Many economists may disagree with me but the rising $A is hurting our economy and your lifestyle.

Not so much for the short term but potentially for the long term.

But how you may ask? Surely Australia is the envy of the rest of the world economically.

Scratch under the surface and you will see that many industries hurting.

Who you say?

Try the farmers and our mighty mining industry for a start. Both of these major contributors to our economic strength are in fact suffering from lowering demand due to them being more expensive as our dollar continues to climb. As a result their overseas trading partners have already started to look for cheaper sources of supply. Ultimately reducing their record incomes and impacting our countries prosperity.

One area where it already has hit is the overseas students - a massive export industry for Australia. With the strengthening Aussie dollar and rising living costs here, they are now turning their sites on the US and Europe as they become the low cost suppliers.

Another area is local manufacturers. Here a stronger Aussie dollar makes imports cheaper. As a result the already weakened Australian manufacturing industry suffers even more. Potentially with disastrous effects on employment as they shut down due to being priced out of the market by cheaper overseas competitors.

If as many economists are predicting the Aussie dollar will peak sometime late 2010 at 98c to the US$1. This means that we have almost another year of this economic erosion of our main industries that have helped us get to where we are economically prior to the GFC.

That said, we could actually see a reverse effect where if all the plans in the US come off and they start come of the recession we could actually slip slowly into the recession we had to have!

Unfortunately by then lost most of our contracts for the farmers and many of our manufacturing plants may have already shut down! And let's face it resetting up a manufacturing plant takes a very long time and a substantial amount of money which investors may not be willing to bet on again.

Sorry to be sounding negative, but my job is to help you see between the lines and to see what others are not seeing now.

You need to start thinking about the long term just as much as the short term.

Just consider this…

We are a nation of deluded spenders. According to the RBA we actually spend 150% of our income and we have more debt per capita than we have ever had. Sure we have had the good times and laughed off the GFC but think about how much you owe on your mortgage and how the interest rates are affecting you with your day to day cash flow - is there still a surplus or was there ever one? While you are reflecting think about how much you owe on your credit card or credit cards and how long they will take you to pay them back!

What does all that have to do with the increasing Aussie dollar? A lot because it has a major impact on the broader economy as I just pointed out just now.

So moving forward please just don’t look at the Aussie dollar on the news each night and say "oh wow Bali would be even cheaper now!"

Think to yourself: how you can take advantage of the current buoyant times to get your finances well under control because the GFC II may just be around the corner!
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Greg