Indeed KK this is a global situation but you citing a "flight to quality" is temporary at best. Do you really think foreign buyers of short term T-bonds are going to be satisfied with the debt being payed back with more debt? Pray tell, how long do you think this ponzi scheme is going to last?

China has already been absent from some of the latest treasury auctions. As well as Russia and India. Instead they have opted to buy gold reserves. To boot, China is encouraging their citizens to invest their savings in gold. The Fed can't supply demand for T-bonds indefinately and their game is easily spotted if you taken a look at the latest audit figures.

So the dollar temporarily gains againt the Euro. Which ironically is in trouble for many of the same reasons the dollar is in trouble, only much worse. That doesn't elude the fact that America's current debt crisis is unsustainable at it's current pace. So there is a temporary flight to quality in US T-bonds. When Europe straightens out their crisis and that capital flows back into their domestic markets, then what? An enormous spike in interest rates circa ealry 80's and an unmanagable debt load to go with it.

If you're counting on world-wide collapse to rectify the spending habits of our federal government in a "flight to quality" you are sadly mistaken.