#$rbs

Here are some of the stocks the Yahoo Finance team will be tracking for you today:

Nike (NKE) shares fell in early trading as a metric that gauges future orders was weaker than expected and that’s fueling concerns about the company’s growth prospects going forward. The sneaker giant delivered a beat on both its top and bottom lines as revenue jumped nearly 8% from a year ago.

BlackBerry (BBRY) shares were sharply higher this morning after the Canadian smartphone maker raised its outlook for the year after reporting that earnings broke even in the second quarter. However, revenue missed estimates as sales plunged 28% from a year ago. BlackBerry also announced it is getting out of the hardware business and will outsource the production of its handsets as it shifts its attention to software.

AB InBev (BUD) has something to celebrate. The brewer’s $100 billion plus takeover of rival SABMiller has been approved by shareholders of both companies. The deal is expected to be completed by October 10th.

Tempur Sealy (TPX) shares sank in early trading late yesterday the mattress firm cut its revenue and profit outlook for the year as it sees weak sales in the current quarter.

Royal Bank of Scotland’s (RBS) agreed to pay $1.1 billion to a US regulator to settle claims that it sold toxic mortgage-backed securities to credit unions in the run-up to the financial crisis.

The government will take a big loss on the sale even as it plans to cut spending on defense and social welfare programs. Pass the moldy tomatoes and rotten eggs.

by Jonathan Braude

As the minister in charge of Britain's national purse-strings, the Chancellor of the Exchequer, George Osborne, has a fiduciary duty to keep them drawn fairly tight. So much so, that he actually plans to write into law a rule requiring governments to maintain a budget surplus "in normal times."

Exactly what the punishment should be for a Chancellor who breaks that law has not been spelled out. Perhaps a general election campaign spent in the stocks for angry taxpayers to pelt with moldy tomatoes and rotten eggs would be a popular choice. Or, better still, one of those 10-year prison sentences that Bank of England governor Mark Carney has told business leaders should be meted out to another kind of moldy fruit: the rare rotten apples among all those ripe and juicy bankers and hedge fund managers who poison the fruit-bowl with market abuse.

Osborne probably has nothing so drastic in mind. Possibly he expects nothing more than a sharp rebuke from Parliament's Public Accounts Committee, from the National Audit Office, or (more embarrassing since it was his creation in the first place) the Office of Budgetary Responsibility.

But he seems to be creating a hostage to fortune with his decision to begin selling off the government's 80% stake in Royal Bank of Scotland Group plc at what he acknowledges will be a loss to the taxpayer.

Speaking at the same annual City of London dinner as Carney on June 10, the Conservative chancellor conceded he would likely take a political hit for selling shares at their current levels, far below what his Labour Party predecessor Alistair Darling paid for them back in 2008. But he argued that it was better to start selling now than to wait for "something to turn up."

Some of what he argued might be right. Selling part of the government's stake, even at a loss, could be expected to help raise the share price and reduce the loss on later disposals. It would increase the bank's free float, injecting some liquidity into the stock and giving the market comfort that the Edinburgh bank's chief executive, Ross McEwan, will in future have more freedom from political interference. The mere prospect of a sale was enough to boost the bank's share price by 1.89% to 361.5 pence on the day after his speech.

But that is a far cry from the 502 pence that the previous government paid for its shares in the 2008 bailout. At today's prices Royal Bank is worth about £32 billion ($50 billion). Bailing it out cost the taxpayer £45 billion.

Osborne has tried to spin the numbers to his advantage. He commissioned the investment bank Rothschild for advice, and the bankers concluded that once the fees paid to the government by RBS for its rescue and management of its bad bank were taken into account, the loss would be about £7.2 billion, even if all the shares were to be sold at the current low valuation prices.

Indeed, taking into account the expected returns from the sales of the other rescued institutions, Lloyds Banking Group plc, Northern Rock plc and Bradford & Bingley plc, the taxpayer could actually expect to have made a profit of about £14.3 billion on the £108 billion spent on bank rescues. Well, that's what Osborne was told by his advisers at Rothschild. And where would the Chancellor be if he couldn't rely on his investment bankers and their numeracy skills?

