Well duh!
When the debt prices collapse, there is not nearly enough money to cover obligations.
You think debt prices will collapse from here? Let me know what you're shorting to profit from this collapse.
No. I generally don't short. As I have said in other threads, I anticipate a series of upside down U's until the excess leverage is removed from the financial system. Any leg of the U could lead to financial meltdown so I don't believe the Fed/PPT/Treasury will let those go too low. The top of the current U will occur in the next month or two. The next leg down will probably be July followed by a very sharp rise into another upside down U. There is no small matter of $8000 in new home buyer tax credits being paid out next year as well as other stimuli, so there will be growth late this year or next year.
These inflationary booms will succeed but increasingly create a malinvestment condition where prices for commodities and raw materials rise to strangle industry and ultimately economic growth. The subsequent deflationary booms will feature large amounts of deleveraging as long as the Fed pursues cheap credit as its only policy.
This whole mess could be easily rectified with a return to market interest rates combined with investment tax incentives (mainly reduction of the corporate taxes and elimination of the long term capital gains tax). We would also suffer an inflationary burst as this happens but that should be a one time event. Economies cannot grow on credit, only suffer booms and busts and in our condition a bust could end our financial system.