Another major issue with falling World Oil prices that hasn't been given much thought in an Independent Scotland and even less talked about by the SNP (understandably) is the effect it may have had on "Scottish Mortgage Rates" and its devasting effect on Scottish Homeowners.
If Scotland had been already an Independent country when this Oil price fall had hit , not only would working families have had to bear the brunt of likely heavy increases in a local Income Tax to make up the shortfall in the Scottish budget, ordinary Scottish Homeowners with Mortgages in the nation may have also had to cope with additional crippling Bank Interest rate rises that the Scottish Government of the day would most likely have had to implement in order to protect against the value of its currency falling due to steeply falling Government Oil Revenues. Protecting the value of a Countries currency is important and essential for creating a stable exchange rate for its Industries that trade with the rest of the World. To give some idea of just how disastrous this would have been to millions of Scottish families consider how any individual in Scotland would cope with a shock 15-17% Mortgage rate as this was the Bank exchange rate Russia too had to implement to protect the value of its own currency due to its own shortfall in its own finances because of the falling Oil price last year. Russia's interest rate is still currently 12% more than six months later. Other Oil producing countries had to cope with similar problems. The UK overall escaped this because Oil is only 3-5% of UK GDP but would have been around 15-18% of an Independent Scotlands GDP , this is one of the realities and huge risks of being an Independent Scotland having to cope with World commodity shocks..would it really have been worth the risk of tens of thousands of Scots losing their Homes and family lives when they couldn't keep up mortgage payments due to punitive levels of interest rates in an Independent Scotland ? This could have brought hardship and utter misery to a whole nation but the SNP do not want you to consider the consequencies of this scenario in the slightest. There have been many Oil shocks in past fairly recent History and there will be more Oil shocks in the future as surely eggs are eggs and the Scottish Government has no means whatsoever of protecting Homeowners from these if it were Independent whenever they happen, as they are outwith Government control. The only way to try to cope with shocks like these is to stay part of a much wider and broader Industrial economy where individual commodity shocks have an overall smaller effect on the economy and preferably as part of a Country that actually can control its own interest rates , its own stable currency and therefore its own long term financial destiny.
This is a real scenario not a theoretical one but have Scottish Voters really understood the risks or have they merely been blindly misled and ill advised by the SNP for their own agenda. It's not the SNP MP's that could lose the roofs over their heads with £75 salaries and expense accounts but the families of ordinary working Scots. SNP MP's will have nothing to lose in this siuation but ordinary working families have everything to lose. With high interest rates and people rushing to sell to get out of ever rising debts House prices would also likely be hit hard , good for buyers , not good for forced sellers at all.
How would Scots really cope with a substantially higher Mortgage Interest Rate in Scotland than England because this is a very real potential result of breaking away from the UK's larger, more stable economy and broader Industrial base , my guess is that they would be less than happy ? Understatement ? So why aren't Scots taking this whole issue seriously yet ?
Russian Interest rates http://www.global-rates.com/interest-rates/central-banks/central-bank-russia/cbr-interest-rate.aspx
Venezuela Interest rate (also has a large part of its Economy based on Oil )
http://www.tradingeconomics.com/venezuela/interest-rate
Winners and Losers from falling Oil prices
http://www.bbc.co.uk/news/business-29643612
Why do Governments have to control the Interest Rate anyway ? :
Interest rates are one lever used to control the economy. The MPC's remit is to keep inflation near the official target of 2%. Raising the base rate should bring down inflation by encouraging saving and deterring people from borrowing - thus lowering demand for goods in the shops. Lowering rates should stimulate economic demand and push up prices, as consumers would be left with more disposable income after paying mortgage costs.
This base rate is used to calculate repayments for tracker and variable-rate mortgages. The interest rates paid on savings accounts should also move in line with the base rate, although retail banks are not obliged to pass on changes in full.
Another Youtube Video presentation on options for "A Scottish Currency" is here ...while viewing this video its very important to remember clearly what has happened to interest rates in Russia and other countries that have and are dependent on Oil as large parts of their GDP , Government budgets and therefore spending plans for their nations. World Financial Commodity shocks like for the price of Oil can and do cause countries to have long periods of high interest rates to protect their currencies which has been implictations for Mortgage holders https://www.youtube.com/watch?v=mBC0mLFz91o
While younger Homeowners probably only remember lower levels of interests rates in recent times, they have been as high as 14% in the 1990's after ERM exit and over 12% in the 1970's, these were periods when many people struggled to keep up morgage payments and many of course evntually often lost their Homes. Small countries generally have unstable and unpredictable economies, larger ones with a broader selection and number of Industries generally always fare better than smaller ones when economic winds blow hard.
Full Historic Interest Data here http://www.theguardian.com/news/datablog/2011/jan/13/interest-rates-uk-since-1694
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What happened in Russia could easily have happened in an Independent Scotland too because in Scotland "Oil is not just a bonus" no matter what the SNP say.
"On Russia’s “Black Tuesday” this week (16 December 2014), the Central Bank tried to stop the rouble’s value falling by hiking interest rates to 17%. It didn’t work. The bankers and corporations panicked; the rouble kept falling. It has now lost half its value in six months. The main cause is the falling price of oil, on which the Russian economy is heavily dependent.
Now Russian people are likely to pay the price, with inflation, unemployment and falling living standards. More than at any time since president Vladimir Putin became the Moscow elite’s dominant figure 15 years ago, he is likely to face a population troubled by serious economic hardship.Q. So what were the triggers for this week’s collapse of the rouble?
A. Low oil prices, which always threatened to undermine the Putin set-up, have arrived.
See more here http://rs21.org.uk/2014/12/18/the-spectre-of-social-unrest-is-haunting-putins-russia/
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Irina Fedulova and her husband have repaid more than one-third of their $150,000 housing loan, but they owe more than when they started, thanks to the collapse of the Russian ruble.
The loan was in dollars but “our salaries are in rubles, and we realize we can't pay it the way things are,” the 42-year-old chemist said by phone from Nizhny Novgorod. “We are so desperate we might have to sell our three-room apartment and move into a smaller one, if we can afford it now.”
Millions of middle-class Russians are facing unexpected hardship this winter amid a 40% decline in global oil prices http://touch.latimes.com/#section/-1/article/p2p-82305345/
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Russian energy executives expect that the current slump will correct itself by mid-2015, as demand picks up and the existing glut of supplies disappears. Yet, what happens if these expectations do not come to pass? If significantly lower global energy prices represent a “new normal” that is likely to persist for years to come, however, what then?
See more http://nationalinterest.org/feature/russias-double-trouble-dilemma-crashing-oil-prices-tough-11939
( Editor: It's now September 2014 and Interest rates in Russia ie Morgages are still at 12% having been at 17% and 15% in the last year since the Oil price fall...how would you lives in Scotland be affected by similar Interest rates induced by a Currency Crisis caused by the same Oil price drop affecting Scotland ? This is one of the Dangers of ever being a small country with a large part of its national spending budget depending on the Oil price, despite what the SNP say "Oil is NOT just a bonus" to the Scottish budget, its essential to its financial stability as long as Scotland carries the £9 billion "onshore" budget deficit shortfall, a shortfall that could take anywhere from 50-100 years to attempt to rectify with no guaranteee of success )
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Whats a currency crisis ? https://en.wikipedia.org/wiki/Currency_crisis
Update 17 Jan 2016 How a small Oil rich country is not coping with the fall in the Oil price and how its facing disastrous economic issues http://www.bbc.co.uk/news/world-latin-america-35329617
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