One figure, however, didn't make it into the calculation. The cost of capital. Even at the ridiculously low rates at which the government has been able to borrow money since the crash, the cost of the national debt has been rising as the government has been borrowing more each year and as Osborne has failed to produce even one balanced budget so far.

Reducing that interest burden is among the more cogent arguments of all for starting a sale as soon as possible, so it is odd that so little was made of it in Rothschild's calculations.

Perhaps even more important, it is the government, as the major shareholder, which supports Royal Bank as it racks up billions of pounds of losses year after year. It is the British taxpayer who supports the bank, as it pays out huge fines to U.S. regulators for market manipulation or compensates British retail customers for mis-sold insurance policies. And it is the taxpayer, who will likely have to continue supporting the bank as it faces another inquiry from the government's own Competition and Markets Authority into current accounts and small business lending. More costly remedies await.

Yet while Royal Bank itself would be only too happy to be freed from political control and given the chance to pay competitive salaries and bonuses again to attract top bankers, it is far from clear that potential investors are queuing up to buy a bank that is not expected to show a profit for at least another year.

Moreover, to put that downplayed £7.2 billion loss into some kind of perspective, it is over a third more than the €7.2 billion ($8.1 billion) delayed disbursement to Greece at the heart of the life and death struggle between Athens and its Eurozone partners. And it is not much less than the £8 billion the British government itself has pledged to pour into the ailing National Health Service to put it back on the road to recovery.

It is a vast and politically sensitive sum for the government to write off at the same time as it plans to slash £12 billion from its social welfare budget, make deep cutbacks on defense and other key areas of policy and put a cap on new taxes.

Investors have a new chunk of rock and nationality to worry about this week. Not Ukraine, not Syria, not Iraq, not Liberia ...

Look north, turn left, and zero in on the land that brought us bagpipes, tartans, Macbeth, single-malt Scotch, kilts and of course, more importantly, and how could I even put it last, golf.

You might have heard that those renegades up in bonny Edinburgh and Glasgow and have just about had it with those rotters that run the United Kingdom down in London, and they want out. As the fair laddie Kris Kristofferson said, "freedom's just another word for nothing left to lose."

While we are always on the side of freedom and self-determination, there is a lot of concern that the Scots have not thought this through very well. The margin of potential victory for the pro-secession side is very small, but even the possibility that this could happen is freaking investors out.

Among the many reasons is that there are a lot of big global banks up there, and if they were to lose the aegis of the Bank of England they could be in a lot of trouble. Here are direct excerpts from analysts at the think tank Stratfor on the dangers a secession presents:'

Stratfor:

"The political union between Scotland and England might be abolished after 300 years. The implications of this are enormous and generally ignored.

"Obviously, this raises a host of question about how such a divorce might take place, whether the expected time frame -- divorce by 2016 -- will be adhered to, and how state property might be divided. It also raises the question of Scottish foreign policy. Will Scotland remain in NATO? Will it have membership in the European Union? Will it continue to use the pound sterling, and if not, how will it roll out its own currency?

"These are important questions, but far more important issues will follow. One of the principles of the postwar world was the inviolability of Europe's borders. Border disputes were the origin of centuries of war, and so Europe's borders were frozen after World War II to avoid discussion. This may have left some people of one nationality on the wrong side of a border, but this was accepted since the risk of opening the door to border redefinition was considered far greater than any discomforts stemming from the borders that were locked in place.

"This principle has been weakened since the end of the Cold War. Still, though the disintegration of the Soviet Union created fully independent states, these were recognized republics within the context of the Soviet Union. One could argue that this did not in fact represent border change. Later, the "Velvet Divorce" of Czechoslovakia into Czech and Slovak successor countries represented another shift, but in a country that had only existed since the end of World War I. The separation of Kosovo from Serbia was a more radical shift but was justified by claims of Serbian oppression. Though each shift weakened the principle of inviolable borders, each came with an asterisk -- that is, each had an aspect that stopped it from being the definitive case.

