By Cees Bruggemans, Chief Economist FNB.

After a great fall (2008), success in arresting the fall and stabilizing the economy on a low level of capacity utilization (2009), growth prospects tend to be very promising as slack resources as well as new inputs will be available to be put to work. Demand needs to grow in order to put such available resources to work.

Potentially this will be so for years to come (2010-2020) as any new supply imbalances eventually ending the next growth expansion (balance of payments, inflation) could remain manageable for the time being.

This, in a nutshell, is the case for growth.

It then gets better, but it also gets worse. For the global environment looks even better than this simple base case, offering piggyback opportunities for small open economies like ourselves.

This very favourable global environment, however, may also prove to offer a too rich

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This in from the Wall Street Journal on the somewhat disturbing, political dimensions of Russia's Nord Stream pipeline.  Approved just last week by Finland and Sweden after ecological concerns were overcome, the project is now ready to get off the ground, or rather under the ground.  For the pipeline will traverse the Baltic Sea floor to Germany, rather than crossing overground through former Eastern bloc countries; a divisive move, Alexandro Peterson suggests:[ . . . ] The Nord Stream project is part of an exclusionary agreement between Moscow and Berlin--nicknamed in circumvented Warsaw the "Molotov-Ribbentrop Pact," after the 1939 Soviet-Nazi deal to carve up Poland. It would have been much cheaper to build an overland pipeline ...

It felt as if negotiations would go on for an eternity, with months of stalling: search this site for 'Opel bid' and the stories of stops and starts come thick and fast.  Now, just as it seemed that the deal was finally coming to a close, comes the spectacular announcement that GM will not in fact sell off its loss-making European unit Opel to the consortium of Canadian part-maker Magna and Russia's Sberbank, preferring to restructure it itself as the economic climate warms.  German Chancellor Angela Merkel, who had pledged €4.5bn in loans may well be fuming and apparently Prime Minister Putin has chimed in with his consternation over the abortive deal, which had promised ...

The longer the rally persists, the more dangerous it becomes.

The S&P 500 is up almost 60% since March. The Dow just had its best quarter since ’98.

Yesterday, the Dow slipped 29 points. Is the rally finally rolling over? Or is this a genuine bull market, just taking a pause?

If it is a real bull market it’s a funny-looking bull – one that is missing parts!

For example, corporate earnings are missing. P/E ratios are rising far above the corporate earnings that support them. This puts the market 35% overvalued on a cyclically-adjusted P/E basis, says Smithers & Co.

And if you look at it in terms of its “q” ratio – a comparison of capitalisation and replacement costs – the S&P is even more overvalued. As for emerging markets, “they’re off the charts,” says the Financial Times.

Another missing part is the consumer. This from David Rosenberg:

“ Consumer confidence not only

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Pundits greeted Angela Merkel’s convincing election win in Germany Sunday with a collective yawn. Commentators think the German economy is sluggish and over-dependent on exports, and believe that a change in the German government from a grand coalition to a center-right coalition will make little policy difference.

I think that’s wrong. It’s an erroneous viewpoint that’s symptomatic of the short memories of the chattering media. It’s also one that could cause investors to miss out on one of the best profit plays in the global marketplace today.

I’m talking about Germany – the real powerhouse of Europe.

The “New” Germany

From the 1950s to the 1980s, West Germany consistently delivered high growth rates and low inflation. West German engineering proved superior to any other on the planet. And West German living standards rose far above anywhere else in Europe.

Then came 1990.

East and West Germany were reunited and an

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World stocks hit a 12-day low on Monday, depressed by recent weak U.S. economic data and failing to find support from the G20 summit, while the yen attracted fresh flows to hit an eight-month high against the dollar.

Weaker-than-expected U.S. housing sales and durable goods orders on Friday drove U.S. stocks lower, and world and European stocks followed that trend on Monday.

Leaders of the Group of 20 rich and developing nations pledged on Friday to bring the global economy back into balance but their statement contained few surprises and investors are already looking ahead to U.S. employment data at the end of this week.

Global equities and other higher risk assets have risen sharply in the last six months on growing optimism about the economic outlook, but markets are starting to run out of impetus, analysts say.

“Investors are a little bit reluctant to add to their risk positions,” said Koen De Leus,

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Ria-Novosti reports that first deputy prime minister Igor Shuvalov believes the path towards a customs union with Belarus and Kazakhstan is clear.  Bank of America Corp. has increased Russia's economic growth forecast for 2010 to 3.9% from 2.4%.  Citigroup Inc. estimates that Russia's economy will grow faster than previously estimated, according to Bloomberg.  Arabtec Holding has started foundation-test work on the Gazprom tower.  Sberbank may sell its stake in Opel to VEB, if a sale to GAZ Group falls through, Reuters reports.  President Medvedev has told German Chancellor Angela Merkel that he is willing to provide state guarantees for Opel investments in Russia, says Reuters.  A possible windfall for Avtovaz: the company may be assembling Nissan cars by 2012.  The Telegraph reports on tough times for the Lada.  The Times reports that Yelena ...

In case you had not noticed, Germany has spent this Sunday electing a new government and judged by the incoming bulletins the current chancellor Angela Merkel will be getting another term, with another coalition mind, and thus the dubious honor of leading Germany out of its worst recession in a long time, here is the BBC's Gavin Hewitt; 

From the moment the first exit polls appeared, the celebrations began at the Christian Democrats' Headquarters in Berlin. Every good result was met with whoops and a clinking of beer glasses. They even managed to offer sausages with "CDU" branded on them! Angela Merkel's supporters had grown nervous in recent days that they might have to continue their awkward partnership with the Social Democrats.

Soon it sunk in that Germany would have a centre-right government. It was more than many at Mrs Merkel's party headquarters had dared to hope for. One woman

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A very interesting if not controversial article from Luke Harding makes the argument that we are seeing continuity in foreign policy toward Russia under both Gerhard Schröder and Angela Merkel.  In my experience, the change has been night and day in terms of getting high level politicians willing to talk about human rights issues (just look at Sabine Leutheusser-Schnarrenberger), though Harding does make a good point that this has not produced any concrete or measurable changes on the ground or any visible political costs of the relationship.  He has a point, but my response would be that we should wait and see.

During her first visit to Russia as chancellor, in January 2006, Merkel made a point of meeting human rights activists - an apparent break with the sleazy Schröder era. She also promised to

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Dollar’s rally is cut short…Major problems for loans still exist…Yen rallies on exporter repatriation…Kiwi gets whacked! And Now… Today’s Pfennig!

Good day… And a Happy Friday to one and all! It’s still raining here in St. Louis this morning, but I won’t that get me down, as it is a Friday! G-20 has gotten a bit ugly, folks… Seems everyone just can’t seem to get along! Imagine that! 20 different countries, and now they want to be able to watch another country’s finances and comment on them! Oh, I can see that working out real well! NOT!

So… Yesterday, we had the dollar gaining back the ground that it had lost the previous day, but at the end of the day, we’re looking very much like the currencies hadn’t moved from morning to morning… And overnight, didn’t bring about much movement… So… When you get to the currency round-up below, you’ll

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