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Germany’s controversial suggestion of a European debt regulator with direct control over Greece’s spending turned out to be such a touchy subject that Chancellor Angela didn’t even mention the idea to the leaders at Monday’s European Union summit in Brussels.

In what was seen as a blow for Germany’s push for tighter European integration, national sovereignty appeared to have won the argument Monday.

Over the weekend, Germany had made a pre-summit call to give a powerful European debt watchdog direct control over Greece’s budget decisions. Despite often stinging criticism over how Greece runs it financial affairs, having a foreigner directly run a nation’s budget found no takers among the other leaders.

Even Merkel’s staunch ally, Nicolas Sarkozy, who is so close that they have morphed into the diplomatic couple “Merkozy”, could not back her.

“We cannot put a country under trusteeship and run it from abroad. It would not be reasonable, not democratic, and, in short, not efficient,” Sarkozy said after the summit.

Going into the summit, German Economics Minister Philipp Roesler had suggested the EU should take over the “leadership and supervision” of Greece’s budget.

Athens is teetering on the brink of a disorderly default and is seeking a key agreement to get a second euro130 billion ($170.43 billion) bailout. The country has been surviving since May 2010 on an initial euro110 billion package of rescue loans from other eurozone countries and the International Monetary Fund.

Greece must also cut its deficit further and push through painful public sector layoffs and sell off several state companies, and its partners are unhappy with the pace of action.

Still, a “Sparkommissar” in German_ or “savings Czar” _ was beyond the pale for Greece.

“Our partners do know that European integration is based on … the respect of their national identity and dignity,” Greek Finance Minister Evangelos Venizelos wrote in an angry retort.

“I am certain that the political leaderships of all European nations _ particularly bigger nations that bear increased responsibility for the course of Europe _ are aware of how friends and partners, who have joined their historical destinies, raise questions,” he wrote on Sunday.

Merkel got the message.

“I believe that we are having a discussion that we shouldn’t be having,” she said entering the summit.

Other European leaders have said that the Commission, the EU’s executive, needed the power to block bad spending decisions, but not only in Greece but also other highly indebted countries.

But taking over the leadership of budget went too far.

“It can only be put in place by the Greeks, in a democratic way,” said Sarkozy.

Ever since Greece threw the eurozone into financial turmoil in 2009 when it admitted previous governments had played down the amount of debt, it has been criticized as a profligate nation living off the wealthy northern nations.

It has since committed itself, under often intense pressure, to slowly move back toward a degree of fiscal discipline.

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Greece is still hopeful that it will be able to reach a deal with private bondholders to cut its massive debt _ despite tougher terms set by its European partners.

On the front line of Europe’s sovereign debt crisis, Athens is trying to get its private creditors _ banks and other investment firms _ to swap their Greek government bonds for new ones with half their face value, thereby slicing some euro100 billion ($130 billion) off its debt. The new bonds would also push the repayment deadlines 20 to 30 years into the future.

However, the main stumbling block over the past few weeks to securing this deal has been the interest rate these new bonds would carry. A high interest rate could buffer losses for investors, but would also require the eurozone and the International Monetary Fund to put up more than the euro130 billion in rescue loans they promised in late October.

In the early hours of Tuesday, politicians representing the 17 countries that use the euro as their currency drew a firm line on the Greek debt restructuring.

Jean-Claude Juncker, the Luxembourg prime minister who chaired a meeting of finance ministers on efforts to fight the crisis, said the average interest rate over the lifetime of the new Greek bonds must “clearly below 4 percent,” with an average rate of less than 3.5 percent for the period until 2020 _ far below the 4 percent demanded by the Institute of International Finance, which has been leading the negotiations for the private bondholders.

The caps on the interest rates underline that the eurozone and the IMF are unwilling to increase new rescue loans above the promised euro130 billion, even though Greece’s economic situation has deteriorated. After already granting Greece a euro110 billion bailout in May 2010, the eurozone and the IMF are threatening to withhold further funding for the country, which has repeatedly failed to hit budget and reform targets required in return for the financial aid.

The interest rate caps will also seriously test the willingness of private bondholders to agree to a debt deal voluntarily. IIF head Charles Dallara over the weekend had characterized the bondholders’ most recent offer as the best possible.

