If Alex Salmond's speech today was intended to be a "deconstruction" of Westminster's warning (delivered by the triumvirate of George Osborne, Ed Balls and Danny Alexander) that the UK would not form a currency union with an independent Scotland, it didn't go to plan. His opening gambit was to suggest, as Nicola Sturgeon did last week, that Osborne and others are simply bluffing. After a vote in favour of independence, "enlightened self-interest" would lead the Treasury to agree to share the pound. But all of the public - and private - statements by the unionist side suggest that this is no bluff: they really are not prepared to risk the health of the UK economy by placing it in an unstable currency union with a country with a decidedly poor fiscal outlook and a banking sector 12 times its GDP.
In a tacit admission of as much, Salmond went on to make two other main arguments against denying Scotland the pound. The first was that it would impose transaction costs of around £500m per year (dubbed "the George tax" by Salmond) on UK businesses: "I am publishing today an estimate of the transactions cost he would potentially impose on businesses in the rest of the UK. They run to many hundreds of millions of pounds. My submission is that this charge – let us call it the George tax – would be impossible to sell to English business."
The problem with this argument is that it simply isn't true. The figure of £500m (less than 0.0005 per cent of the UK's GDP) is too small for it to outweigh the negative costs of a currency union between England and Scotland. But in any case, as Alistair Darling noted after the speech, Salmond's championing of the pound merely reinforces the case for the status quo. He said: "Alex Salmond was arguing against about a problem of his own making - the problem of transaction costs for business due to changing currency. Avoiding extra costs to business and not placing jobs at risk are powerful reasons why we should vote to remain in the UK and keep the pound."
As a last resort, Salmond again brandished the threat to default on Scotland's share of the UK's national debt if the government vetoes a currency union. "If there is no legal basis for Scotland having a share of the public asset of the Bank of England then there is equally no legal basis for Scotland accepting a share of the public liability of the national debt," he claimed. But any default would, as he surely knows, would render Scotland an economic pariah, destroying its creditworthiness at a single stroke and preventing it from raising the funds it needs on the international money markets.
With arguments as weak as these, Salmond was forced to fall back on essentially political points: Westminster is bullying Scotland and Labour is dancing to the Tories' tunes. "The sight of the Labour Shadow Chancellor reading from a script prepared by George Osborne" was, he declared, "too much to bear for many Labour supporters in Scotland". With no opinion polls published since Osborne delivered his threat, it is impossible to know whether he is right about the mood of this crucial swing group. But today, Panglossian as ever, he unambiguously failed on his own terms.