Here’s my take on what’s now happening in the bond market. In yesterday’s testimony to Congress, Bernanke basically said the following:

1. “I’m scared of what I’m seeing in the bond market right now, and
2. Hey, Congress, this fiscal irresponsibility is a problem that you created, and one that you must solve.”

Here’s an excerpt of Bernanke’s own words:
“Crucially, whatever size of government is chosen, tax rates must ultimately be set at a level sufficient to achieve an appropriate balance of spending and revenues in the long run. In particular, over the longer term, achieving fiscal sustainability–defined, for example, as a situation in which the ratios of government debt and interest payments to GDP are stable or declining, and tax rates are not so high as to impede economic growth–requires that spending and budget deficits be well controlled.

Wow! Bernanke suddenly is getting “religion.”