Jack Nicholson sang in 'As Good As It Gets', "always look at the bright side of your life..."

Both flight attendants(theres where the gloom should start) the first has bought an apartment in Redcliffe, Brisbane about 18 months ago. Repayments were initially $1600 per month, now she's paying $2220. She takes home $3200-$3600 a month at the moment, and as she is casual(!) she had noticed the hours falling off at the same time as repayments creep up. She told me she hasn't been grocery shopping for 6 weeks, and gets by on tinned food and the odd loaf of bread from the local shop, as well as eating as much food onboard the aircraft, supplied by the airline, as possible when at work. Unbeleivably, she tells me she's NOT IN TROUBLE YET, and when her tax return comes through, and she gets a bonus(she is relying on) she can stop living off her credit card, and then sort things out! How optimistic can she be?

The second flight attendant lives in Sydney, and when we were talking about the stock market, mentioned that he hasn't had one yet BUT if he gets a margin call, he'll have to sell his house. He said this without the slightest hint of doom or gloom. I asked if he caould tell me how much the margin loan was...answer $300,000!!!

As the Mogambo Guru might say "We're - or in this case - They are freakin doomed!"

Cheers, Luke

For any market, the correct price always is the actual price in any moment.

Money is a commodity. Folks swap money for other commodities -- stuff of the earth -- and capital -- Future Money. This swap reflects the call for one and the offer of the other.

Calculating this swap ratio yields a value. We call this value a price.

For the price of any commodity or capital to rise, more money (notes and coins) must offered and spent to buy it than less money offered.

This money must come from somewhere -- peeled away from other bets.

When a man believes the price of a thing will rise quicker than the prices of all other things and that man puts money up to support his belief, he makes a bet about the future state of the world.

Once made and distributed, Money in Circulation (notes, coins) never gets destroyed.

Thus, if the price for a trading good falls, fewer folks have bet on such a good. Those who sold their controlling interest believe better bets exist elsewhere.

Prices fall in tandem for commodities when new Commerical Credit seems worthy to bet upon. When bets on new Commerical Credit rise faster than bets on Commodities, economic expansion happens.

I need to sift the depegging through the greymatter (you might say dishwater). I keep asking myself about what the realpolitik affect on that USD will be.

We are talking about an attempt to deflate those de-pegged export prices aren't we? Why should the former pegged country merchandise sellers or commodity exporters keep pricing in USD as they are being hit with inflated labour costs and raw materials de-coupled to the currency they are buying in? It's not like the pegged countries printed those USD's is it? And how are they taken out of circulation, the more I think about it the more I think it is a hedge funds dream, is this some scheme dreamed up by Rubens mates as the new big thing? Can we revisit Mahatir's capital control regime to brush up?

Productive enterprise is still evident wherever you look – so the end is not neigh – even if you Comsec balance and super balances take a medium to long term hit. So what!

I agree with Dan’s view that the longer term outlooks for energy and resources are good but my punt would be that a significant correction is now very close at hand. The relationship between supply , demand and price is not linear – meaning that a hypothetical drop in demand can result in a higher or lower (by percentage) adjustment in price. And, if demand by Australia for petroleum imports can drop by 18% really quickly (as a consequence of the price rises) the same will happen everywhere else. As the cost of cars (and the cost of running them) goes up the immediate impact will be reduced demand for steel and iron ore (I expect an initial over correction here as well). There are of course deeds and lags to consider and we are now at the top of a steep pricing pyramid. Next year’s iron ore price won’t collapse but it could well be a 40% drop on this year’s price. The same goes for many other commodities.

In current circumstances I don’t know why any country would want to told onto a dollar peg or even a peg to a basket of currencies. Climbing off a peg is risky, difficult and in some cases slowed by a need to retain social cohesion. But climb off they will!