BONDS HAVE ISSUES

The U.S. government is hoping to raise $160 billion in an upcoming bond auction. It will be successful, but the issue for the U.S. is how long we'll be able to sell them, and at what rate of interest. Dubai recently faced default in its sovereign debt, and it's looking bleak for the P.I.G.S (Portugal, Ireland, Greece and Spain). Greece may be the first to go. Whether the E.U. will bail them out by buying or guaranteeing the debt remains to be seen. In the last year, the bond issues of Germany and the U.K. have gone over like lead balloons, and the U.K.'s bond rating has recently dropped. The only thing that maintains our ability to borrow internationally is a belief that the U.S. is too big to fail. With our level of national debt, it's not out of the question that our bond rating may drop as well.