Nice little house price bubble you've got going there, shame if anything were to happen to it...

Danny Alexander came up with a splendid Home-Owner-Ist argument against Scottish independence as reported in The Daily Express:

SCOTTISH homeowners (1) could face a £1billion increase in their mortgage bills if the country becomes independent, it was claimed yesterday. Danny Alexander, the Chief Secretary to the Treasury, predicted that Scotland may not inherit the UK's coveted AAA credit rating (2), which determines the cost of borrowing on the international money markets.(3) That could force up interest rates for Scottish banks, (4) leading to bigger repayments for hundreds of thousands of mortgage-holders and small businesses.(5)

Where do you start?

1) It's not "homeowners" who'll pay more in interest, it's "mortgage borrowers".

2) Scotland might well not be rated AAA. But the UK might lose its AAA rating anyway. So that's a highly speculative claim. And it all depends on how much of the UK's national debt Scotland is prepared to take on.

3) "However, Finance Secretary John Swinney described the claims as "economic illiteracy" and said it was "deeply worrying" that a senior Coalition minister did not know the difference between the interest rates paid on government bonds and private bank lending."

That has the makings of a fair point. The credit rating of banks depends largely on the credit rating of the government which is propping them up, which is still likely to be the UK post-independence (see 4), so the government's credit rating has some influence on the interest rate which banks have to pay, but it probably has f- all influence on the interest rate which mortgage borrowers pay to the banks.

4) Which "Scottish banks"does he mean? Does he mean Lloyds-Halifax-Bank of Scotland or Royal Bank of Scotland-NatWest? Nobody has debated whether the UK government or the Scottish government will be responsible for propping them up post-independence. If the UK were to fob it off onto Scotland then all Hell would break loose, with "hard pressed hard working homeowners" (TM Gordon Brown) in England also facing higher interest charges, so that seems unlikely.

5) All this glosses over the fact that higher interest rates are bad for leveraged land price speculators but great for cash savers, and that small businesses barely borrow anything from banks in the first place.