Questions are growing over whether Greece can survive financially until new elections on June 17. Jonathan Rugman reports for NBC News’ partner in Britain, Channel 4 News.

Spain and Italy will be the next victims of the European financial crisis if Greece crashes out of the euro currency zone, the head of the World Bank has warned.

Fears that Athens may be forced to issue registered warrants or return to its former currency, the drachma, have rattled global markets and alarmed world leaders, with Greece set to figure high on the agenda at the G8 summit in Camp David later this week.

A cabinet of professors and diplomats was sworn in Thursday, to steer the debt-ridden eurozone state into repeat elections on 17 June, the BBC reported.

Europe, US and the world brace for messy impact from Greece

The risk of the contagion spreading to bigger European economies that are vulnerable due to high debt or weak banks has sent stocks and commodities tumbling, and has driven Europe’s single currency toward its lowest levels this year.

“The core question will be not Greece, but Spain and Italy,” World Bank President Robert Zoellick said on Wednesday.

Reuters reported that a Greek exit from the eurozone would have effects reminiscent of the collapse of the Lehman Brothers investment bank collapsed in 2008, which spread panic on global financial markets, and said that it could expose other European nations to hundreds of billions of euros in losses.

Recession-hit Spain, which faces deep concerns over the health of its banks, is set to see its medium-term borrowing costs rise sharply at an auction on Thursday of 1.5-2.5 billion euros of bonds expiring in 2015 and 2016.

Greeks withdraw $894 million in a day: Is this beginning of a run on banks?

Meanwhile International Monetary Fund chief Christine Lagarde warned of “extremely expensive” consequences were Greece to leave the eurozone, a once taboo possibility that European leaders have now begun to discuss openly.

Echoing Zoellick’s comments, Lagarde told Dutch television that a Greek departure from the euro “would be extremely expensive and hard, and not just for Greece.”

Greeks have withdrawn hundreds of millions of euros from banks in recent days as fears grow that the country might be forced out of the eurozone, although there has been no sign of a run on individual Athens bank branches.

In March, Greece agreed to extensive budget cuts as part of the conditions of a $165 billion bailout package organized by the European Union and the IMF.

European shares edged lower at the start of trading on Thursday, having closed down during the last three sessions.

The BBC said Panagiotis Pikrammenos, the senior judge who has taken over as prime minister of Greece, views the cabinet’s sole task as leading the country into the poll in the hope of producing a more conclusive result.

On May 6, voters punished the two mainstream parties that had imposed austerity measures under the terms of international bailout deals.

Reuters contributed to this report.

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Vincent Thian / AP

A worker prepares to start business for the day at a traditional food stall in Beijing. Over the past two decades, incomes have gone up fourfold in the world’s most populous country.

Sometimes more money just buys more unhappiness. Take China, for example.

Everyone assumed that people would get happier as their wallets got fatter. But a new study shows that the opposite occurred, at least for those at the lower end of the income spectrum.

Despite record economic growth over the past two decades – resulting in more than fourfold increase in income and spending – Chinese people overall have become less satisfied with life, according to the study published in the Proceedings of the National Academy of Sciences.

“Incomes really did go up – even among the poorest segment,” says the study’s lead author, Richard A. Easterlin, university professor and professor of economics at the University of Southern California. “The staggering thing is that despite that, overall satisfaction failed to go up.”

Not only did satisfaction fail to go up, it fell like a rock in the early 1990s. Satisfaction slowly climbed back up after that but never to the point where it was at the beginning of China’s economic transformation.

Easterlin and his colleagues looked at two decades of surveys that included questions about life satisfaction. In 1990, those surveys showed that a large majority of the Chinese people, across all age, education and income levels, reported high levels of life satisfaction. A full 65 percent of those in the poorest income bracket reported high satisfaction as compared to 68 percent of the most wealthy.

By 2010, just 42 percent of Chinese in the lowest income bracket reported high satisfaction, compared with 71 percent of the most wealthy.

“Although a precise comparison over the full study period is not possible, there appears to be no increase and perhaps some overall decline in life satisfaction,” the study says.

While many people believe economic growth leads to rising happiness, an entire field of economics has shown that happiness and wealth are not always closely correlated.

Part of the explanation for the unhappiness in China may lie in big societal changes that came along with the country’s amazing economic boom.

