Another look at the bond time bomb - the big show

Here's an article about the bond bubble collapse I have been predicting since October (to start by end of March, which it did).

I should simply explain again the problem I have been seeing. Our government has been spending money like water. More than half is paid for with debt. The amount will go up a lot each year. Every other major country is on the same stupid plan we're on of borrowing piles of money to solve the problem of too much borrowed money. They also need to borrow tons each year.

Our government needs to refinance mountains of short term debt. They keep increasing the amount of short term debt. They are also paying virtually no interest. There will soon be a ton of debt to be refinanced combined with a ton of new debt. At the same time, the economy is about to get much worse, and the Fed says they aren't going to keep buying our debt.

No one on the earth thinks they will actually stop buying our debt, even though Bernanke has never wavered in claiming they would absolutely stop on March 31st. The bond and stock markets are not prepared at all for them to actually stop. Everyone scoffs at the idea. I think they really will. They're effectively broke, and there's no decent resolution to it anyway. If they really stop, the economy stops all over the world, period. That's a problem.

I have to rebut the article. It blithely claims that until now the foreign appetite for our debt has been good. This is plain silly. When the Fed lends a country free money to buy debt that pays money, or offers to swap American junk real estate debt for Treasury debt, or a country sells our long term debt and buys short term, those aren't good signs. It is different ways for them to edge towards the exit.