Headlines

Spain's government will effectively nationalize the nation's fourth largest bank to shore up the hurting banking sector and try to convince investors the country doesn't need a bailout like those taken by Greece, Ireland and Portugal, the Economy Ministry said Wednesday, the Associated Press reported. Under the deal, €4.5 billion ($5.9 billion) in funding that Bankia SA received from Spain in 2010 and 2011 will be converted into shares of the institution's parent company, the ministry said in a statement.

Two years after Europe bailed Greece out to protect the euro, the rescue has become a debacle that threatens to unravel the common currency, The Wall Street Journal reported. After Greece's May 6 elections left pro-bailout parties too weakened to govern the country, more elections are likely in June, with no guarantee a stable government will emerge. By next month, Athens must identify €11.5 billion, or $15 billion, in fresh spending cuts or face suspension of the international loans it needs to pay pensions and run schools.

The Korea Housing Finance Corporation (HF) confirmed that more and more seniors are turning to reverse mortgages, an arrangement in which a homeowner borrows against the equity in his or her home and receives monthly payments from the lender, The Korea Times reported. It could be argued that reverse mortgages are a financial tool tailored made for Korea, which struggles to cope with a prolonged housing market slump, decaying employment situations, spiraling family debt and stagnant income. This has resulted in millions of over-50 Koreans marching blindly into retirement poverty.

Hutchison Whampoa Ltd has made a revised 2 billion euros ($2.6 billion) bid for eircom, the Irish phone company granted court protection from creditors six weeks ago, according to sources familiar with the deal. Hutchison, the parent company of 3 Mobile, amended its offer after the court-appointed examiner overseeing Eircom's reorganization rejected an initial bid over the conditionality attached to it, Reuters reported. A tweaked bid, with some technical adjustments and no conditions, has been resubmitted, but it is still subject to due diligence said a source.

Debt-shackled Jamaica's interest payments as a percentage of gross domestic product were the highest in the world last year even after a domestic debt restructuring two years ago, according to a Washington-based think tank, Bloomberg Businessweek reported. A new report on Jamaica's economy by the Center for Economic and Policy Research says the heavily-indebted Caribbean country's total interest payments were about $1.4 billion in 2011, or about 10 percent of GDP. That's about two-and-a-half times what was spent on capital programs.

Greece is heading for a clash with international lenders as the radical leftwing party that came second in the weekend’s election called for the ripping up of a “barbarous” austerity programme underpinning its bailout and questions mounted about the country’s future inside the euro, the Financial Times reported.

Everyone in Europe seems to agree that government austerity has been overdone. Now comes the hard part: finding someone to pay for less of it, the International Herald Tribune reported in an analysis. Classic fiscal stimulus through increased deficit spending by governments does not seem to be an option, analysts say, simply because not enough private investors are willing to lend more money to the countries that need it most, like Spain. On the contrary, some analysts argue, more borrowing would simply destroy what little investor trust remains.

Countries around the world envy Germany's economic success and look up to it as a role model. But a closer look reveals a much bleaker picture. Only a few are benefiting from the boom, while stagnant wages and precarious employment conditions are making it difficult for millions to make ends meet, Spiegel Online reported. "Prosperity for all" was once the credo of Ludwig Erhard, the first economics minister of postwar Germany. This promise shaped the country for decades and set it apart from many other economies. But how much is this promise still worth today?

Shares in Spain's fourth-biggest listed bank, Bankia, fell sharply Tuesday after the government said it would inject public money in the lender this week to clean up huge bad loans, Agence France-Presse reported. On Monday shares in Bankia, which has the industry's largest exposure to the property market at 37.5 billion euros ($49 billion), had lost 3.26 percent. An economy ministry official told AFP Monday that the government was "finalising a plan to clean up the bank", adding that the scheme would use public money and was likely to be announced by Friday.

The National Asset Management Agency has unveiled its deferred mortgage payment plan in an attempt to sell residential properties on its books and stimulate sales in the moribund property market, the Irish Times reported. The initiative is designed to encourage potential buyers who can secure mortgage approval but who postpone their purchase fearing that property prices will fall further. Nama listed 115 houses in 12 developments in Dublin, Meath and Cork where the scheme will be piloted before the possibility of being introduced on more properties.