Do the Scots really want independence?
The polls say no. The situation is always going to be fluid, but mostly they suggest only around a third of voters would actually go for it were there to be a referendum.
Perhaps they’ve noticed that independence would come with a slug of the national debt chucked in. Given that, you might think it odd that the same voters voted in the Scottish National Party. But it isn’t really. Why?
Because in times of difficulty and uncertainty, voters shift away from their main parties if they can.
In Scotland, everyone hates the Tories; that’s just the way it is (see Kevin McKenna’s comments here if you aren’t sure why).
They aren’t all that for Labour any more either. And why would they be? After all, Labour presided over the destruction of much of their banking industry; destroyed their global reputation as a canny and careful lot (even now asset managers here tell me that winning business in the US is a million times harder than it was five years ago); it did little to solve their entrenched unemployment and health problems too, albeit not for want of trying. And it followed all that up with the kind of shambles of an election campaign that suggested there may be more to come.
So given that the Scottish have a third way on offer – and one that is well organised, mildly left of centre and charismatically led – they voted for it. They didn’t necessarily vote for independence. They voted to not be bothered by the patently useless policies of either of the UK’s big parties for a while.
It is much the same thing that the rest of us were trying to do by voting for the Lib Dems at the last election. The same thing that the Americans are doing by actually listening to the ramblings of Donald Trump. The same thing that is putting what the Telegraph calls the “European utopia of political and economic union” on the brink. And the same thing that the populations of the Middle East are doing by revolting against the rising inequalities in their own countries.
Times of financial trouble and resource scarcity demand new solutions. And if voters aren’t getting them from their usual political parties (or dictators) they tend to demand regime change.
With this in mind, we should note that not only is this financial crisis not yet over (with the sovereign default bit still ahead of us, it may have only just begun), but that the volatile and destabilising inflation it has given us will be with us for a while – something that can only bring even more instability in its wake.
The point? We shouldn’t get too het up about Scottish independence (although as both Matthew Lynn and I pointed out in last week’s magazine it might be a great thing for Scotland). But we should use the SNP’s victory as a reminder that, as predicted by the UN in 2009, financial instability breeds political instability – wherever it comes.
That makes it time for investors to brush up on their geopolitics. At Edinburgh’s CFA conference last week, Pippa Malgrem pointed out that a great many modern investment strategies simply ignore things they can’t quantify and pop into an equation. That won’t do any more.