The United States economy and US dollars are not dead. Last week, at the American Institute of Certified Public Accountants Advanced Financial Planning, we were privileged to hear a commentary on the United States economy by David Malpass, Bear Stearns' chief economist.

This calm, measured, thoughtful, highly researched presentation by this brilliant individual could not have happened at a better time, or a worse time depending upon how you were viewing last week's market volatility.

Mr. Malpass has ranked among the top five Wall street economists (No.2 in 2005 and 2006) for the last few years in the Institutional Investor survey, and for good reason. In 2001, he warned of the deflationary recession, while highlighting the expansion of 2002-2007 and its global scope.

He is a Certified Public Accountant, an MBA and studied international economics at Georgetown University School of Foreign Service, and also speaks Spanish, French and Russian. He has held appointments within both Reagan and Bush administrations as well as the US Treasury, US Congress and US Senate.

Economic uncertainty

According to Mr. Malpass, the United States is not in a recessionary environment, let alone a depression, as media talking heads would have us believe. While that could change in the longer term, in the near term, his key points that support his analysis are:

• Weekly US unemployment data is not pointing to a recession. He contrasted the very high numbers during post 9/11 and Katrina (450,000 - 500,000). Numbers of unemployed are still within the 350,000 range.

• While employment growth has slowed, and unemployment is around five percent, his view is that this constitutes normal unemployment from the super-low seen in the last several years.

• Consumer spending has slowed, but it is not near levels experienced post 9/11 and Katrina

l Housing construction has fallen sharply, but this is not a big part of the economy. States that experienced the largest increases in house starts, are now experiencing the biggest correction and supply of inventory.

• Corporate profits are slowing, but still good, even though the finance sector has taken a tremendous beating.

Liquidity is extremely high among corporate giants; they are holding significant amounts of cash. This cash effect works the same as it would for an individual household. Holding cash (or near cash in high quality money market funds, treasuries etc.) provides a buffer against market volatility.

Market uncertainty

With the release of additional liquidity by the US Federal Reserve in the form of emergency interest rate cut of 75 basis points, this strategy should provide impetus for those seeking to capitalise on cheap valuations in equity markets.

Granted, the financial sector still has to work out the securitisation of loans problem, but many, many good company stocks are highly undervalued at this point in time.

Mr. Malpass and other analyst web feeds that I receive indicate that overall, once this volatility filters through the global systems, there will be more balance between the US economy and emerging markets and equity markets will return to moderate/average years. Other analysts feel that there will be a strong equity return by mid-year.

Much has been said about the US dollar falling apart, and anecdotal commentary from the east indicates that there is salesmanship aplenty to encourage people to switch to the euro.

Other common sentiment prevailing as espoused that the rest of the global markets do not need the US and that its influence is waning. It has been interesting to see that other markets still do work in tandem with the US market and were not able to hold sustain forward momentum in global markets.

In reality, the United States is still the world's biggest exporter by far, and the biggest importer. There are more than 150 million US working people earning, consuming, and heeding the wake-up call to make their savings stronger.

In summary, in spite of all the recent news, the US overall demonstrates a relatively healthy economy. People still have jobs relative to the unemployment rate, which was artificially low, and while consumer spending is nowhere near an all time low, it has not stopped.

Political uncertainty

Other factors that are all coming into play at the same time is the heat of the presidential race, where once the primaries are over and the 'real' serious candidates emerge, the focus will be on a stronger dollar. Democrats will want a strong dollar; just the fact that the race is almost over will go a long way to keep some of the uncertainty down.

Companies, markets, governments, and individuals, all hate uncertainty. It is far easier to know (and understand the bad news), and then plan for it than to have no idea what to do. What should you do now, if anything?

l Avoid media hype; it is abhorrent to me and I consider it fiscally irresponsible when financial media all start with comments such as "there is real fear in the market today". Far more preferable are logical reasoned shows such as the CBS Morning Show which presented calm, reassuring financial experts who offered excellent advice on how to handle yourself and your finances during periods of uncertainty.

l Understand that much of these volatile swings are driven by emotion. Investors are falling to emotional logic and selling investments that may be perfectly acceptable at their lows.

l Also, understand that when markets tumble on a global basis, almost all valuations fall temporarily. Don't throw the baby out with the bath water.

l Review your investments. Ask for recent fact sheets and verify with your financial representative that your investments are not exposed to the sub-prime market. Go to the last bear market statistics. If your portfolio did well during that time, the odds are that you are connected to strong money managers who have anticipated this volatility and are best situated and experienced to get your investment through another period of market volatility.

l If you own individual stocks and are self-directed, follow the same pattern, but you should also research whether any of your holdings are subject to sub-prime activity.

l Make sure that you, too, have enough liquid cash to draw on short-term, so that you will not feel pressured to sell out a long-term appropriate investment.

Martha Harris Myron is a Senior Wealth Manager at Argus Financial Limited. She is a United States Certified Public Accountant NH#1929, Certified Financial Planner 67184 and a STEP.uk student member and specializes in providing comprehensive financial solutions for life style planning to career professionals, individuals and their families and business executives. She can be reached at 294 5709 and confidential email mmyron@argusfinancial.bm