Investors looking for bonds to short should look here:

Source: bloomberg.com

Not here:

Source: bloomberg.com

Talk about all risk and no reward! Township and state revenues are falling through the floor, and politicians are exceedingly reluctant to cut bloated budgets. Next year, I bet the default rate on Munis will be as high as the Florida mortgage default rate (well into the double digits). Vallejo California was just the canary in the coal mine. Not every town pays their firemen $250k, but most pay $55-70k with full benefits and retirement by age 48. Here’s a look at firemen in Vallejo making 200-300k per year. This is too absurd not to publish:

Source: sfgate.com

Yes, the federal government is just as broke, but its powers of taxation are practically absolute, and it has a central bank to print up any shortfalls. Hence, US debt is the ultimate near-to-intermediate term safe-haven. This Treasury rally is no bubble. This is what a good, hard, deflation looks like.