I'd like to hear mcgowanmc's response.

My thought is that what he means is bond prices will drop a lot and there will be a corresponding rise in interest rates. I don't know whether the 15 day time frame is right, but it is a perilous time right now, and that is the general direction things are moving. As there are more and more defaults, this is the direction one would expect bond markets to move.

If bond prices drop a lot and there is a corresponding rise in interest rates, the lack of credit we have been seeing recently in bank borrowing and commercial paper will spread to the rest of the debt market--namely bonds. It will make it very difficult for businesses to finance anything. Companies (and municipalities and churches) that thought they could issue new bonds to pay off old ones coming due will find this impossible to do, without raising their financing costs to exorbitant levels. This could result in more bankruptcies, and more defaults on loans, starting the cycle over again.

These bonds are held by many organizations, mostly not banks (although banks may hold some of the bonds), so it will be difficult for the infusion of cash into the banks to have much effect in stopping the cycle. To the extent banks hold the bonds, this will bring down their equity, causing more banks to fail. The drop in bond values will eventually hit other holders of bonds, including insurance companies, pension funds, causing them to have financial problems as well.

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

The Baltic Dry represents shipping worldwide.

that's a picture of cardiac arrest.

Any bulk commodity, think BHP, Rio Tinto, Vale, et al.

By Ambrose Evans-Pritchard
Last Updated: 11:27AM BST 14 Oct 2008

Nuclear-armed Pakistan is bleeding foreign reserves at an alarming rate leading to fears that it could default on its loans.

There are mounting fears that Ukraine, Kazakhstan, and Argentina could all now slide into a downward spiral towards bankruptcy, while western banks exposed to property bubble across Eastern Europe have seen their share price crushed.

The 10 year bond yield is rising with every move by the sovereign.

The last thing that "Main St" needs.

When no one wants any more US bonds, the US will have to default.
Then price won't matter. The Federal reserve note of Ben Franklin then becomes the US Gov't "bond".