt..
It is sure and certain the SNP wants “Sterlingization” or the continuation of using the GB pound, but if push comes to shove, they have other options. On several grounds, Dollarization may be the better of the “quick and dirty” options but an all-new, all-Scottish money cannot be ignored as a major and serious option enabling Scotland to negotiate with England from a position of strength over bank debt and national debt..These in fact are the key issues – the degree of “sovereignty” attaching to the liabilities of what are international private banks which, when they regularly get into the messes they create themselves, suddenly proclaim their “national identity”.
By Andrew McKillop
Contact: xtran9@gmail.com
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.