Today the US celebrates Independence Day.  However fewer and fewer citizens are truly independent.  Yesterday the markets took a turn down after the non farm payrolls came in worse than expected. Initial unemployed still remains above 600,000 and the unemoloyment rate hit 9.5%.  This is the official figure which does not count those unfortunate people that have run out of thie entitlement. (Now 39 weeks, up from the normal 26 week entitlement)  I have read that the figure counting all those unemployed or under employed is closer to 20%.

Early in the week there was optimism that the worst was behind us. Bernie Madoff was sentenced to 150 years in goal.  What are they going to do? Keep his coffin in there until 2159?? Even George Soros said that the crisis was behind us and growth will begin next year.  Then yesterday we read that another seven banks have hit the wall bringing the total to 52 for the year.  Two and a half years ago I was giving a running total of mortgage firms that were hitting the wall each month.  I did not dream that banks would fail at a similar rate.

Can you remember when it was said that the US was “a goldilocks economy” (not too hot, not too cold). that “it dosen’t matter if internet companies have no earnings”, or “high P/E ratios don’t matter”.  What about “subprime loans aren’t important” or that “foreign economies have decoupled from the US”.  All the above have been offered as reasons why “this time it is different”.  So it is too early to see “green shoots”.  That falls into the same catogory as “house prices never go down”.  If you believe that you will believe anything.

Now that the quarter is over, in a few weeks we will start to have the earnings reports and predictions for this quarter.  Most will have their rose tinted glasses on.

There will not be a sustained improvement until employment starts picking up and confidence returns to the person in the street; where they are confident they will still have a job next week, next month, next year.

Finally for my rays of sunshine this week I read that India joins Russia and China in questioning US dollar dominance. If these three huge traders decide to circumvent using US dollars for trade amongst themselves, as China has already agreed to with Brazil, then the US dollar is going to be less desirable a currency to hold.