“Here we have people who were basically secure about their jobs, their income and their retirement, and that all goes by the board,” Eaterlin said. “So even though incomes got better, overall feelings of anxiety became much more severe and outweighed the material improvements.”

Beyond this, health care was no longer a right. As the system became privatized, fewer could afford doctors’ bills. So along with lowered satisfaction, people were reporting poorer health.

Easterlin sees this as proof that the road to happiness requires more than just bigger paychecks – especially if everyone is getting a bump in pay.

China might make its people happier if the country repaired some of its damaged safety nets, he argues.

But even with that, there might still be plenty of dissatisfaction.

The problem may simply be that people are more concerned about money now and more focused on “keep up with the Jaos,” Easterlin says.

Breaking down the economic data out of China and discussing which emerging markets investors should be after, with Geoffrey Dennis, Citigroup and Andrew Kanaly, Kanaly Trust Company CEO.

Aris Messinis / AFP – Getty Images

Greek Archbishop Ieronimos blesses the new caretaker prime minister, Panagiotis Pikrammenos, right, in Athens Thursday. Greeks will return to the polls next month after an inconclusive vote sent jitters across the eurozone.

European officials are playing a dangerous game of chicken with Greece.

In an apparent signal to Greek voters, the head of the World Bank warned Thursday that if Athens were to depart from the common currency, Spain and Italy could well be the next dominoes to fall in Europe’s widening financial crisis.

After ousting the Athens government that agreed to deeper spending cuts in return for a financial lifeline, voters return to the polls in June after the winning parties failed to form a new government. Apparently hoping to convince Greek voters to return a pro-austerity government to power, European officials are now openly discussing the likely dire consequences if they don’t.

But the comments may have only served to heighten fears of a wider breakup of the eurozone should Greece exit the monetary union.    

Investors backed away further from Spain’s government debt Thursday, raising the country’s borrowing costs to levels that sparked the Greek debt crisis in the first place.

Bond buyers were also reacting to fresh economic data showing that Spain’s economy is beginning to shrink, which makes its existing debt load even harder to carry.

The growing crisis also has caused growing nervousness among U.S. investors. Since the inconclusive Greek vote May 6, the Dow Jones industrial average has fallen in seven out of eight sessions and was down again Thursday. U.S. banking giant JPMorgan Chase send another ripple of worries through the market May 10 when it said it had lost at least $2 billion in a failed attempt to hedge against European volatility.

The recession is also putting more pressure on Spain’s banks, which have been saddled with bad mortgages as the country faces a deepening housing bust. Last week, the government took over Bankia, which holds 10 percent of the banking system’s deposits, after it reportedly suffered an large outflow of deposits.

The news follows reports that depositors pulled another $900 million out of Greek banks on Wednesday, extending a capital flight that could bring down Greece’s banking system. The fear is that those worries spread among depositors in other countries like Spain where the banking system is already under pressure.

Until very recently, European officials were loath to even discuss the idea of Greece’s departure from the compact binding 17 nations with a common currency. For one thing, the treaty that created the euro has no provision for a member country to abandon the currency or for its expulsion by the rest of the monetary union.

But central bankers and officials of agencies like the World Bank and International Monetary Fund have begun to think – and discuss – the unthinkable. IMF chief Christine Lagarde warned this week that Greek’s departure from the euro would be “quite messy” and  ”extremely expensive.”

Analysts who are looking at the potential impact say the losses and economic pain would be widely felt.

Replacing the euro with a new, devalued currency would wipe out much of the remaining assets on Greek bank books. Europe’s central bankers have already pulled back some forms of funding for Greek banks that have been hit hardest by withdrawals. Hundreds of billions worth of additional borrowing by Greek households and businesses would be in legal limbo.

Any new currency – or a return to the pre-euro drachma – would be massively devalued, by some estimates as much as half the value of a euro. That would help Greece’s economy eventually get back on a growth path because it would make its products and services cheaper for buyers spending dollars and euros. A week’s vacation in Crete would cost half the price of a comparable trip to Sardinia.

But Greek households and businesses would bear the immediate pain. Imported goods and commodities like oil would suddenly cost twice as much. Households and businesses making good on outstanding loans written in euros would see repayment double in local currency terms.

