The Baltic Dry Bubble

The Baltic Dry Index,a gauge of international shipping activity,has been surging of late.Experts believe that China is driving it.China is building a lot of infrastructure now,requiring a flow of commodities.The Baltic Dry does not reflect what's going on in the U.S. economy.It's a very volatile index.
The supply of ships will put a cap on the Baltic Dry,people familiar with the matter believe.Many ships are coming online to meet Asian demand.The surge in the index is an anomaly driven by congestion at ports and iron ore restocking for steel production.Next year will be more tempered.Even if there is a correction,most companies in the trade will still be profitable,these experts think.

Russia Needs To Modernize

Years of strong energy prices covered up Russia's serious problems,President Dmitry Medvedev noted recently.The time is running out for Russia to turn itself into a modern nation.They do not produce competitive goods.Mr.Medvedev called on Russia to re-focus away from energy and heavy industry towards information technology,telecom and space.Once the space shuttle program ends next year,the U.S. will be relying on Russia's Soyuz spacecraft to ferry American astronauts to the International Space Station.
It has been said that Mr.Medvedev has a vision for Russia,but only Prime Minister Vladimir Putin can implement it.Whatever the political reality,Russia faces military challenges in its North Caucusus region.In Ingushetia,Islamic militants have killed more than 200 this year,many of them with suicide bombs.Ongoing tensions in the region divert attention and money from the need for economic transition.

Germans Disappointed In GM

News that General Motors backed out of its deal with Magna International and Sberbank was greeted with bitter criticism in Germany.GM's sale of Opel/Vauxhall to the Canadian-Russian consortium had seemed to be a sure bet.In the end,the abandonment was a defeat for Chancellor Angela Merkel,who had pushed so hard for the protection of German workers.Magna had pledged to keep all four German Opel plants open,and GM had received a two billion dollar bridge loan from Germany.GM finally decided it had to maintain a presence in Europe-especially its access to the emerging Eastern Europe.One German worker observed that it was foreseeable that GM would keep Opel.He knew it.
Thousands of Opel workers staged protests at all of the Opel plants in Germany.They fear they will lose two of the four plants.The workers were carrying red and yellow union flags and beating drums.GM said they have nothing to fear.GM intends to adhere closely to the outlines of the Magna-Sberbank deal.Fritz Henderson,GM's CEO,is currently in Europe to mend fences.GM says it may use its liquidity to restructure Opel/Vauxhall.

Copenhagen Is Fast-Approaching

The European Union is gearing up for next month's conference on climate change in Copenhagen,at which a successor to the Kyoto Accords is to be agreed.In a summit last week,the EU found that by 2020,developing nations will need 128 billion dollars a year to fight climate change.The EU pledged to contribute 74 billion to a fund to assist these emerging market states.The amount each EU member gives will be determined by the abilities of the donors.
Norway was the first EU member to raise interest rates since the financial crisis began-a sign of economic strength.The U.K is holding its rates steady.Many,if not all,EU members are keen to keep stimulus measures in place.Substantial promises of aid to other countries may thus be viewed with some degree of scepticism at this time.