A condensed version of Dr. Roubini's latest post:

"I was wrong about the impact of $40 oil, but I'll be right about the impact of $70 oil."

I know Dr. Roubini was wrong about the impact of $40 oil because my name also appears on the 2004 note.   We both were wrong.    We thought high oil prices would be a drag on the economy in 2004.  They often are. 

Yet,  global growth was very, very strong in 2004.  Judging from the evidence, the magic formula for global growth is an undervalued Chinese RMB, high oil prices and a growing US current account deficit financed by the central banks of really poor countries and a few really rich oil sheiks.   The formula is just so counter-intuitive that it took a long time to discover ..   2005 wasn't quite as good as 2004, but it wasn't bad by any means.

OK, maybe high oil prices aren't really tonic for the global economy. I think James Hamilton would say that a strong global growth has been a tonic for oil producers.   Oil prices are high mostly because demand for oil is high.  The key point, though, is that higher oil prices - and the resulting transfer of purchasing power from oil consumers to oil producers - hasn't been much of a brake on the world economy.