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Wayne,

As you would have realised, Oil has closed above $50 for the first time. So things are looking grim.

I've speculated over the effect of high oil prices in other threads and my oppinion remains the same. Oil will have a devastating effect on any economy if it remains above $50. And it just so happens to look like it's going to move higher. On the long run oil will remain expensive. It may be pushed lower every now and then but it will recover. The main reasons are China and the US. They just need too bloody much of that stuff over the next few years to satisfy their economy and (for China) their ever growing hunger for energy.

Now the US economy is at the brink of failure. It's like one of those huge monsters wobbling around tramping onto anything that moves without really knowing where to go. It will at some stage fall to the ground unable to stand up again for a long, long time. Why? Because without oil, nothing happens. And if nothing happens, then an economy already in trouble will come to a stand still quicker than you and I can say CRIKEY WHAT WAS THAT?

I think we have a few more months to get our money in before the storm will hit our shores. It takes a while until the big pictures becomes clear. So far the US has done a good job in hidding the truth behind strange statements form the FED about temporary slow downs and other funny things.

The question is how quick it will affect the Australian economy which at this stage is booming based on resource companies and our strength in this field.  If China gets hit (I somehow think they will go for a lot longer than the US) then things are looking VERY bad indeed.

So there you have my view of things to come. I do hope that I am very wrong with that. I really do.

Have a nice weekend

Stefan