JEFF CARTER: Bond Markets Don’t Bend, They Snap. “When there is a recession or some shock the non US Treasury bond market liquidity dries up. You’ll be holding some paper and looking for a bid and there literally is no bid. “Not for sale at any price” is a hard number to stomach on the way down when you need to get out. I hope we don’t find out but I suspect someday in the next five or ten years we will experience that.”

Illinois is a prime suspect. “States, municipalities and private companies that are extended will see credit totally dry up. No one would finance Detroit at any price. When the tide rolls out we will see who’s really naked. The state of Illinois and every county and city are naked right now. Some just don’t see it, or it’s so ugly they don’t want to look.”