Headlines

Italian Prime Minister Silvio Berlusconi yesterday strongly defended his government in the wake of the decision by ratings agency Standard and Poor’s to downgrade Italy, reducing its sovereign debt rating from A+/A-1+ to A/A-1, the Irish Times reported. In a report issued late on Monday night, S&P had questioned the “government’s ability to respond” to the current euro zone crisis.

Swedish labor union IF Metall Tuesday submitted bankruptcy petitions against car maker Saab Automobile AB to the Vanersborg district court, Dow Jones Daily Bankruptcy Review reported. The blue-collar union, representing workers at the troubled Swedish car maker, said in a statement the decision was "very painful" but that it must secure its members' wages and can't wait any longer.

Germany’s bad banks, backed by the state to prevent the collapse of Hypo Real Estate Holding AG and WestLB AG during the credit crisis, would be the hardest hit in the event of a Greek default, leaving taxpayers to shoulder the bill a second time, Bloomberg reported. Hypo’s FMS Wertmanagement, with 8.76 billion euros ($12 billion) in Greek sovereign investments and loans, and WestLB’s Erste Abwicklungsanstalt, with 1.21 billion euros, bear more than half of German banks’ Greek debt, according to data compiled from company reports and statements.

A restructured Colorado Group will emerge from receivership as the newly named Fusion Retail Brands, flush with a $70 million capital expenditure and marketing war chest to drive its success in the tough retail environment, The Sydney Morning Herald reported. The appearance of Fusion will help secure the future of flagship Australian brands that once made up the Colorado Group - Diana Ferrari, JAG, Mathers and Williams - as well as the company's 2200 staff working across 282 stores.

Elcoteq, the Finnish electronics manufacturer under insolvency proceedings, said on Tuesday it filed another subsidiary for bankruptcy, Reuters reported. The group that assembles cellphones and set-top boxes said Elcoteq Network S.A., which handled its material purchases and customer invoicing in Europe, was no longer able to continue its activities after lenders blocked its bank accounts. The parent company said insolvency proceedings continued in Luxembourg. Last month Elcoteq filed three subsidiaries for bankruptcy due to a lack of funding. Its chief executive resigned earlier in August.

Slovenia’s left-leaning government was ousted in a parliament confidence vote Tuesday, further complicating Europe’s debt crisis as the small eurozone nation becomes more politically unstable, The Washington Post reported. Prime Minister Borut Pahor’s government faced the motion after months of disagreements between ruling coalition partners and several Cabinet resignations. The opposition has accused the government of corruption and mishandling the economy. The vote in the 90-seat assembly was 51 against the government and 36 for, with other lawmakers abstaining or being absent.

Greece said it had "a productive and substantive discussion" with its official creditors on Monday in talks aimed at releasing a new slice of bailout aid, and a Greek finance ministry official said an agreement was close, The Wall Street Journal reported. U.S. stocks, which had initially declined on Greek-induced gloom, recovered some of their losses late in the trading day after the Greek statement.

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.