Greek finance minister Evangelos Venizelos was nevertheless confident that the two sides could find common ground.

“We have the green light from the Eurogroup to close the deal with the private sector in the next few days,” Venizelos said in Brussels.

The alternative to a voluntary deal would be to force losses on to investors _ a move that the eurozone has so far been unwilling to make. Officials fear that a forced default could trigger panic on financial markets and hurt bigger countries like Italy, Spain or even France.

Dutch Finance Minister Jan Kees de Jager has said that a voluntary deal was not a must and that getting Greece’s debt down to a sustainable level was a bigger priority.

“Greece and the banks have to do more in order to reach a sustainable debt level,” he told reporters Tuesday as he arrived for a second day of meetings with his European counterparts. “We have to await the discussions about that because a sustainable debt level is absolutely a precondition for the next (rescue) program.”

Europe’s finance ministers are meeting in Brussels to discuss other elements of their efforts to fight the wider crisis _ including a permanent bailout fund for nations in financial distress and a balanced budget treaty.

Greek stocks opened lower Tuesday, shedding a collective 3 percent one day after optimism on the debt writedown deal sparked a 5 percent rally.

Meanwhile, updated budget execution figures released by the Greek Finance Ministry showed that despite massive spending cuts, the country’s fiscal deficit for 2011 was actually higher than in 2010.

Last year’s fiscal deficit hit euro21.72 billion ($28.27 billion) _ euro270 million ($350 million) more than in 2010.

Revenues were euro910 million ($1.18 billion) below target, but the ministry said this was offset by higher-than-anticipated spending cuts of euro896 million ($1.16 billion).

These figures are on a cash basis, and exclude some categories of spending taken into account in calculating the final budget deficit for 2011 _ which Greece has pledged to cut to about euro20 billion ($26 billion).

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Nicolas Paphitis in Athens, Greece, contributed to this story.

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Berkshire Hathaway Inc.’s energy business agreed to buy an 81-megawatt wind power project from Invenergy Wind LLC to expand production in Illinois.

The Bishop Hill II project, which is under construction, will use 50 General Electric Co. 1.62-megawatt turbines, according to a statement Friday from Berkshire’s MidAmerican Energy Holdings Co. in Omaha, Neb.

Berkshire, led by Warren Buffett, has been expanding renewable production at the energy unit, which also produces power with coal and natural gas. Mid-American has invested about $6 billion in wind generation and built or acquired more than 3,300 megawatts of the renewable energy source in states including Iowa, Wyoming, Washington and Oregon since 2004. Last month, the unit agreed to buy the $2 billion Topaz solar project in California from First Solar Inc payday loans.

Wind “meets current and future energy needs in an environmentally efficient and cost-effective manner,” said MidAmerican Chairman and Chief Executive Greg Abel.

The Bishop Hill II wind project is near the town of Galva, Ill., about 40 miles northwest of Peoria. The project is expected to be in commercial operation in the fourth quarter. A unit of Ameren Corp. in Illinois has agreed to buy electricity from the project under a 20-year power-purchase agreement. Terms of the Invenergy deal weren’t disclosed.

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Federal Reserve Bank of Chicago President Charles Evans said the drop in the unemployment rate to 8.5 percent may be partially reversed in coming months.

Workers at Top Form International Ltd.

J.C. Penney Co. named board member Thomas J. Engibous, former head of Texas Instruments, as the department store chain’s new chairman. He succeeds Myron E. Ullman III, former chief executive and chairman, who is finishing up his reign at Penney’s.

The announcement adds the finishing touches to a major management transformation at the mid-price retailer.

Ullman, who became Penney’s CEO in 2004, gave up that title Nov. 1 to Ron Johnson, a former executive at Apple Inc. who took over merchandising and marketing responsibilities and then planned to assume the rest of the responsibilities Feb. 1. During the three-month transition period, Ullman served as executive chairman.

The company said that Engibous will become chairman Jan. 28, which marks the end of Penney’s fiscal year.

Under Ullman, J.C. Penney added popular brands like European clothing line MNG by Mango and Sephora cosmetics. But the department store chain is still struggling to be more inviting. The department store chain posted disappointing holiday sales as it has faced stiff competition from Macy’s Inc. and other clothing sellers.

