Year 2004. August. Oil prices hit another new high after Russian oil giant Yukos announced it will not be allowed to use frozen funds to pay for operations. The market grips its chair in tension and scrutinizes charts as oil prices reach - $44.

Year 2007. September. Crude oil prices hit US$80. And frankly the market doesn't care. In Singapore, the STI closed at 1.69 points lower yesterday. And according to the Straits Times today, economists and analysts don't think very much of this new figure nor future record highs.

US$100 per barrel . So freakin what?

The question ringing in my head now is - we're not too far off from 2004, so why the big difference in the reactions now? I think i've got an idea. Remember that our economy is in a boom. GDP for Q2 2007 saw a 13.6% quarter on quarter growth and the optimism is still growing on strong.

And that's where the little increases – no matter how many – don't count. GST increase, grumble grumble. Bus fares increase, grumble grumble. And that's it. Everybody's in too optimistic a mood to throw a wet blanket on the party. Inflation creeps out at us but we don't care.

But we should. The US is experiencing the pains of ignoring this crafty little thing call inflation. Alan Greenspan just admitted last week on a CBS News programme, 60s that While he was aware a lot of these practices were going on, he had no idea how significant sub prime mortgages were going to be until very late.

See what that late realisation did to the markets?

We're in trouble of making that same mistake and not realise it until we reach the brink of a recession. Could be too late by then.


Ashley Choo

Labels: Alan Greenspan, crude oil prices, grumble, GST hike, inflation