Headlines

Shareholders of troubled timber firm Sino-Forest Corp. would receive nothing under a proposed restructuring plan that would transfer remaining assets to creditors, thestar.com reported. A once-mighty company with a market capitalization of $6 billion, Sino Forest is now in tatters as its former executives face fraud accusations that include overstating assets and sales in China. Sino-Forest says it is owed $887.4 million from authorized intermediaries, who operated on its behalf in China.

Banks, investors and companies are bracing themselves for the possibility that the euro will break up -- and are thus increasing the likelihood that precisely this will happen, Spiegel Online reported. There is increasing anxiety, particularly because politicians have not managed to solve the problems. Despite all their efforts, the situation in Greece appears hopeless. Spain is in trouble and, to make matters worse, Germany's Constitutional Court will decide in September whether the European Stability Mechanism (ESM) is even compatible with the German constitution.

A new challenge to the European Stability Mechanism, the eurozone’s permanent €500bn rescue fund, has been filed in the German constitutional court, seeking to delay ratification by Germany until it has sought the opinion of the European Court of Justice in Luxembourg, the Financial Times reported.

After the party, the hangover looms: London's golden Olympics may soon be a distant memory as Britain returns to the reality of its economic mess and years of more belt tightening, Reuters reported. The 2012 Games have lifted the nation's spirits, but the government has few alternatives to an austerity drive that may last for the rest of this decade - although some academics and economists believe yet more radical policies may be needed.

A far-left-wing party is emerging as a front-runner in next month's elections in the Netherlands, as it benefits from growing voter resentment toward the German-led austerity drive and euro-zone bailouts, The Wall Street Journal reported. A win by the anti-austerity Socialist Party could threaten to unravel a cost-cutting plan agreed under the current government in April, and also could derail stringent budget targets for 2013 set by the European Commission and fiercely advocated by Prime Minister Mark Rutte.

The government will likely suffer from a tax revenue shortfall this year as many businesses struggle to make profits due to plunging exports and sluggish domestic demand as a result of the global economic downturn, The Korea Times reported. Many salaried workers and self-employed people have seen their income shrink in the wake of the tight job market and other unfavorable economic conditions, making it difficult for state collectors to levy as much tax as they did last year.

In 2009, a flood of loans saved the day for China's economy. Now, there is barely a trickle, The Wall Street Journal Heard on the Street blog reported. New loans in July slid 41% month on month to 540.1 billion yuan ($84.9 billion). One reason: a new dynamic in China's banking system from wealth-management products, which offer a higher return than bank deposits. Fitch Ratings estimates about 10.4 trillion yuan was in WMPs at the end of June, equal to 11.5% of bank-sector deposits.

A handful of European banks have figured out a way to boost their profit and capital ahead of new regulations: grab back their bonds, The Wall Street Journal reported. With the European crisis knocking down the value of banks' longer-term debt, some are taking advantage by buying back their debt from investors at a discount from the original value. Banks can book the difference in price as an accounting gain, adding to their bottom line—and their ability to withstand losses.

Concerns about China's economy intensified Friday on signs that attempts to kick-start growth aren't working and new evidence of weakness in the export sector, putting pressure on Beijing to move more aggressively, The Wall Street Journal reported. New loans by China's banks fell to 540.1 billion yuan ($85.1 billion) in July, down from 919.8 billion yuan in June, and the lowest level since September 2011, despite efforts by the central bank to make it easier to lend. Export growth also disappointed. July exports were up just 1% from a year ago, slowing from June's 11.3% pace.

An outgoing member of the Bank of England’s Monetary Policy Committee has challenged the governor Sir Mervyn King for his insistence that central banks should buy only government bonds in quantitative easing programmes to stimulate growth. Adam Posen told the Financial Times that the BoE could be much more effective in fostering economic recovery if it ditched “anguished religious ethics” over what it considered reasonable intervention.