J.C. Penney reported that revenue at stores open at least a year rose 0.3 percent in December, missing the company’s expectations. This figure is a key indicator of a retailer’s health because it excludes results from stores recently opened or closed. The company also said on Thursday that it expects to lose money in the fourth quarter personal loans for people with bad credit.

Engibous said in a statement on Tuesday that he will help J.C. Penney as it looks to lure more shoppers to its stores.

Engibous is a retired chairman and former CEO of Texas Instruments Inc. He has been a J.C. Penney board member since 1999 and has served as lead independent director and presiding director since 2008.

Johnson said in prepared remarks that Engibous has been invaluable to him in his early days leading the retailer and expects him to assist in the company’s quest to build itself into “America’s Favorite Store.”

The company took one step toward revitalizing itself last month when it announced that it is buying a 16.6 percent stake in Martha Stewart Living Omnimedia Inc. for $38.5 million. Starting in February 2013, mini-Martha Stewart shops will appear inside most of J.C. Penney stores, and the companies will operate a joint website. Later this month, Johnson is expected to unveil plans on a new pricing strategy and other broad-sweeping intitiatives.

J.C. Penney runs more than 1,100 stores in the U.S. and Puerto Rico.

Shares slipped 8 cents to $34.49 in morning trading.

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U.S. employment likely grew solidly last month, but the jobless rate probably rose from a 2-1/2 year low as improving conditions lured some Americans who had given up looking for work back into the labor market.

The government’s closely watched employment report due on Friday should cement views that economic growth accelerated in the fourth quarter after a tepid performance in the first nine months of 2011.

However, the pace of job creation remains too slow to signal a robust recovery is finally under way. Nonfarm payrolls rose 150,000 last month, according to a Reuters survey, after rising 120,000 in November.

Unusually mild weather during the month may have given employment a boost.

While the unemployment rate is expected to edge up to 8.7 percent from 8.6 percent, the tone of the report will likely be strengthened by upward revisions to the payrolls count for October and November, in keeping with a recent trend.

“Businesses are beginning to feel a little bit better about the future and are hiring, but we cannot get too excited because 150,000 is the minimum we need to keep the job market stable,”

said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.

The economy would need even faster job growth over a sustained period to make a noticeable dent in the pool of 24.4 million Americans who remain either out of work or underemployed 2-1/2 years after the end of the 2007-09 recession.

Job growth has averaged 131,000 over the past 11 months and even if payrolls rise as expected in December, employment will still be 6.1 million below its December 2007 level.

With the labor market still far from healthy, the debt crisis in Europe unresolved and tensions over Iran threatening to drive up oil prices, the U.S. economy faces stiff headwinds.

Economists predict the recovery will lose a step early this year after expanding in the fourth quarter at what is expected to be the fastest pace in 1-1/2 years.

This should keep alive the possibility of the Federal Reserve embarking on a third round of asset purchases, or quantitative easing, to spur stronger growth.

“We could see QE3 by the middle of the year,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

The employment report will offer little comfort to the Obama administration and could provide Republicans with more ammunition to attack the government’s handling of the economy.

President Barack Obama’s chances of a second term in office could depend on the health of the labor market.

LABOR MARKET TONE IMPROVING

Although the pace of job creation remains mediocre, there is no denying that the market is healing.

Small business hiring is improving and layoffs have subsided, with first-time applications for state unemployment benefits hovering near 3-1/2 year lows.

Over the past several months, the government has consistently revised up earlier payroll counts based on its survey of employers high risk personal loans. In addition, the household survey, from which the unemployment rate is derived, has shown an even more vigorous pace of hiring for each of the last four months.

Economists say the Bureau of Labor Statistics may not be picking up jobs created by small companies and new businesses.

“The payrolls survey has a hard time picking up smaller employers and births of new start-ups, and that’s where we expect to see a lot of job creation,” said Stephen Bronars, senior economist at Welch Consulting in Washington.

“It’s always going to be harder for the BLS to pick up those because they are measuring employment at companies that are included in their survey and those tend to be the bigger, well established companies.”

In Friday’s report, the government will revise the household series going back five years. Analysts will watch this survey closely to see if the recent improvements will hold.

A broad measure of unemployment that includes people who want to work but have stopped looking and those working only part time but who want more work hit a 2-1/2-year low in November.

