If the stock market were an old broken-down car, it would have been towed away by now. It has barely moved for years. Rust has eaten up the hood. Trees poke through the wheel wells. Investors who bought "the market" in the late '90s see their investments still sitting there - just where they were when they first bought them.

The same could be said for the dollar and bonds. They have hardly twitched in several years. Every time we look, we get about $1.20 per euro. Bond yields remain under 5%.

That last item is the most peculiar. It is as if someone had abandoned a shiny new Porsche in a bad neighborhood and the locals had forgotten to steal the hubcaps. U.S. government 30-year bonds, at less than five percent, are an invitation to larceny, as near as we can tell. What hope does the lender have of ever seeing his money again? What will the dollar be worth in 2036? How much will the bond be worth then? Someone is being set up for a major loss. You'd expect investors to take advantage of it...snapping up lenders' money as if they were ripping out radios from parked cars.

And yet, there is a curious and eerie silence, when it comes to the risks. No one is talking. Just look at the options market. The cost of protecting against risk hasn't been lower since 1998, just before Long-Term Capital Management blew up. Yet, the cat seems to have grabbed all warning tongues. Still, in yesterday's International Herald Tribune, we managed to find one that got away.

"Investors appear to believe that for some reason the age of globalization has made the prospect of a global economic meltdown remote," writes Daniel Wagner, "and that the global economy will recover from whatever is thrown in its way."

"What might be thrown in its way?" we wonder out loud. Oil trades at $65 a barrel, with no major disruption in tight supplies, Wagner notes. But, what would happen if terrorists took out a major oil field or pipeline. What would happen if a major producer went "off line," or major oil terminals were to be attacked? What would happen if the price simply went up? The whole world economy could suddenly shrink like a deflating balloon.

Wagner doesn't pose the question, but what would happen if another big hedge fund went bust, the derivatives market suddenly imploded, Wall Street crashed, or the Bush administration attacked Iran? What would happen if China flew off the rails, a Y2K-type virus were to clog up the world's communications, or an avian flu-type virus were to clog up the world's lungs?

Colleague Dan Denning, another person whose tongue the cat hasn't got, sends this note:

"The U.S. Treasury hit the debt ceiling and had to raid the exchange stabilization fund and disabled civil servants pension to meet current obligations...over $1 trillion in government borrowing has to be rolled over this year. Over $614 billion of long-term debt matures this year...meaning over $1.6 trillion in funding has to be floated in the market, at rising interest rates, for the government to meet its obligations to current bond holders and entitlement recipients.
 
"It's a grim looking situation for the Empire, and explains why 10-year treasury yields hit 4.75% yesterday, the highest since the Fed began cutting rates. Ten-year rates are finally moving up. Greenspan's conundrum is disappearing, one basis point at a time."

In a similar vein, our own MoneyWeek magazine carried an article last week explaining how Japan's rising interest rates could finally knock the pins out from under America's real estate bubble. Today's International Herald Tribune picks up the story with a front-page headline: "Bank of Japan facing a momentous decision." Investors have enjoyed a field day, borrowing from Japan at zero interest and sticking the money all over the world - including in U.S. debt (Thereby helping to hold U.S. mortgage rates down). This surge of money has lifted house prices in Las Vegas and stock prices in India (up 42% last year). What will happen when it stops?

"The five-year free ride is coming to an end," say some economists. But you wouldn't know it from all the people queuing up at the station. In the face of rising risks, people have never been more confident or more eager to get on board. The modern democratic capitalism cannonball, driven by enlightened central bankers, adjusts fluidly and painlessly, they tell themselves sagely. That is what markets are supposed to do; they are constantly toting up the odds of trouble, constantly hedging, constantly looking down the tracks ahead and adapting.

Maybe so, but occasionally markets also make mistakes. The joy train riders are all reading the same newspapers and the watching the same TV channels; they are all borrowing from Japan and investing in the United States. And all of these riders eventually come to believe more or less the same thing; it's something they all desperately want to believe, something that flatters them, something that comforts them and something that ultimately ruins them.

Yes, dear reader, that is how it works. Risks do not go down just because people do not see them. The more sure people are that they have nothing to fear, the less ready they are for bad news. And then, when it comes, they are shocked and appalled - and ruined.

We do not buy gold because we know there is bad news coming. Bad news always comes. We buy gold because we suspect that most people are not prepared for it.

Bill Bonner, back in London with more views...

*** The votes are in...the House Appropriations Committee voted 62-2 to bar Dubai Ports World, a United Arab Emirates backed company, from holding contracts at U.S. ports.

"This is a national security issue," said Rep. Jerry Lewis, the chairman of the House panel, adding that the legislation would, "keep American ports in American hands."

Well, as patriotic as that sounds, the London-based Peninsular & Oriental Navigation Company previously owned the five U.S. ports in question. Last we checked, London was in Great Britain, not America. And what about the other foreign-operated shipping terminals in the United States? China already runs a terminal at the Port of Los Angeles and Singapore runs terminals in Oakland...are we going to shut those down?

Another major detail the House seems to have conveniently overlooked - the UAE are our allies. U.S. Navy ships call at the port of Dubai, and the U.S. Air Force uses UAE airfields to launch missions into Iraq and Afghanistan. In addition, the UAE donated $100 million to Katrina relief - more than four times any other countries contribution combined.

"The lopsided House committee vote shows that the bull market in economic nationalism rolls on," says Capital and Crisis' Chris Mayer.

"Not only in the United States, but abroad as well. We have the French government trying to block an Italian bit for Suez. We have the Spanish government trying to block a German bid for Endesa. We have the Polish government trying to quash an Italian takeover of a German bank because it involves Polish subsidiaries...

"This is starting to sound like a joke. But it's real and a new global depression hangs in the balance. The more governments push, the closer we get to the edge of a very mean cliff..."

*** "The price of sugar is going to go up five times in the next decade," Jim Rogers predicted in 2004. Since then, sugar is up threefold, recently hitting 17.21 cents - the highest level in 24 years. That's a better performance than oil, gold or a lot of other commodities.

"Brazil uses part of its sugar output for ethanol, more so when the price of gasoline is high," Chris Mayer tells us. "That sort of shift has a big impact on the sugar markets, as ethanol production consumes more and more sugar. Current forecasts hold that about 80% of Brazil's output will wind up in Brazilian cars."

"That's one part of the demand equation. But there's more. The human race has quite a sweet tooth. Not only is there increasing demand for sweets in Western markets, but also there is also steady demand from places like India (the world's largest consumer of sugar), Pakistan, Russia and China."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.