Thursday, September 18, 2014

The Scottish vote --- a personal view

Today's vote, yea or nay, on Scotland's independence is viewed with great interest here.  Yes could mean, will mean, a rocky road ahead short term, but perhaps not close to the worst case scenario projected by some.  A No vote could be positive in ways exponentially unknown, as this scare to the British "empire" will lead to considerably more autonomy for the area while still under the U.K. fiscal umbrella, a noun used purposely given its necessarily ubiquitous use in London.

A personal view holds Scotland dear.  It is the ancestral land of my late mother's family.  I visited there on business on average twice a year from the late 80's to the early 2000's, calling on investors primarily in the financial center of the country which is Edinburgh, and tangentially in the historically commercial center of the country Glasgow.

The Scottish people in the banking world that I encountered were almost uniformly charming, great and highly opinionated talkers, who on the golf course could seem like hometown friends even if one was meeting them for the first time.  In business meetings, the charm was still on but the attitude was decidedly different.

Because Scotland was somewhat off of the beaten path, meaning a layover in Heathrow before a connecting flight to Edinburgh or Glasgow, plus it was not a high profile shopping or sophisticate location, most senior executives were pleased to delegate the region to yours truly, unless either a Gulfstream, golf, or both were involved.  Autonomy was always fine here, in fact preferred.  My trips there were arranged through long term personal contacts and investor lunches  of size were arranged by a London consultant.

Those investor luncheons were classic.  The investors attending knew that, while my firm was treating them to a nice lunch in a fine hotel, my role was not something that deserved significant deference.  I was there to provide information.  After a period of informality while attendees arrived and had cocktails, spicy tomato juice, or sparking water, we would sit down for lunch.  Once we got down to entrees, I was fair game.  There would basically be an hour or more of castigation.  Well thought out rhetorical explanations of financial history and why the U.S. was doomed were listened to politely, careful credit analysis of why my firm would soon collapse were acknowledged, questions about how I could represent the company on my own were taken mostly with aplomb, all because it was enjoyed here.  When I would finally get a chance to give the pitch of my company, they would listen with arms folded and looks on their faces as if this was the last place that they wanted to be.  Could one call this arrogance, or just being in the cocoon of the British empire.

As investors in U.S. banks, the Scottish securities gurus were almost uniformly wrong.  They would sell or not buy when the stock that I represented and was pleading, in the limited way that the law allowed,  for them to buy had a risk/reward that was compelling, and they would buy quietly, never mentioning it to me, when our firm was valued at the top.  Among those Scottish investment firms, many legendary, only Standard Life seemed to get it right.

This was all enjoyed immensely at the time.  The relevant thought for today's election is that the Scottish investors behaved as they did because they were part of the U.K., and their outspoken behavior was part of their role as being a counterweight to their London counterparts.  We are different, and not so easy is what they were saying.  That is part of what the country is saying now, in varying spheres of influence.  Without that adversarial role, what will an independent Scotland evolve into, and how will it change.  Without a chip on their shoulder, what will drive them.

In the long term they will be fine.  As independent they will be a minor country going through negotiations of cooperation on multiple fronts with their former country.  With the world's greatest whiskey and many fabled golf courses, they will be the beneficiaries of Japanese and Chinese investment across the board that, knowing them, many will abhor.  They will get by, but one could ask whether the tension of their relationship with England is best in both the short term and long term. 

Today's result is a cliffhanger it seems, and watched here with fascination.

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