GOVERNMENT A DRAG

All the anticipated job gains in December will come from the private sector, where payrolls are seen rising 165,000. Government employment is expect to shrink 15,000, weighed down by budget cuts at state and local governments.

However, the worst of the belt tightening is over and some states have reporting increases in revenue.

In November, a measure of the share of industries that showed job gains during the month fell sharply and economists will be watching to see if it recovers.

Job gains in December are expected to come from construction, where unseasonably mild weather has boosted groundbreaking for new homes. Transportation and warehousing payrolls could also benefit from the mild temperatures.

Manufacturing could post a third consecutive month of job gains, but a moderation in retail employment is expected after recording the biggest increase in seven months in November as retailers geared up for a busy holiday shopping season.

Healthcare and social assistance hiring is expected to pick up after adding the smallest number of jobs in five months in November. Temporary hiring — seen as a harbinger of future hiring — is expected to show more gains.

Even though employment probably picked up last month, a modest gain in hourly earnings is likely, indicating that most of the jobs being created are low paying. The high unemployment rate also means wages cannot grow much.

This is a potentially troubling sign for consumer spending, which has been largely supported by a reduction in savings.

The average work week is seen steady at 34.3 hours.

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After four leaderless months, Yahoo named Scott Thompson as its new CEO on Wednesday — choosing an outsider to take over the helm despite shareholders’ calls to sell the company.

Thompson was previously the president of PayPal, an eBay (, Fortune 500) subsidiary. His appointment, which becomes official January 9, follows the ouster of former CEO Carol Bartz — who was unceremoniously fired by the company’s board via phone in September.

Shares of Yahoo (, Fortune 500) closed 3.1% lower Wednesday.

In a prepared statement, Thompson called Yahoo "an industry icon" with a "rich history." Although that’s true, Yahoo has struggled mightily in recent years. The company gave up on search two years ago, a market that it once led. It is also losing ground with its other cash cow, display advertising, to new entrants to the market such as Google (, Fortune 500) and Facebook.

On a conference call following the announcement, journalists and analysts hammered Thompson on those points. He said he needs time on the job to develop strong answers.

"It’s too early for me to have any informed opinion as to the display space, what’s going on there and what’s happening next," Thompson said on the call. "I have a lot to learn, and it’s still very early days … but down in that data we’re going to find ways to innovate and compete."

Roy Bostock, chairman of Yahoo’s board of directors, was also on the call and jumped in to answer many of the hardball questions.

"What we’re doing at Yahoo, you can call it a turnaround, but it’s really building on strong assets," Bostock said.

Will Yahoo sell itself? Despite Bostock’s insistence Yahoo can stand alone, the company’s weakness has attracted buyout interest from a long list of both private equity firms and tech titans. Reports in late October said Google was preparing a bid, in addition to Microsoft (, Fortune 500), which offered to buy Yahoo for more than $47 billion in 2008 and was turned down no checking account payday advance. Reports last month said Chinese Internet company Alibaba, of which Yahoo owns a stake, is preparing a takeover bid.

Yahoo co-founder Jerry Yang and other board members have privately told four major private equity firms that the board would not support a takeover offer for the entire company, Fortune reported on Wednesday.

Several groups of activist shareholders had pushed Yahoo’s board to sell the company, but bringing in an outside CEO makes that possibility more remote.

An analyst on the conference call asked Thompson whether he "see[s] Yahoo as public or private" in the future.

Thompson got out half a word before Bostock jumped in: "We are a public company, with roughly a $20 billion market cap. We don’t see that changing right now."

But earlier in the call, Bostock said Yahoo is "considering a wide range of business investments" and other options. He stressed several times during the call that "the primary focus will be on core business."

That leaves Yahoo room to shed more of its vast product portfolio. It began winnowing in late 2010, killing off struggling services like its Buzz community news site and aging AltaVista search engine. Yahoo also thinned its blogs and sold off bookmarking service Delicious.

Thompson said his aim is "to return this business to one of the great iconic brands. I have a core belief that what happens in the next five years, and the next ten, is almost impossible to imagine."

He closed the call by saying, "I’m genuinely excited to be here. I would not be here if I didn’t think the future of this brand could be spectacular."

Yahoo chief financial officer Tim Morse had been serving as interim CEO, and he will return to his former position once Thompson takes the helm. Morse will also join the company’s board. 

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