Bond Bubble Bursting?

The yield on 10-year bonds surged to its highest level since October at almost 4 per cent, sparking concern high interest rates could temper recovery.

It appears that bond investors are continuing to reprice sovereign risk on US Treasuries. I suspect it only has one direction....up. Like General Motors, the US is well on the road to insolvency, perhaps inevitably. Years of over spending on wasteful folly like meaningless wars such as Iraq combined with chronic under taxation have left the U.S. in financial ruin. The state of California (amongst many) is bankrupt financially and politically.

This US's condition been achieved by the Bush administration's prolificacy and Greenspan's ruinous monetary policy, not as some partisan U.S. conservative commentators have suggested, by the current administration. However, it is being exascerbated by the Obama administrations reponse to the crisis. Some of the crucial social policy initiatives needed to reform and modernise the U.S. as a contemporary state, such as a national public health care system, are necessary but no longer fundable. As more and more people in the US fall into unemployment so too will the intolerable sutuation of massive numbers of US citizens without public health care continue to rise. National public health care systems deliver necessary social equity and preserve human dignity whilst delivering a needed service at a lower percentage cost of gross domestic product. It is one of the few areas where empircial evidence strongly supports the notion of lowest cost government delivery. I appreciate that may be anathema to some of my readers. Of course, I have digressed.

If the current trend continues US bond prices, US interest rates, and inevitably global interest rates will continue on an upward trajectory despite the recessionary environment.