Headlines

The post-crisis European Union offers insight into a contentious economic question: How fast do wages fall in the face of high unemployment? The question is far from academic. Millions of Europeans who lost their jobs in countries hard-hit by the crisis won’t see their prospects improve until companies believe labor is cheap enough to start hiring again, The Wall Street Journal Real Time Brussels blog reported. Lower wages are needed in the troubled euro-zone periphery and in countries such as Latvia that peg their currencies to the euro to reverse years of lost competitiveness.

Almost €4 billion from the National Pension Reserve Fund which was invested in Bank of Ireland and Allied Irish Bank last year has been written off, according to the annual report of the Comptroller and Auditor General, the Irish Times reported. The report shows that up to the end of 2010, the NPRF invested €11.35 billion in Ireland's two biggest banks. However, as a result of an impairment loss of €3.7 billion, the value of this investment fell to €7.6 billion.

A Swedish court gave struggling carmaker Saab leave to appeal a lower court's decision denying it protection from creditors, offering a glimmer of hope for the bankruptcy-threatened company on Monday. Saab, owing August wages to workers and 150 million euros ($207 million) to suppliers, applied for protection from creditors this month, but was turned down. Owned by Netherlands-listed Swedish Automobile , the company asked for leave to have the case re-examined, pointing to, among other things, a promise of new funding it received early last week.

Troubled insurer Blue Shield was on Friday placed under statutory management by the Insurance Regulatory Authority for inability to honour claims. IRA commissioner Sammy Makove further barred the insurer from conducting any new business and advised existing policy holders to use other underwriters, allAfrica.com reported. IRA attributed the firms woes to its involvement in the public service vehicles (PSV) insurance business which has been beset by soaring claims, fraud and litigation.

Property tycoon Vincent Tchenguiz has reached a confidential settlement in his pursuit of damages from failed Icelandic bank Kaupthing, Reuters reported. London-based Tchenguiz -- one of Britain's best known real estate investors -- said trustees of his family trust and its Euro Group business vehicle had settled all civil claims filed against Kaupthing in July 2010 after the bank's winding-up committee refused to recognise the trust as a priority creditor following its October 2008 demise.

The regulatory fog engulfing senior bank debt thickened this week as the UK's Independent Commission on Banking (ICB) became the latest body to release proposals on how to make creditors liable for future bank losses, International Financing Review reported. Under the ICB's proposals, the pari passu link between senior creditors and depositors would be broken and outstanding debt would not be grandfathered, making it easier for senior debt to be bailed-in. The report is the latest in a string of global and national initiatives that have yet to be implemented.

Greece's government was meeting over the weekend after receiving fresh warnings from its euro-zone partners that future aid will be withheld unless it can produce conclusive steps to bring its unruly budget deficit into line, Dow Jones reported. Prime Minister George Papandreou aborted a planned trip to New York and Washington this week to preside over emergency meetings in Athens to identify new savings that will convince other euro-zone governments that targets can be met.

EU finance ministers have signed off on a package of interest rate cuts on Ireland’s bailout which will benefit the State by up to € 10 billion during the course of the rescue, the Irish Times reported. Minister for Finance Michael Noonan will today raise Anglo Irish Bank when he meets European Central Bank president Jean-Claude Trichet but he has acknowledged there is little prospect of the bank allowing him not to repay some of Anglo’s senior debt.

Portugal's central bank said Madeira island, a small autonomous region, has underreported its debt since 2004, putting further pressure on the country to meet deficit targets under an international bailout, The Wall Street Journal reported. An evaluation conducted by Bank of Portugal of Madeira's accounts showed it failed to report €1.1 billion ($1.53 billion) in debt from 2008 to 2010 related to agreements between the government of Madeira and construction companies. Bank of Portugal on Friday called the omission "grave," adding it doesn't know of any similar cases.

The Swedish district court in Vanersborg Friday said it received late Thursday four petitions for a bankruptcy ruling against Saab Automobile AB, bringing the total number of petitions against the troubled Swedish car maker to six, Dow Jones Daily Bankruptcy Review reported. There could be more to come: labor union IF Metall, representing about 1,500 unpaid employees, said Friday it would file for Saab Automobile's bankruptcy if Sweden's appeals court hasn't granted the company protection from its creditors by Sept. 20 at the latest.