European officials who engineered the costly plan to “save” Greece — led by France and Germany — would also feel the pain. Much or all of the more than $200 billion in loans already extended to the Greek government by the IMF, European Central Bank and Europe’s private banks would be at risk. That would mean explaining to French and German taxpayers what went wrong with the grand plan.

It would also raise the political costs of extending further bailouts to weaker, debt-burdened countries including Spain and Italy. As Greece demonstrates that a once-unthinkable exit from the euro is now possible, other countries may follow. If investors continued to shun Spanish and Italian government bonds and depositors flee their banks, the choice facing Europe grows more stark.

Worries about the fragmentation of Europe’s monetary union have already sapped business and consumer confidence and brought the region’s economy to a dead stop. Government austerity measures imposed on weaker economies are driving them deeper into recession.

As that recession spreads, the pain of Greece’s departure from the euro would be felt even more broadly, according to Michel Juvet, an economist at Bordier, a Swiss bank.

“At the same time we have China, which is slowing down very, very fast, we have the U.S. economy, which is losing momentum, and we have this global slowdown, “ he said. “All economies are so connected that when one country or one big zone is suffering, the others are suffering as well. This is globalization.”

Others see the crisis in starker terms.

“This is phase two of the global financial crisis,” said R. Seetharaman, CEO of Doha Bank in Qatar. “That’s the reality.”

What’s happening in the global markets and how are the Europeans handling the euro crisis? R. Seetharaman, Doha Bank CEO, provides perspective on Middle East banking mentality, summer gas prices, and global economic trends.

Sergio Perez / Reuters

A trader reacts on the floor at the Madrid Bourse. European shares sank to new 2012 lows in a broad-based sell-off as concern over contagion from Greece gripped investors.

As Greece teeters on the edge of financial collapse, European officials have a new task before them: preventing the financial turmoil from spreading across the continent, across the Atlantic and around the rest of the world.

The fear is that Greece’s financial turmoil could spread beyond its borders despite European efforts to create a “financial firewall” to contain it.

 “The spillover effects, the chain of consequences are very difficult to assess,” said International Monetary Fund President Christine Lagarde on Wednesday. “We can certainly assume that it would be quite messy.”

Lagarde, whose agency has been among those providing financial support for Greece, said the IMF has begun making “technical” preparations for Greece’s  possible departure from Europe’s common currency, the euro.

Greece’s exit from the eurozone seems more likely every day. A two-year standoff deepened this week between Greek voters, 1 in 5 of whom are unemployed, and European officials, led by German Chancellor Angel Merkel, who are insisting on continued “austerity” by the Greek government in exchange for a financial lifeline. 

After deep budget cuts sent the Greek economy into a painful recession, voters ousted the former government that agreed to measures that would inflict even more pain on Greece’s banks, businesses and households.

Merkel and Lagarde remain steadfast in their insistence that continued financial aid depends on whether Athens adheres to tight-fisted spending policies.

“Nobody is going to give the Greeks a penny unless they put a government in place which implements austerity,” said David Roche, president of Independent Strategy, a London-based investment research firm.

Depositors have already begun pulling their euros out of Greek banks as the odds rise that Athens may soon exit the common currency.

Without continued financial aid, the Greek government is expected to run out of cash in a few weeks. That would almost certainly bring another round of bond defaults, increasing pressure to abandon the euro.

Beyond defaults on debt issued by the government, Greece’s suspension of the euro as its official currency would likely invalidate much of the more than half trillion dollars’ worth of private borrowing by households, companies and other levels of government. That would drive its economy even deeper into recession.

Without a backstop, Greece’s banking system would also face a sharp contraction, if not collapse, as the value of its assets implode. Analysts estimate that the value of any new currency – the drachma, for example – introduced to replace the euro would force markdowns of as much as 50 percent or more.   

The immediate impact on U.S. banks would likely be limited. After sharply reducing exposure to Greece for the past two years, American banks hold roughly $6 billion worth of Greek government debt.  

But the effect on the European banking system could be severe if investors and depositors grow increasingly fearful that other debt-heavy countries, such as Spain, Italy, Ireland or Portugal, might also eventually leave the euro zone. 

CNBC’s Silvia Wadhwa reports on German Chancellor, Angela Merkel’s comments on keeping Greece in the euro zone.

