This is indeed a dramatic move. The world's largest bondholder, Pacific Invest Management Company, dubbed Pimco, sold all of its U.S. government holdings including U.S. treasuries.

At the end of February, Pimco had $236.93 billion or 12% of its holdings in the Total Return Fund in U.S. holdings. That was cut to zero.

Bond money managers are usually glum. Then again, they need to be cautious since they are locking up money at fixed rate of returns. In a volatile world, this can certainly be a risky proposition.

So it should be no surprise that the biggest bond money manager, Bill Gross, is not enthusiastic about 2011. He leads the Pacific Investment Management Co., which has $1.2 trillion under management.

Throughout history, there have been periodic bubbles. Unfortunately, they have always ended badly.

Of course, the U.S. markets have experienced several bubbles over the past two decades. There was the dot-com surge as well as the real estate mania.

But now the bond market is in the midst of a bubble -- and it could be in the late stages. In fact, the bond market has likely been in a bubble since the early 1980s.

There's bad news and good news regarding Bill Gross's latest assessment of global credit markets.

The bad news is that Gross, who heads the world's largest mutual fund at PIMCO, said government bailouts point to a global "unicredit" bond market in which sovereign debt rates mirror those for corporations, Bloomberg News reported Monday.

The March British pound futures traded at $1.5928 on Thursday. BNP Paribas, an international commodities trading firm, predicts that the pound will fall to $1.5730 in the coming weeks and then to $1.40.

Analyst Ian Stannard, said that the pound could "fall off the cliff." Some high-profile bond investors, including Bill Gross's Pimco investments, are pulling back from the purchase of Gilts (British bonds). Some investors are even pulling out completely.

Bill Gross is one of the world's biggest investors. In his recent monthly letter he cites the dangers of ultra high deficits in the US.

But first, we must cite Gross' comments on the state of our democracy. He said: "Our democracy does not work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people." "When special interests even singular citizens write a check, it represents a perversion of democracy, not the exercise of the First Amendment..."

Here's another priceless quote: Referring to the money spent by health care lobbyists, he said: "What amazes me the most of all is that politicians can be bought so cheaply."