Earlier this month, Mint Capital strategist Bill Blain warned that the bond bubble is about to burst.
A crash in the bond market would likely take stocks down with it, but there is another impact that is less obvious. It could have a huge impact on the United States’ ability to finance its massive debt.
Puerto Rico officially plunged into bankruptcy this week. Years of accumulating debt and misguided government policies finally reached their inevitable end.
The bankruptcy means more pain for the people of Puerto Rico, as well as bondholders who have virtually no hope of ever getting their money back. But beyond that, it serves as a giant, flashing warning sign, because the truth is, the financial condition of the the US isn’t fundamentally different than that of her island territory.