"The market feels a lot like it did in March of 2000, right near the top," says Mr. McClintock of Babson. He doesn't expect a pullback nearly as severe as that one, but he has the same sense of excess market optimism at a time when the economy is slowing and bond yields are rising.

Even the pessimists figure that bond prices will suffer more than stock prices. The prospect of higher interest rates makes existing bonds, with their lower yields, look relatively unattractive.

Fears are spreading again that the Fed will keep pushing rates up until some blowup occurs in the financial markets or the economy -- at a big investment fund, for example, or in the housing market.

Record U.S. trade deficits pumped dollars abroad, which foreigners obligingly recycled into U.S. Treasury bonds and notes. The heavy demand for U.S. bonds kept U.S. bond yields from rising much, which in turn kept U.S. mortgage rates low. Consumers borrowed and spent, and money was cheap despite the Fed rate increases. Warnings of coming trouble increasingly were ignored.

Despite a bout of nerves last week as bond yields rose again, that kind of hopeful thinking has survived.

Let's start with a shocking revelation: If you borrow money, it eventually has to be repaid. We all know this, of course. Yet the data suggest many Americans are trying their hardest to ignore this inconvenient fact.

But they can't ignore it forever. Forget the 1990s technology-stock bubble. Forget the recent real-estate mania. To my mind, today's debt bubble will prove far more damaging. It's going to derail many baby boomers' retirement plans -- and it's already hurting the generation that follows.

Facing facts. Make no mistake: The statistics are ugly. As a nation, our borrowing is growing as fast as our wealth, we are loading up our kids with college debt, and we are continuing our spendthrift ways into retirement.