"Scotland separating from England, by contrast, can't be minimized. If that centuries-old union can be revised, then anything can be revised. Scottish separatists' reason for splitting is that they are a separate nation, that each nation has the right to its own state and the right to determine its own destiny, and that they no longer choose to be in union. But if they have the right to determine this, why shouldn't others in Europe enjoy the same right?

"For example, modern Spain is an amalgam of regions. One, the Catalan region -- which contains Barcelona -- has a strong separatist movement. If Scotland can leave the United Kingdom, then why shouldn't Catalonia be allowed to leave Spain? Farther east, the Treaty of Trianon gave Romania and then-Czechoslovakia large portions of Hungary along with the Hungarians living there. Why shouldn't Hungarians living in those territories have the right to rejoin Hungary? Meanwhile, if French-speaking Belgians and Dutch-speaking Belgians wish to part ways and return their two regions to their respective countries of origin, why should they not be allowed to? And why shouldn't the eastern part of Ukraine be allowed to secede and join Russia?

"Raising the stakes, this is an issue that goes far beyond Europe. There are seemingly innumerable separatist movements in India, China, Africa and so forth. If Scotland has the right to leave the nation-state it is part of and form a new one based on ethnic identity, why can't anyone follow suit? And if anyone can do it, but they are blocked by the state they wish to leave, is resorting to violence in pursuit of independence legitimate?

"The Scottish issue -- the claim that the Scots are a separate nation and that all nations have a right to self-determination -- simply cannot be asterisked. Having this happen in the heart of Western Europe would set a clear precedent that would expand geographically and conceptually. It would legitimize similar movements globally and force a reconsideration of what a nation is. Ultimately, a nation would be whatever the majority says it is.

"It is doubtful that the Scottish precedent could be contained in Europe. And it is hard to imagine how this precedent might not lead to conflict somewhere, not in the British Isles but somewhere where the existing state would be less inclined to grant the right of self-determination to a separatist movement.

"Of course, the separatists in Scotland may well lose, sentiment might change in the post-election negotiations, and so on. But if England and Scotland divorce, the right to separate will become an integral part of international custom -- and it will arouse other movements."

* *

And now here, courtesy of London Telegraph columnist Ambrose Evans-Pritchard, is the dour view of Credit Suisse. The investment bank analysts expect recession, deposit flight; a 20% currency devaluation and a 10% cut in wages. An excerpt, via Evans-Pritchard, from the CS report:

"In our opinion Scotland would fall into a deep recession. We believe deposit flight is both highly likely and highly problematic (with banks assets of 12x GDP) and should the Bank of England move to guarantee Scottish deposits, we expect it to extract a high fiscal and regulatory price (probably insisting on a primary budget surplus).

"The re-domiciling of the financial sector and UK public service jobs, as well as a legal dispute over North Sea oil, would further accelerate any downturn. In our opinion, as North Sea oil production slows, we estimate that the non-oil economy would need a 10% to 20% devaluation to restore competitiveness. This would require a 5% to 10% fall in wages, driven by a steep rise in unemployment.

"Scotland can have a huge banking industry, or it can have independence linked to sterling, but it cannot do both unless the Bank of England props up its lenders as a lender of last resort. Perhaps the Bank will do that as a courtesy gesture, but why should it? ...

"Significant deposit flight would require Scottish banks to offer much higher deposit rates, which would in turn increase borrowing costs for Scottish entities and individuals. This, in our view, would increase the risk of a severe economic downturn in Scotland post-independence.

"With North Sea oil output in decline(with the Office for Budget Responsibility calculating that output has declined by an average of 7.8% per year since 1999 and recent estimates by Sir Ian Wood putting North Sea oil reserves at 15-16.5 billion barrels versus estimates by the Scottish government of 24 billion barrels), it is clear that the non-oil manufacturing base in Scotland would need to be clearly competitive in order to attract in capital."

Evans-Pritchard himself offers this final comment:

"I happen to think that Scotland could prosper eventually as an independent ''Nordic'' economy, just like Denmark. But there are a great number of analysts from across the world who fear that it will be an almighty fiasco for the next decade unless Britain props it up. In my view, Britain will be forced to prop it up. Excuse me for feeling a slight irritation about this, as a Welshman"