A Financial Post article, below, reports that tightening credit conditions will force some Canadian companies to defer expansion plans, particularly in the oil sands.  There has been an expectation that the oil sands will add some 2 mb/d of capacity by 2015.   It appears such growth will be scaled back.  If oil prices go lower and stay low for a while the combined effect of that with credit restrictions may well result in the deferral of a number of megaprojects around the world.  The impact of such deferrals would …

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Massachusetts has joined California in approaching the federal government for emergency funds to deal with cash flow problems.  In the case of MA, the state indicated a possible need for $7B in emergency loans.  Massachusetts faces a $233M shortfall in revenue for its first fiscal quarter due to a slower economy according to a brief New York Times story (p. 35) on Sunday.  But apparently the federal loan being contemplated is more related to the current credit crunch that is clogging up the banking system and in the case of …

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Some time long ago in a strange land that used to be called the United States of America - sometime before Bush 43, Cheney and Rove decided it didn’t matter if we were united or not as long as their team had the power - back in that hard-to-remember time before this Crewe came along - we had a “balanced budget” and were “generating surpluses” in the Federal budget. 

Al Gore thought we could do even better - he understood that the budget was not really balanced or generating a …

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The number of reports of electricity shortages in China, India, and other developing economies recently, some of which I have posted, seem to be increasing.  Part of the problem in China may be due to environmental sensitivity surrounding the Olympics.  But it may also reflect a real shortage of coal globally and also the fact that electricity is becoming  uneconomical to produce given price controls on electricity combined with rising coal prices.   The last sentence of the report below from The Times  on an “electricity crisis …

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  China’s Power Crisis Deepens as Coal Supply Dwindles (Update1) By Wang Ying July 29 (Bloomberg) — China, the world’s second-biggest energy consumer, is facing a deepening summer power crisis that may persist into the winter months, the nation’s dominant electricity distributor said. State Grid Corp. of China, which more than 1 billion people rely on for power, said electricity shortages have worsened because of inadequate coal supplies. Forty-six percent of the power stations connected to the distributor’s grid have coal stockpiles below the “caution line,” or …

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Below are posted some thoughts about  near to medium term economic conditions.     On the one hand, a top Citibank official forecasts declining home prices through 2009 in the U.S and England.  That is an important forecast, if it proves correct. Since declining real estate prices is the single most important driver  of risk to the solvency of financial institutions - banks and brokers - the prospect of another 18 months of lower real estate prices does not bode well for either the economy or stock prices in general.  It is hard to see stocks rising …

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