“Capital flight from those countries would have to be ring-fenced by unlimited amounts of government bond buying by the European Central Bank and also with guarantees for depositors so they wouldn’t take their money out of places like Portugal, Ireland, Italy and Spain,” said Roche. “Are we ready? No.”

The financial markets are already anticipating further deterioration; investors are bailing out of stocks across Europe, with bank stocks especially hard hit. They’re also dumping Spanish and Italian government bonds, driving yields to the kind of unsustainable levels that initially sparked the Greek crisis two years ago.

Since then, European officials have been cobbling together a “financial firewall” – a series of measures to backstop failing banks and prevent another full-blown crisis. The latest move late last year by European central bankers to lend banks roughly $1 trillion in cash has apparently provided only a temporary reprieve. Banks hoarding cash to weather the coming storm have tightened credit, further slowing local economies.

Other agencies, including the IMF and a recently created “stability” fund, are also available to help put out any financial fires. But analysts – and some American officials – have long expressed concerns that Europe’s bailout fund isn’t nearly big enough to handle a banking crisis that spreads beyond Greece.

“Greece is peanuts as far as the United States is concerned,” said Uri Dadush, former economic policy chief at the World Bank. “But if Greece leads to the contagion of Spain and Italy, the euro could implode. This is big business for the U.S. We’re talking trillions of dollars in direct and indirect exposure to the European banking sector.”

Ongoing demands for austerity in exchange for financial aid have brought Europe’s economy to a dead stop. The latest data show gross domestic product flatlined in the first quarter, largely because the ongoing turmoil has sapped business and consumer confidence and spending.

That could spell more trouble for America’s businesses and consumers.

With U.S. government spending contracting and consumer spending weakened by slow wage growth, manufacturing exports have provided one of the few bright spots for the U.S. economy. In the last five months, U.S. manufacturers have added 167,000 jobs to their payrolls.

Until recently, Europe was a ready market for goods made by those workers. More than half of U.S. foreign investment and a fifth of all American exports end up in the European Union.

But unemployment in Europe, currently at 10.9 percent, is rising. In Spain and Greece, half of the work force under 25 is out of a job.

American companies are already feeling the impact; U.S. car makers Ford and General Motors recently reported that first quarter profits were hurt by a slowdown in car sales to European buyers.

A continued slide in the value of the euro would make matters worse for U.S. companies by making their products more expensive in those markets.

“Right now, the best case scenario in Europe is a recession,” said Chad Moutray, economist at the Washington-based National Association of Manufacturers. “Any of the worst case scenarios threaten our growth strategy.”

Attempts to form a government in Greece collapsed on Tuesday, worsening fears that leftists opposed to the terms of a European Union bailout could sweep to victory and push the eurozone crisis into a dangerous new phase. 

In Athens, a spokesman for President Karolos Papoulias said his efforts to broker a compromise — in which a cabinet of technocrats would try to steer the country away from bankruptcy — had failed, nine days after an inconclusive general election.

A caretaker government will now be formed pending a new vote probably in mid-June. 

“For God’s sake, let’s move towards something better and not something worse,” Socialist leader Evangelos Venizelos told reporters after party leaders met the head of state.

Greece’s financial woes have wiped out billions of shares in Europe and highlighted the precarious future of the Eurozone. ITV’s Martin Geissler reports.

The turmoil in Athens rattled markets and sent shock waves around other troubled members of the eurozone, the 17 nations that use the euro currency and the world’s largest trading block. 

‘Bad news’ for U.S.?
And with hostility rising in Greece to austerity policies imposed by the European Union and International Monetary Fund, speculation that Greece will exit the eurozone won’t go away. 

“It is quite uncharted territory — say your prayers,” politics professor and associate fellow at British think tank Chatham House Richard Whitman told msnbc.com. ”If the EU is sickly, it’s bad news for all its trading partners (such as China and the United States). You can’t sort out the world economy without Europe on the mend.”  

Greece abandons quest to form new government

The amount of political energy and effort being spent on sorting out the Greek issue means that policymakers and politicians were simply “muddling through” and not focusing enough attention on the entire trading block’s ailing economy, he said.  

Mark Yockey, Artisan International Fund, shares perspective on where to invest in Europe and what would happen if Greece were to exit the euro zone.

