Headlines

Financial authorities have vowed to throw everything they have at the country’s consumer debt mountain, which now threatens to outstrip an entire year’s gross domestic product (GDP). But to the majority of observers, it appears the officials are doing nothing at all, if not actually making things worse, The Korea Times reported. It was two months ago when the Financial Services Commission (FSC) announced a fresh set of measures to tackle the increasing problem of personal indebtedness, aimed at assisting households in repaying loans and suppressing irresponsible lending by banks.

Korea’s increasingly toxic housing market is now threatening to wipe out the cream of the crop in its construction industry, a private think-tank claims. High on the endangered list are builders like Daewoo, Lotte, Ssangyong, Halla, Kolon and Keangnam, The Korea Times reported.

Bank of Ireland said Wednesday it would impose a 60 per cent haircut on a group of UK junior bond investors through a revised debt buyback offer, the Irish Times reported. In July the bank withdrew its original offer to swap £75 million (€85.3 million) in perpetual unsecured junior bonds for cash or equities, citing administrative difficulties. The decision to terminate the offer came as the lender faced a legal action by a British investor in the bonds which were originally sold by Bristol and West Building Society, which Bank of Ireland acquired in 1997.

French president Nicolas Sarkozy has given the green light for a highly political budget, placing the burden of new revenue raising on the richest and on big companies while preserving the benefits of some tax breaks for ordinary workers, the Financial Times reported. Just nine months away from a presidential election, France’s high earners will face higher taxes as the government seeks some €12bn in extra revenue by the end of next year to help bring public finances under control.

Saab Automobile’s two biggest unions said they’re likely to ask a court to put the cash-starved Swedish carmaker into bankruptcy in about two weeks unless salaries are paid by then, Bloomberg reported. Saab, which is scheduled to pay factory workers tomorrow and administrative employees Aug. 26, said yesterday that it may be forced to postpone wage payments as “committed” funds from investors may not arrive in time. Saab paid salaries about a week late in June and July.

Belgium and its financial institutions aren’t having the easiest summer. There’s been no federal government since elections in June 2010 and coalition negotiations continue tackling the thorny issues, The Wall Street Journal The Source blog reported. The Bel-20 index, like most European bourses, has taken a pounding—leaving bank Dexia down 51% from 12 months ago; peer KBC down 44% and insurer Ageas down 37%.

After being held up as a model of strength in a region saddled with debt and low growth, Germany suddenly finds itself in a perfect economic storm that could force it to rethink its approach to the crisis plaguing the wider euro zone, Reuters reported in an analysis. New business sentiment figures from the Munich-based Ifo institute confirmed on Wednesday what tepid second-quarter growth data suggested last week: Europe's largest economy is slowing, and slowing sharply. The reasons are many.

Speculators are betting against the euro, banks are taking incalculable risks and the markets are in turmoil. Three years after the Lehman Brothers bankruptcy, the financial industry has become a threat to the global economy again. Governments missed the chance to regulate the industry, and another crash is just a matter of time, Spiegel Online reported.

Greek households and small businesses show growing signs of strain as knock-on effects of government cutbacks ripple through the country's fragile economy, The Wall Street Journal reported. The government, supported by the European Union and the International Monetary Fund, argues that painful changes are necessary to put the country back on its feet after it nearly defaulted on its debt last year.

UBS AG’s decision to cut 5 percent of its workforce brings to more than 40,000 the number of jobs cut by European banks in the past month as the region’s worsening sovereign debt crisis crimps trading revenue. UBS, Switzerland’s biggest bank, said yesterday it will eliminate 3,500 jobs, mainly from its investment bank. It follows HSBC Holdings Plc, which announced 30,000 cuts on Aug. 1, Barclays Plc, which is cutting headcount by 3,000, and Royal Bank of Scotland Group Plc, which is eliminating 2,000 posts. Credit Suisse Group AG announced 2,000 reductions on July 28.