Craig Simmons, a lecturer in economics at Bermuda College, addresses some of the big issues affecting Bermuda residents' livelihoods in the current environment.

Much of the rise in the cost of living we have seen in recent months has been put down to higher oil prices. So with the large drop-off in oil prices in recent weeks, will we see prices of food, gasoline and electricity fall?

It is no great secret that prices tend to be sticky on the down-side. We can attribute that to the fact that energy markets are not competitive in the way that, say, currency markets are. Energy prices did, in fact, fall during the 1990s when oil prices slid under $30 a barrel.

What we should expect is the prices of electricity, gasoline and foood not rising as fast as they have since this time last year.

Is the Bermuda economy better able to withstand the turmoil than those of other countries?

Small countries and island micro-states in particular generally suffer more from supply shocks such as food and energy price increases than do larger countries. Bermuda's economy is less vulnerable because it has deep pockets: it can afford to pay higher prices for food and energy than can the rest of the world.

Food accounts for about 13 percent of a household's weekly expenditure. In many developing countries that figure exceeds 40 percent. As a result Bermudians will feel a pinch, but not nearly as severe as in most other countries.

The fact that energy was already expensive in Bermuda has created an energy conservation discipline that is absent from our American neighbours who are scrambling to adjust to the new reality. So from that perspective we are better able to withstand higher food and energy prices.

How serious is the rising inflation we have seen this year?

Given that the spike in inflation is rooted in rising food and energy prices and that these prices will not rise as fast over the next 12 months, then it is fair to say that we have seen the worst of the inflationary storm. A more serious problem is the inflation that results from an overheated economy that is creating more jobs than it can fill.

Recall that between 2000 and 2006 the labour force grew by 346 but the number of Bermudian jobs decreased by 1,438. The stellar growth we have seen is not well connected to Bermudian happiness.

Bermudians working in agriculture and fishing, manufacturing, construction and the hospitality sectors have seen both job losses and declining wages over the last decade, despite six-figure average salaries in the international business and financial services sectors.

Do you expect to see further job losses?

We are living in a fluid time: companies are always looking for ways to profitably produce and assemble their goods and services in many different geographical spaces. Bermudians will have to get used to companies deciding to outsource parts of their operations. This will mean job losses.

The credit crunch - a loss of confidence in both capital markets and the banking sector to structure financial capital in meaningful ways - is a serious threat to local stability, because Bermuda is an off-shore financial centre.

Ken Rogoff, a former IMF chief economist and Harvard economics professor believes a major US bank will go under before the end of 2008 and that the worst is yet to come.

Already several local international businesses have been adversely affected. If Professor Rogoff is correct, we should be bracing for the storm. Jobs in international business will no doubt be affected as will the lives of the many women who hold those jobs and the families that rely on them.