NEW Unemployment figures Show We’re Still Lingering in Depression.

This week began with shrieks of joy. First, a federal court came down on Bernie Madoff like a brick on a bald head. Madoff, convicted of lying to investors, drew a sentence that only a sea turtle or a swamp oak could complete. Then, like children playing in the sea, investors were teased by one wave of good news… and tickled by the next.

Bloomberg reported that “Wall Street’s largest bond-trading firms say the worst may be over for investors… ” Then, General Electric’s CEO, Jeffrey Immelt and famous investor George Soros both said that the crisis is “behind us” and that growth will begin again next year. Finally, analyst John Dorfman opined that the stock market would be a safe place for their money at least through the end of the year.

And now comes the big American holiday – July 4th. Investors

We’ve been keeping a close eye on US Treasuries lately. That’s because the bond markets are full of useful information about the real state of the economy. For one, they tell us how investors really feel about government wastefulness.

Yesterday, the yield on the 10-year Treasury bond rose sharply to about 3.7%. This is still well below the 5% it hit before the credit crisis. But it is a clear sign that bond investors are concerned about the amount of money the government is borrowing to ‘fix’ the economy.

As yields rise, so do mortgage interest rates. Right now, the Fed is keeping them artificially low by buying Treasuries. But pressure is building on the mortgage rates as oversupply in the Treasuries market pushes yields higher.

And with prime mortgage delinquency rates at 6% (more than double the long-term norm) and a quarter of subprime loans delinquent, the government simply can’t afford for