Then there is the question of contagion, experts warn.

“Is it Portugal, Spain or Italy next? And then the euro itself starts to unravel,” Whitman said. 

At least 100,000 march in Spain over austerity

Greece’s left-wing SYRIZA party, which surged to second place in last week’s election on an anti-austerity platform, rejected all compromise with pro-bailout parties, emboldened by opinion polls showing it could top the poll in a second vote. 

The tremors from Greece, compounding worries about Spain’s debt-laden banking system, ended any honeymoon for new French President Francois Hollande, thrusting the growing risks to the EU to the top of the agenda for his first meeting with German Chancellor Angela Merkel hours after he took office. 

Exit Sarkozy, enter Hollande: Socialist sworn in as French president

In his inaugural address, the Socialist president called for a European pact to revive growth and temper German-driven austerity measures, seeking to change the direction of eurozone economic policy.

“I will propose to our partners a pact that will tie the necessary reduction of our public debt to the indispensable stimulation of our economies,” Hollande declared, saying Europe needed “projects, solidarity and growth.” 

Msnbc.com’s F. Brinley Bruton and Reuters contributed to this report.

Anthony Devlin / AP

Former News of the World Editor Rebekah Brooks, left, arrives at Lewisham police station in London on Tuesday.

Updated at 11:05 a.m. ET: LONDON - Rebekah Brooks, a close confidante of Rupert Murdoch, was charged on Tuesday with interfering with a police investigation into a phone hacking scandal that has rocked the tycoon’s empire and sent shockwaves through the British political establishment.

“I have concluded … there is sufficient evidence for there to be a realistic prospect of conviction,” Alison Levitt, the principal legal adviser to Britain’s Director of Public Prosecutions, said in a statement.  

Brooks, 43, who quit as News International chief executive in July, faces three separate allegations of conspiracy to pervert the course of justice.  If convicted she could face a prison sentence.

Also charged were Brooks’ race horse trainer husband, her secretary and other staff from News International, including her driver and security officials from the British newspaper arm of Murdoch’s News Corp media empire.

The news is a personal blow for Murdoch and also embarrassing for British Prime Minister David Cameron, who was close friends with Brooks, 43, and her husband, Charlie Brooks. 

Former News International CEO Rebekah Brooks reveals details of sympathy messages received from British Prime Minister David Cameron after she was forced to resign over the phone hacking scandal. ITV’s Lucy Manning reports.

The action against the woman who was one of his most trusted lieutenants comes as Murdoch faces increasing pressure in Britain. He has been forced to close one newspaper, withdraw a major takeover bid for a lucrative TV group and been described in a parliamentary committee report as someone who is not fit to run a major international company. 

She and others are accused of conspiring to “permanently … remove seven boxes of material from the archive of News International” and to “conceal documents, computers and other electronic equipment from officers of the Metropolitan Police Service,” according to the CPS. 

All eyes on court as Murdoch confidante Rebekah Brooks lays bare ties to UK elite

The criminal charges are the first to be filed since police launched a new inquiry into phone hacking in Jan. 2011. Previously, two people were jailed in 2007 for hacking the phones of members of the royal household.

The offenses were all alleged to have taken place in the frantic days last July when Murdoch closed down the 168-year-old News of The World amid widespread public disgust over revelations that it had hacked the cell phone of a missing schoolgirl who was later found dead.

For a detailed look at the charges against Brooks and the hacking scandal, see coverage by NBC News’ British partner ITV News

Murdoch announced his decision on July 7, 2011. Levitt said the alleged offenses took place between July 6 and July 19.

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Sang Tan / AP

Rebekah Brooks and her husband Charlie Brooks leave the High Court in London after giving evidence to an inquiry into Britain’s media ethics on Friday.

LONDON - Rebekah Brooks, the flame-haired former chief executive of Rupert Murdoch’s British newspaper arm, will be charged with perverting the course of justice over a phone-hacking scandal at one of the media mogul’s papers, British prosecutors said on Tuesday. 

If convicted, she could face a prison sentence.  

“I have concluded … there is sufficient evidence for there to be a realistic prospect of conviction,” said Alison Levitt, Principal Legal Advisor to the Director of Public Prosecutions in a statement.  

