So what is quickly developing as the central story in world finances right now?
And yesterday there was a dramatic worsening of the eurozone sovereign debt crisis as Standard and Poor's downgraded Greece's credit rating by three notches to junk status, citing concerns about the country's ability to implement the reforms needed to slash its budget deficit.
The agency also cut Portugal's rating by two notches to A minus.
This, of course, led to heavy falls for European and US equities as investors sought sanctuary in German and US government debt, gold and the dollar.
The moves came towards the end of a European session that saw mounting uncertainty over whether Greece would secure financial aid in time to meet a refinancing deadline on May 19.
In view of the popular opposition in Germany to helping Greece, markets have grown increasingly concerned about just how Angela Merkel, Germany's chancellor, can push the country towards participating in a bail-out.
Jane Foley at Forex.com said: "If Germany doesn't come through with a loan for Greece, it would seem unreasonable to expect cash-strapped economies such as Spain, Ireland and Portugal to help make good the shortfall - meaning that an EU loan could yet fail. Even if Germany does present a loan to Greece, there would be no guarantee that there would be an end to Greece's problems. Until Greece can prove it can live within its means its bond yields will carry an inflated risk premium on the open market reflective of higher default risk."
Five-year credit default swaps on Greek government debt, a measure of insuring against debt default, hit a record yesterday of 800 basis points, up from 710bp on Monday. The spread of Greek 10-year government bond yields over Bunds - the premium demanded by investors to hold Greek rather than German debt - hit a record wide of 718bp.
"Risks are mounting and governments should move swiftly to take additional corrective measures to improve their outlook and bolster market confidence."
What is most interesting is the way investors are seeking sanctuary in the the US dollar and US Treasuries.
Mark my words... it will be a shortlived strategy.
As has been stated on this blog earlier this year, the UK and the US are not that far removed from Greece and Portugal.
In fact on the very day all this transpires, US Federal Reserve Chairman Ben Bernanke is warning the United States that America's debt is unsustainable.
And perhaps the most significant quote was this little gem: "Failure to cut the deficits would push interest rates higher - not only for Americans buying cars, homes and other things - but also for the government to service its debt payments," Bernanke said.
Which brings us to our insular little world in the Village on the Edge of the Rainforest.
So many of the R/E cheerleaders living in denial and delusion have clung to Bernanke's comments about keeping the Federal funds rate low for an extended period of time, even as the economy appears to be recovering.
But as I have cautioned time and time again, that does not mean interest rates for the common mortgage holder won't rise.
Today Bernanke came out and said so.
What is happening in Greece and Portugal today will - soon enough - play out in the UK and the United States.
Many of the individual States in America are in dire financial straights. And the federal balance sheet, as Bernanke notes, is unsustainable.
"No laws are more basic than the laws of arithmetic: For fiscal sustainability, whatever level of spending is chosen, revenues must be sufficient to sustain that spending in the long run," Bernanke told President Barack Obama’s commission to tackle the soaring deficit yesterday.
The bond market is going to drive interest rates up.
And I don't think it's a stretch to imagine that if the Bank of Canada raises the BoC rate by 3% over the next six months that the bond market also won't drive up rates an additional 3% as well (we've already seen them boost rates 1% with no raises from the BoC).
That would be a rate increase of 6% added to the current five year rate of 6.25%; for a mortgage rate of 12.5%.
Perhaps that's why BoC Governor Mark Carney was telling a Parliamentary committee that Canadians should get ready for more expensive money and less expensive houses. “We see a marked weakening in housing over the course of our projection (into 2012), starting from the second quarter of this year and over the balance,” he said.
Central Bankers choose their words with extraordinary care.
And when Carney says he sees a "marked weakening in housing" between now and 2012, you should pay particular attention.
Perhaps he sees what a 12.5% mortgage rate will do to it.
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