Headlines

Greece will have to leave the euro zone if it fails to clinch a deal on a second, 130 billion euro (108 billion pound) bailout with its international lenders, a government spokesman said on Tuesday, Reuters reported. It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves. Greece is racing against the clock to agree with the EU, the IMF and private bondholders on the details of the rescue plan before a major bond redemption in March.

Registered unemployment in Spain, where almost half of young people are out of work, rose for a fifth month in December as the euro area's fourth-largest economy contracted, the Irish Times reported. The number of people registering for unemployment benefits rose 1,897 to 4.42 million, the labour ministry in Madrid said in an e-mailed statement today. In November, it surged 59,536. Spain's economy contracted in the final months of the year as tourism and exports, the drivers of its first-half recovery from a three-year slump, weakened, the Bank of Spain said on December 29th.

South Korea's Ministry of Strategy and Finance said Tuesday that it will continue studying ways to reduce the economic risk posed by rapid capital flows in and out of the country, as growing concerns about the euro zone stoke fear of another global economic shock, The Wall Street Journal reported. Vice Finance Minister Shin Je-yoon said at a briefing Monday that the bond market and interbank lending market are two key areas for additional policy consideration.

China's Jade Cargo International Company Ltd. said Saturday that it had temporarily grounded its fleet of six Boeing 747 freighter planes because of weak demand, Dow Jones Daily Bankruptcy Review reported. The joint venture between a unit of carrier Air China Ltd. and Deutsche Lufthansa AG is the latest victim of the slowdown in air cargo traffic from China as customers pare orders because of the wider uncertainty over the global economy.

Canadian silicon producer Timminco Ltd filed for protection from creditors, after it failed to secure funding and a slump in the market hit the restart of the company's commercial solar-grade silicon production, Reuters reported. The Ontario Superior Court of Justice (Commercial Division) gave an order under the Companies' Creditors Arrangement Act, granting the company protection till Feb. 2, Timminco said in a statement. Becancour Silicon Inc, a unit of Timminco also filed for protection.

The “Buffett tax” will affect very few this year as just 0.17 percent of taxpayers reported in 2010 that they made enough to be affected by the newly-introduced highest rate, the tax agency said Tuesday, The Korea Times reported. The National Assembly passed a revised bill last week that allows a collected 38-percent tax rate from those who earn 300 million won ($270,000) or more annually. It has been dubbed the Buffett tax after Berkshire Hathaway Chairman Warren Buffett, who suggested the U.S. government raise the tax rate of rich people like him.

European leaders return to work this week seeking to buy time for the Spanish and Italian governments to wrest control over their debt and rescue the single currency from fragmentation in its 10th anniversary year, Bloomberg reported. Some 157 billion euros ($203 billion) in debt will mature in the 17-member euro area in the first three months of 2012, according to UBS AG. By the end of that period, leaders have pledged to draft a stricter rulebook for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin Jan.

The Spanish government said Monday it will introduce more austerity measures this week on top of a swath of spending cuts and tax increases approved last week, as it scrambles to contain a budget deficit that may have surpassed 8% in 2011, The Wall Street Journal reported. The new measures are set to be approved at a Cabinet meeting Thursday, Budget Minister Cristobal Montoro said Monday during an official event in Madrid. He didn't specify what measures the government plans to introduce.

One of the biggest public-housing projects in history will help determine whether China can remake its real-estate sector fast enough to prevent its economy from flaming out, The Wall Street Journal reported. China is in the midst of a crash program to build 36 million subsidized apartments by the end of 2015—enough units to house the entire population of Germany.

A savings bank undergoing a normalization plan was found to have extended loans to applicants using borrowed names, the financial watchdog said Monday, The Korea Times reported. As the grace period for six secondary lenders that survived the government’s mass suspension in September last year and have pushed for normalization ended last month, the financial authorities are expected to shortly come up with a clearing list. There are growing concerns that the fallout of last year’s savings bank scandal that hit domestic financial markets hard is likely to continue in the new year.