The news is a personal blow for Murdoch and also embarrassing for British Prime Minister David Cameron, who was close friends with Brooks and her husband, Charlie Brooks. 

Former News International CEO Rebekah Brooks reveals details of sympathy messages received from British Prime Minister David Cameron after she was forced to resign over the phone hacking scandal. ITV’s Lucy Manning reports.

Also to be charged were Brooks’ race horse trainer husband, her secretary and other staff from News International, including her driver and security officials from the British newspaper arm of Murdoch’s News Corp media empire. All were set to answer bail later on Tuesday, at which time they would be officially charged, police said. 

Brooks and others were accused of conspiring to “permanently to remove seven boxes of material from the archive of News International” and to “conceal documents, computers and other electronic equipment from officers of the Metropolitan Police Service,” according to the CPS. 

All eyes on court as Murdoch confidante Rebekah Brooks lays bare ties to UK elite

Police re-launched an investigation in January last year into claims journalists at Murdoch’s News of the World tabloid routinely hacked into the phones of celebrities, politicians and victims of crime to generate front page stories. 

MSNBC’s Martin Bashir talks about the explosive testimony by Rebekah Brooks and how it will affect the inquiry into the British phone hacking scandal.

They are also investigating whether staff hacked into computers and made illegal payments to public officials including the police to get ahead in their reporting. 

More than 160 staff are now working on one of the biggest investigations ever carried out by London police and almost 50 people have been arrested. 

Reuters contributed to this report.

More world news from msnbc.com and NBC News:

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• Mexico’s drug war: No sign of ‘light at the end of the tunnel’
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ATHENS — Greek politicians abandoned their quest to form a government on Saturday, leaving the president with one final opportunity to avert new elections that could drive the debt-choked country out of the European single currency.

Greece’s political landscape is in disarray after voters humiliated the only parties backing a rescue plan tied to spending cuts, leaving no bloc with sufficient seats to form a government to secure the next tranche of financial aid.

Without aid from the EU and IMF, the country risks bankruptcy in weeks and – as European leaders now openly acknowledge – potential ejection from the eurozone.

On Saturday morning, Socialist leader Evangelos Venizelos met President Karolos Papoulias in the presidential mansion to formally confirm he had been unable to persuade other parties to form a broad coalition that would keep the bailout agreement but try to improve its terms.

Greek turmoil deepens Europe’s debt crisis

The holdout was Alexis Tsipras, a charismatic 37-year-old radical leftist, who has emerged as the standard bearer for opponents of the bailout’s harsh austerity measures and has the most to gain from a new election.

Last-ditch effort
In a last-ditch effort to broker a deal for a coalition government, President Papoulias called the leaders of Greece’s political parties to meetings on Sunday.

Papoulias’ office announced Saturday that the president would meet initially with the heads of the three parties that won the most votes in Sunday’s inconclusive elections — the conservative New Democracy, radical left-wing Syriza and socialist PASOK. He will then meet individually with the leaders of the other four parties that won enough votes for parliamentary seats.

If Papoulias fails to broker a coalition agreement, Greece will have to hold new elections next month.

In televised remarks during their meeting Saturday, Venizelos urged the president to lean on Tsipras to join an “ecumenical government”.

“I put this forth to Mr Tsipras. I haven’t received a positive response,” Venizelos said. “I believe that is where your efforts should be focused during the consultations.”

The president replied: “There are signs of optimism in what you are telling me and I hope I can contribute to the formation of a government – because things are rather difficult.”

Papoulias will meet the leaders of the three parties on Sunday at 0900 GMT, his office said in a statement.

The lurch toward a new election has caused havoc in financial markets, both in Greece and across Europe, where the prospect of Athens leaving the euro is viewed as a risk for bank balance sheets and the credit ratings of other vulnerable countries, although the EU is better prepared than it was a few months ago.

On Friday, as politicians acknowledged their failure to agree a coalition, the euro sank to its lowest point since January near $1.29.

Opinion polls conducted in the week since the election show Tsipras’s SYRIZA coalition surging into first place – a prize that would give it an automatic bonus of 50 extra seats in the 300 seat house at the expense of the conservatives.

Tsipras says the bailout deal must be torn up, though like most Greeks he says he wants to keep the euro, a position seen in Brussels as untenable without the bailout.

The Associated Press and Reuters contributed to this report.

