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We Did Not Fall Off the Cliff; We Will Get Stuck on the Ceiling

The problem is, this time around the world is not full of problems. The Eurozone has, much to my amazement I must admit, managed to go three full months without a crisis. The OMT (for "outright money transactions") program seems to have scared the evil speculators away for long enough for eurozone leaders to pat each other on the back. Even German Chancellor Angela Merkel has regain popular support by supporting the perpetual support of the peripherals.

Even though, as Merkel said, to her credit quite correctly, that the euro crisis is far from over, I highly doubt it'll resurface in time for the debt ceiling talk in the U.S. China seems to have settled the question of hard landing vs. soft landing and, with much relief, playing a little trampoline on the cushy bottom for the time being.

Japan is full boil in the Abe fever all of a sudden. For the record, I think Japan's heavy stimulus fiscal and monetary policy package, if materialized, would be suicidal in the longer term -- as they finally get the inflation they so dearly longed for, for so long, they may find it a bit difficult to service the mounting debt all of a sudden. But, again, this is a problem that will not be here in time to make the debt ceiling negotiations easier.

What all these mean is this. Due to the lack of bigger worries, the market might as well pay attention to U.S. debt and credit rating this time. Unlike the last time when U.S. credit rating got a slap in the face, which missed by a mile and slapped the raters' face, this one is very likely to land on the originally intended target.

While everybody knows the bond bubble will burst and nobody dares to predict when, this could very well be the perennial prick, without the Fed doing any selling. Even if the Fed dutifully ramps up buying, I doubt it'd help since, when the market finally latches onto a fundamental problem, it may show surprising stubbornness.

In summary, in this scenario the dollar and Treasuries may suddenly stop being the safe haven. Where would the world turn to? Euro, yen, gold. All temporary refuges, for sure. But temporary refuges nevertheless.

Unless, of course, Washington actually works out a compromise in meaningful cuts in spending and deficit. There would be some big moves in stocks and bonds, depending on the details of cuts. But Treasury and MBS yields may stay low even if the Fed stops buying.

Ha, imagine that!

Well, a man can dream, can't he?

At the time of publication, the author was long gold.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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