David Stockman: The U.S. at the Edge of a Solvency Crisis; A Rigged Bond Market Dominated by All the Central Banks

From Bloomberg:

The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt. We have used up all the runway, so to speak. We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it. So we're going to have a gong show."

We have not had a two-way bond market. We have had a rigged market that has been dominated by not just the Fed, but all the central banks. Today over half of the $9 trillion in publicly-held debt is in central bank vaults. I call it the 'Monetary Roach Hotel.' Bonds go in and never come out. If the central banks stopped buying the debt, which will happen with the end of QE2, then we're going to get back into a real investor's market, a two-way market where some people don't believe that Congress and the White House have the capacity to deal with our problems. I think then we run the risk that we'll get real pricing on the debt, which has to be a lot more than 3%."

http://www.youtube.com/watch?v=yBtfktG3T2U&feature=player_embedded