Headlines

Iceland is betting its decision two years ago to force bondholders to pay for the banking system’s collapse may help it rebound faster than Ireland, Bloomberg reported. Iceland’s taxpayers face a smaller debt burden than their Irish counterparts, where the government’s guarantee of the financial system in 2008 backfired this year when the banks came close to insolvency. Iceland’s budget deficit will be 6.3 percent of gross domestic product this year and will vanish by 2012, compared with the 32 percent shortfall in Ireland, the European Commission estimates.

Vitro SAB responded to creditors attempting to push 15 of its U.S. units into bankruptcy, saying the four investment funds are attempting to "hijack" a reorganization process in Mexico that is already underway, Dow Jones Daily Bankruptcy Review reported. The Mexican glass maker's statement, filed Monday with the U.S. Bankruptcy Court in Fort Worth, Texas, comes nearly two weeks after the funds, which list claims of $75.6 million against Vitro, filed an involuntary Chapter 11 petition against the company in that court.

Nortel Networks Corp, the fallen Canadian telecom giant, said it will sell nearly all assets of its Chinese joint venture to Ericsson's China unit for $50 million in cash, Reuters reported. The joint venture -- Guangdong Nortel Telecommunication Equipment -- is a research, development and manufacturing firm in which Nortel's units, Nortel Networks Ltd and Nortel China, own 62 percent. GDNT became a supplier to Ericsson after the Swedish mobile network equipment maker bought Nortel's CDMA and GSM businesses.

Parliament’s Budget Office (PBO) says Kenya’s large and rapidly expanding underground or grey economy is never captured in official data but now accounts for nearly half of the country’s Gross Domestic Product, Business Daily Africa reported. Kenya’s underground economy has expanded rapidly in the past five years to become a mammoth Sh825 billion industry that is denying the government at least Sh275 billion in uncollected revenues, the PBO says.

Australia’s economy slowed to a crawl in the September quarter, The Australian reported. The economy was caught in the transition from the government's economic stimulus package to the revitalised commodity boom. The economy expanded by just 0.2 per cent, half as fast as expected, with the breaking of the drought and higher export prices saving the national accounts from plunging into the red.

The National Asset Management Agency (Nama) has accused developers of being in “denial” about the crisis in construction and rejected criticisms that it had compounded problems in the banking and property markets by applying steep discounts to loans transferred to the agency, the Irish Times reported. The comments followed the release yesterday by the Construction Industry Federation (CIF) of a report – commissioned from Lombard Street Research – on Nama’s impact on the banking and property sectors one year on from its establishment.

Investors dismissed European leaders' latest attempt to restore market calm, raising doubts about whether governments can rebuild confidence in the region's common currency amid signs that the debt crisis is creeping deeper into the Continent, The Wall Street Journal reported. The euro fell to a 10-week low, and was below $1.30 in late New York trading. Bond markets across Europe's vulnerable fringe sank, as the "risk premium" investors demand for lending to Spain and Italy hit record highs.

A Moscow court Tuesday declared the bankruptcy of a leading commercial bank that is run by a man whom the Russian media once identified as being "the cashier to the Kremlin," Dow Jones Daily Bankruptcy Review reported on an Agence France-Presse story. The bankruptcy of International Industrial Bank, or Mezhprombank, controlled by Russian tycoon Sergei Pugachev, came less than two months after its operating license was suspended by the Russian Central Bank.

European Central Bank officials tried to force Ireland to seek a bailout earlier this month and European officials are now trying to do the same to Portugal, Irish Justice Minister Dermot Ahern said. “Clearly there were people from outside this country who were trying to bounce us in as a sovereign state, into making an application, throwing in the towel before we had even considered it as a government,” he told Irish state broadcaster RTE in an interview today.

A revised restructuring plan will see Anglo Irish Bank rebranded and changed into an asset recovery bank, chairman Alan Dukes confirmed today, the Irish Times reported. Mr Dukes said the original plan to split Anglo into a funding bank and recovery agency had been shelved. A plan to wind down the bank’s loan book over “a multi-year period” would be submitted to the European Commission by the end of January, he told RTÉ’s Morning Ireland . However, Mr Dukes said that it was difficult to predict the timing for a recovery in loans.