Headlines

Greece continued its flirtation with national bankruptcy Tuesday, successfully staving off a default on debts owed to the European Central Bank, The Wall Street Journal reported. But at the same time, more information dribbled out on the parlous state of its economy and its banking system. Eurostat estimated that the economy shrank by 6.2% year-on-year in the second quarter, and senior bankers said more than 20% of loans to the domestic economy are now officially "nonperforming." They warned that the problem may overwhelm the sector and derail the country's bail-out program.

The long-awaited personal insolvency regime will not be widely used to escape from under mortgage debt, and will come with little cost to banks, rating agency Fitch said, The Independent reported. An outline of the new rules was published in June and is expected to become law later this year. Fitch said it does not expect the changes to have any immediate impact on its rating of Irish mortgage books. It is in contrast to the view of Justice Minister Alan Shatter, who has proposed the new rules.

UK unemployment levels dropped to their lowest in a year as the Olympic Games created jobs, showing the labour market's resilience in the face of deepening recession, the Irish Times reported. Jobless-benefit claims fell 5,900 to 1.59 million, the Office for National Statistics said today in London. The jobless total measured by International Labour Organization methods fell to 8 per cent in the second quarter from 8.1 percent in the three months through May.

Pressure on George Osborne for a softening of the government's hardline economic strategy intensified on Wednesday after leading economists who backed the chancellor's plans in opposition called for immediate action to lift Britain out of double-dip recession, The Guardian reported. In a blow to the chancellor, almost half the economists who strongly supported the Conservative party's deficit-reduction proposals in the runup to the 2010 election said it was time for a rethink and urged the Treasury to take advantage of low borrowing costs to boost spending on infrastructure projects.

A Spanish mayor who became a cult hero for staging robberies at supermarkets and giving stolen groceries to the poor sets off this week on a three-week march that could embarrass the government and energize anti-austerity campaigners, Reuters reported. Juan Manuel Sanchez Gordillo, regional lawmaker and mayor of the town of Marinaleda - population 2,645 - in the southern region of Andalusia, said food stolen last week in the robberies went to families hit hardest by Spain's economic crisis.

Greece is seeking a two-year extension of its latest austerity programme aimed at improving the country’s debt sustainability and prospects for a return to growth, according to a document obtained by the Financial Times. Antonis Samaras, the centre-right prime minister, is expected to outline the proposal during talks next week with Angela Merkel, German chancellor, in Berlin and French President François Hollande in Paris.

The euro zone's $13 trillion economy is shrinking, data published Tuesday showed, a development that threatens to worsen a global slowdown and intensify the debate about Europe's attempts to restore confidence in the currency union, The Wall Street Journal reported. Economic activity in the 17-country currency bloc fell at an annualized rate of 0.7% in the second quarter after stagnating in the first three months of 2012, according to the European Union's statistics arm.

Ireland's budget adjustment in the period 2008-2014 will be the second largest after Greece among the euro area’s bailed-out countries, the Irish Times reported. In a new paper – Fiscal Consolidation: Does It Deliver? – Central Bank of Ireland economist Laura Weymes finds Ireland’s budget-tightening packages will be almost twice as large as those of Cyprus, Portugal and Spain – the other countries in bailouts by the European Union and International Monetary Fund.

Bondholders of Brazilian troubled bank Banco Cruzeiro do Sul will receive about half of their investments as part of a bond repurchase program, an executive said on Tuesday, Reuters reported. Cruzeiro do Sul was seized by Brazil's central bank on June 4 and put under the administration of privately held deposit guarantee fund FGC the same day. FGC and Cruzeiro launched the global bond buyback plan that will receive tenders until Sept. 12, said Celso Antunes, the FGC executive currently in charge of the bank.

Elpida Memory Inc . bondholders have filed a bankruptcy exit plan that values the company at $3.85 billion, well over the price rival Micron Technology Inc . has offered to pay for the distressed chip maker, Dow Jones Daily Bankruptcy Review reported. Bankruptcy trustees overseeing Elpida's restructuring agreed to Micron's $2.5 billion offer. Micron's bid is expected to be embodied in a bankruptcy exit plan the trustees will file next week in Tokyo District Court.