With a 10-year note that is yielding less than two percent, what is a fixed-income investor to do?

1. I'm assuming that gold IS money. That is, it's a store of value and a medium of exchange.
   
   
2. I'm assuming that the definition of a bubble describes when an asset is overbought to the point that its price is much, much higher than it should be.
   
   
3. If I can safely make these assumptions, then I think it's fair to compare gold to another form of money: the dollar, and by proxy U.S. Treasuries.

The Wall Street Journal reported today that troubles in Japan aren't staying on the island nation. Instead, they're spreading throughout the world.

From the Journal's article, "Global markets plunged as deepening worries over the specter of a nuclear power crisis in Japan in the wake of last week's earthquake and its economic implications sent investors scurrying again for safety."

This piece begs the question: what's safe these days? Is the U.S. Dollar safe? Are U.S. Treasuries safe?

As Germany voted to approve bailout money for Greece, German Left Party lawmaker Gesine Loetzsch was quoted as saying "Speculators are Taliban in pinstripes, and people in our country must be protected from these Taliban…”  

It’s scary to me that any political leader could voice such an inflammatory and downright naïve opinion.   

If a hitter in baseball can’t hit the high fastball, then that’s exactly what he will see until he makes an adjustment. When Yahoo! failed to take advantage of its early-mover status on the Internet to implement a viable paid advertising model, it opened the door to Google.   

The AP is reporting that China has trimmed its holdings of U.S. Treasury’s by $5.8 billion in January. I’m sure members of the doom and gloom economic faction will point to this as solid evidence that the U.S. is losing its ability to fund spending and is inching ever closer to default.   

In my opinion, this line of thinking is completely unrealistic.   

China still holds $889 billion in T-bills. It’s clearly not “dumping” American debt. And as I discussed last week, there is evidence that China is moving to more direct investments in the U.S.  

China’s state-run investment company, the China Investment Corporation (CIC), is already involved in a buyout offer for shopping mall owner General Growth Properties (NYSE:GGP) through Brookfield Asset Management (NYSE:BAM). 

For the past year, the fate of commercial real estate in the U.S. has been a popular talking point for economic bears. Something like $1.4 trillion in commercial real estate loans comes due in the next 3 years.   

Given that a good portion of these properties are underwater, and the fact that banks are still reluctant to lend, the concern that many of these loans won’t get refinancing seems valid.   

Already, we have seen companies simply walk away from properties that are losing money, turning the keys over to the banks that hold the mortgages. Maguire Properties (NYSE:MPG) has done it. And we’ve seen BlackRock (NYSE:BLK) and Tishman Speyer Properties abandon Manhattan’s Stuyvesant Tower when the value fell from $5.4 billion to $2 billion.   

For shareholders, these moves make sense because it’s better than throwing good money after bad. For Maguire, it was a matter of life or death for the company.  

Still, it’s a concern because someone has to step up and buy the impaired real estate from the banks. Otherwise, bank balance sheets are saddled with even more toxic assets, capital bases fall, lending dries up and the whole financial crisis gets repeated again.  

Interestingly, it may be the Chinese who help the U.S. out of this commercial real estate problem.