An interesting chart from the Business Insider of the results of a Morgan Stanley survey of 150 clients at a recent investment conference.   Shockingly, more than 50% of the investors polled believe the US will experience a sovereign debt crisis by 2012.

This is the one issue that keeps us up most at night.   The yield on the 10-year Treasury closed at 2.47% today,  so clearly the market is not pricing this.   We have written that the bond yield is not a reflection of fundamental value and is distorted by various technical factors.  Policy makers must not be lulled into complacency thinking the low yields are a vote of confidence in fiscal policy.

One thing we have learned during this crisis is that markets are prone to doublethink and can live, simultaneously,  in two different realities.  Stay tuned.