There seem to be a couple of likely candidates for the next bubble to pop, among them commercial real estate, with its heavy dependence on (collapsing) retail sales, and government bonds, which are are intimately tied to (ballooning)  government infrastructure spending.

The people I have talked to about commercial real estate (owners / investors) seem split on whether / when the commercial realty bubble will pop, or whether it will be a slow outgas followed by gradual recovery.

In contrast, no one  that I have heard or conversed with is optimistic about government bonds. Talking to a municipal bond trader the other day, I remarked ” the infrastructure spending in the proposed stimulus has got to be good news for your business, right?” He replied to the effect that no, most people in the bond business are very concerned that there is in actuality a growing bubble in government debt, which the stimulus bill has every chance of making much worse.

So, how do you short government bonds again?

(Image from philadelphia reflections, a monetarist’s blog, unfortunately)