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You can find the current article at its original source at http://www.theguardian.com/business/2015/may/26/grexit-bookmakers-put-smart-money-on-an-unwise-move
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| Version 1 | Version 2 |
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| Grexit: bookmakers put smart money on an unwise move | Grexit: bookmakers put smart money on an unwise move |
| (about 11 hours later) | |
| Paddy Power is quoting 11/10 on Greece leaving the euro – and after recent events it’s hardly a surprise that the bookmaker is offering the shortest odds ever on a Grexit. After months of wrangling, Greece still can’t reach an agreement with its creditors to secure fresh financial assistance and doesn’t have the ready cash to make a payment due to the International Monetary Fund at the end of next week. | Paddy Power is quoting 11/10 on Greece leaving the euro – and after recent events it’s hardly a surprise that the bookmaker is offering the shortest odds ever on a Grexit. After months of wrangling, Greece still can’t reach an agreement with its creditors to secure fresh financial assistance and doesn’t have the ready cash to make a payment due to the International Monetary Fund at the end of next week. |
| The economic argument for Greece staying in the euro is weak. National output is down by a quarter in five years. The debt-to-GDP ratio is heading rapidly towards 200%. One in four people are unemployed and there is widespread poverty. | The economic argument for Greece staying in the euro is weak. National output is down by a quarter in five years. The debt-to-GDP ratio is heading rapidly towards 200%. One in four people are unemployed and there is widespread poverty. |
| Demands from Greece’s creditors for more austerity is, in these circumstances, inhumane and economically crass. If Greece was not a member of the euro, but rather a struggling country in sub-Saharan Africa, the IMF remedy would be devaluation, debt relief and a welfare safety net to protect the most vulnerable. | Demands from Greece’s creditors for more austerity is, in these circumstances, inhumane and economically crass. If Greece was not a member of the euro, but rather a struggling country in sub-Saharan Africa, the IMF remedy would be devaluation, debt relief and a welfare safety net to protect the most vulnerable. |
| Greece’s PM has to decide whether to accept more austerity as the price of remaining in the single currency | Greece’s PM has to decide whether to accept more austerity as the price of remaining in the single currency |
| So when the Greek finance minister, Yanis Varoufakis, rails against the stupidity of what is being demanded in return for the dubious privilege of staying in the euro, he is absolutely right. | So when the Greek finance minister, Yanis Varoufakis, rails against the stupidity of what is being demanded in return for the dubious privilege of staying in the euro, he is absolutely right. |
| The problem, though, is that Greece wants to remain a member of the single currency while ending austerity – and that is not an option. All the opinion polls say that there is little appetite for a return to the drachma. Politically, Greece likes the idea of being part of Europe. | The problem, though, is that Greece wants to remain a member of the single currency while ending austerity – and that is not an option. All the opinion polls say that there is little appetite for a return to the drachma. Politically, Greece likes the idea of being part of Europe. |
| That means it is crunch time for Alexis Tsipras. Greece’s prime minister has to decide whether he is prepared to accept more austerity as the price of remaining in the single currency. The mood music suggests that he is. Tsipras is now in personal control of the negotiations and has sidelined Varoufakis. He has won the backing of the Syriza coalition to press on with the talks. | That means it is crunch time for Alexis Tsipras. Greece’s prime minister has to decide whether he is prepared to accept more austerity as the price of remaining in the single currency. The mood music suggests that he is. Tsipras is now in personal control of the negotiations and has sidelined Varoufakis. He has won the backing of the Syriza coalition to press on with the talks. |
| Tsipras is playing a bad hand well. It is in his interests to maintain the sense that the minutes are ticking away to the moment when Greece goes bust and throws the rest of Europe into a fresh crisis. That prospect might just secure him slightly better terms from the so-called troika – the IMF, the European Central Bank and the EU. It will certainly make it easy to sell a surrender to the Greek people. | Tsipras is playing a bad hand well. It is in his interests to maintain the sense that the minutes are ticking away to the moment when Greece goes bust and throws the rest of Europe into a fresh crisis. That prospect might just secure him slightly better terms from the so-called troika – the IMF, the European Central Bank and the EU. It will certainly make it easy to sell a surrender to the Greek people. |
| For, make no mistake, that is a far likelier outcome than Greece leaving the euro. The odds being offered by Paddy Power are not generous. | For, make no mistake, that is a far likelier outcome than Greece leaving the euro. The odds being offered by Paddy Power are not generous. |
| Not a patient success | |
| Two surveys, two competing views of the state of British industry. The good news, according to the consultancy firm EY, is that the UK has cemented its place as Europe’s favourite destination for manufacturing inward investment. Almost 900 new projects were recorded in 2014, up 11% on the previous year. Britain increased its market share for direct foreign investment projects to just over 20%, leaving Germany for dead. The results for the automotive sector were especially strong. | |
| The bad news is that while Britain has an impressive record for assembling cars for foreign-owned companies, the record for developing its own world-beating products is not so hot. According to a Thomson-Reuters innovation study of 12 industrial sectors, the UK issued 6619 patents last year. That was barely a tenth of what Germany managed. France, derided by George Osborne for its poor growth and unemployment record, managed 5000 more patents than the UK. | |
| So which is it? Is Britain the place where the world now likes to do business? Or is it still the country that leaves far too many brilliant ideas in the university labs and engineering departments? The answer is both. Foreign-owned companies like Britain for a number of reasons: taxes are low, labour is cheap, English is spoken, and access to the European Union is guaranteed. Inward investment has become a form of industrial policy. Governments woo foreign companies with the offer of tax breaks and a greenfield site on which to build their factory, and don’t worry too much when the profits go overseas. | |
| The Thomson-Reuters survey shows three things. It demonstrates the damage caused by the hollowing out of industry since the 1970s. In some of the 12 sectors covered, Britain has no patents because it has no real presence any more. Secondly, in sectors such as automotives, where production is booming, the innovation is being done somewhere else. The top five auto innovators as measured by patents were all German. Finally, Britain’s assembly-plant model of manufacturing would be vulnerable if, for any reason, foreign-owned companies decided to leave. |