This blog post originally appeared on RealMoney Silver on Dec. 15 at 8:13 a.m. EST.

Within the context of an overbought and overloved equity market, the rapidity of the rise in interest rates is but one of the accumulating factors that will likely weigh on stocks in the weeks ahead.

As I have written over the past week, our country's leadership has taken the easy route and has demonstrated still further that there will be no meaningful movement on our burgeoning deficit. The bond vigilantes smell blood, recognize this inertia and are demanding a price to be paid in much higher interest rates.

Despite the

Fed

Chairman's protestations (and the

cheerleading

of Wharton's Dr. Jeremy Siegel), QE2 has bombed.

As Bill King wrote last night, the Fed and many investors are victims of Plato's allegory of the cave, a moral about the difficulty of people who exist in a world shaped by false perceptions to contemplate truths that contradict their beliefs. This is why, as Bill scribes, "so many people missed the greatest financial and economic crises since at least Reconstruction."

In the famous simile of the cave, Plato compares men to prisoners in a cave who are bound and can look in only one direction. They have a fire behind them and see on a wall the shadows of themselves and of objects behind them. Since they see nothing but the shadows, they regard those shadows as real and are not aware of the objects. Finally one of the prisoners escapes and comes from the cave into the light of the sun. For the first time, he sees real things and realizes that he had been deceived hitherto by the shadows. For the first time, he knows the truth and thinks only with sorrow of his long life in the darkness.-- Werner Heisenberg, Physics and Philosophy

Meanwhile the talking heads' chorus of smooth and self-sustaining economic growth has grown ever louder (in the powerful bull), ignoring the warning signs of worsening payrolls growth, the temporary nature of the stimulus, a continued buildup in household savings, a banking system that is still in a healing mode and a worsening housing market (among other issues).

We should be mindful that, with few exceptions, most observers (and that includes Ben Bernanke) missed the 2008-2009 downturn despite the clear and accumulating evidence of economic uncertainty and growing credit risks (and abuses). The analysis of multi-decade charts and economic series convinced most (along with other conclusions) that home prices were incapable of ever dropping, that derivatives and no-/low-document mortgage loans were safe, that there was no level of leverage (institutional andindividual) too high and that rating agencies were responsible in their analyses. Importantly, theyalso failed to see the signposts of an imminent deterioration in business and consumerconfidence that was to result in the Great Recession and credit crisis of the last decade.

Many of those who are now expressing more extreme levels of optimism, similar to Plato's criminals in the cave, were in the above camp and experienced significant pain in the last investment cycle, while I voiced concerns and profited mightily in those years.

Today, as several years ago, most investors clearly don't share my concerns. I suspect that the punishment those investors experienced in 2008-2009 was too brief or perhaps it was reversed too soon. (Of course, there is always the chance that such behavior won't be punished again the second time around.)

Nevertheless, I believe the prudent course shouldn't be the adoption of too much risk at thecurrent time.

Color me more bearish.

Doug Kass writes daily for

RealMoney Silver

, a premium bundle service from TheStreet.com. For a free trial to

RealMoney Silver

and exclusive access to Mr. Kass's daily trading diary, please click here.

Doug Kass is the general partner Seabreeze Partners Long/Short LP and Seabreeze Partners Long/Short Offshore LP. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.