Facebook’s co-founder, Eduardo Saverin, is giving up his US citizenship to become a resident of Singapore, where residents pay no capital gain taxes. CNBC’s Brian Sullivan and Amanda Drury report.

Eduardo Saverin, one of four co-founders of Facebook, has renounced his U.S. citizenship.

The move may reduce his tax bill following the initial public offering that values the social-network powerhouse at as much as $96 billion, according to Bloomberg.

Facebook expects to raise as much as $11.8 billion through the IPO. Saverin’s stake in the company is about 2 percent, according to The Wall Street Journal. His holdings are not listed in Facebook’s regulatory filings.

Saverin, a Brazilian-born resident of Singapore, helped Mark Zuckerberg start Facebook while at Harvard University. Saverin was pushed out early on, with his stake in the company diluted from 34 percent to less than 10 percent, according to The Wall Street Journal. After selling some shares and more dilution, that stake has thinned more. Even so, he stands to profit handsomely from the IPO.

“The Social Network,” a 2010 film about Facebook, portrayed Saverin as a scorned friend of Zuckerberg’s and an unsophisticated entrepreneur.

Saverin and Facebook have traded lawsuits over his stake in Facebook, which were eventually settled with Saverin getting a 5 percent stake and a co-founder bio on the Facebook’s site, according to Forbes.

“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” said Tom Goodman, a spokesman for Saverin, in an emailed statement to Bloomberg. Saverin’s name  is on a list of those who chose to renounce citizenship as of April 30, published by the Internal Revenue Service. Saverin renounced his U.S. citizenship “around September” of last year, according to his spokesman.

Singapore does not have a capital gains tax.

Renouncing one’s U.S. citizenship well in advance of an IPO is “a very smart idea,” from a tax standpoint, Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school, told Bloomberg. “Once it’s public you can’t fool around with the value.”

Saverin won’t escape all U.S. taxes. Americans who give up their citizenship owe what is effectively an exit tax on the capital gains from their stock holdings, even if they don’t sell the shares, Avi-Yonah said. For tax purposes, the IRS treats the stock as if it has been sold.

“It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice,” Richard Weisman, an attorney at Baker McKenzie in Hong Kong, told Bloomberg. “The tax cost, complexity and the traps for the unwary are among the considerations.”

Saverin moved to the U.S. in 1992, and became a citizen in 1998, his spokesman told Bloomberg.

Forbes estimated Saverin’s net worth at $2 billion, ranking the 30-year-old No. 634 in its list of billionaires.

Facebook plans to price its IPO on May 17, offering 337.4 million shares at $28 to $35 each. The shares will be listed on the Nasdaq Stock Market under the symbol FB.

Photo courtesy HM

The ad shows the olive-skinned Isabeli Fontana deeply bronzed.

HM made a splash with its new bathing suits, but not in the way the Swedish clothing retailer intended. The company issued an apology yesterday after coming under fire from the Swedish Cancer Society for a series of ads featuring Brazilian model Isabeli Fontana in bright swimsuits and a very, very dark tan. 

“Every year, more people die in Sweden of (skin cancer) than in traffic accidents, and the main cause is too much sunning,” the Society wrote in an opinion article in the Thursday edition of Swedish newspaper Dagens Nyheter, according to the AFP.

The group blasted HM for what it characterized as creating a “deadly” standard of beauty that unduly influenced young people to tan. It said images like the swimsuit ad campaign “contribute to more people dying from skin cancer.”

Live Poll

Should the company have apologized for the ad campaign?

The retailer responded with an apology via email to the media outlet. “We are sorry if we have upset anyone with our latest swimwear campaign. It was not our intention to show off a specific ideal or to encourage dangerous behaviour.” While HM did defend itself by saying the goal was to highlight the bathing suits — as opposed to the color of the model’s skin — it also said, ”We have taken note of the views and will continue to discuss this internally ahead of future campaigns.”

The ads show the olive-skinned Fontana deeply bronzed, an effect that could have been achieved with makeup or digital manipulation instead of via hours in the sun. The Cancer Society did acknowledge that it was possible that Fontana’s complexion could have been faked with computer enhancements, but said the image was harmful either way.

 ”[T]he effect is the same: HM tells us we should be very tan on the beach,” it said.