government bonds are junk

Understanding credit. Attendees at the 2005 Global Conference heard warnings about risks in the mortgage market a full two years before the sub-prime situation made headlines. Given subsequent developments, we'll focus on several areas of credit this year:
Ratings: It's clear that high credit ratings are no guarantee against defaults. In the first 70 years of the 20th century, debt of AA-rated railroads had defaults 200% higher than B-rated industrial companies. In the past year alone, more than $100 billion in losses and write-downs have occurred in AA and AAA securities and their derivatives.
Real-estate lending: The false belief that any loan based on real estate is a good loan has caused recurring problems. It led to major losses in the 1960s, and again in the 1980s, when it contributed to the failure of almost every highly rated financial institution in Texas. Today's problems in the mortgage market are primarily in the U.S., the U.K. and Germany since fewer than 20% of homeowners carry any mortgage in most of Latin America, the Middle East and Asia.
Government debt: Although recently there have been few losses attributed to investments in sovereign debt and government agencies, 150 years of financial history show that these loans traditionally have the highest default rates. The belief that sovereign debt was riskless led to losses of approximately $1 trillion on loans made in the 1970s and '80s. It was only a few years ago that Argentina, for the third time in a century, settled its debt obligations (this time around, more than $70 billion) for pennies on the dollar.

Extracto de carta do Presidente do Milken Institute, Michael Milken, à Conferência Anual do Milken Institute.