Will "PIIGS" fly or only the spreads

Today, most markets have been slaughtered and if your wondering why markets are down, you only have to look as far as the G in PIIGS (Portugal, Italy, Ireland, Greece and Spain). Today, for the third day in a row, spreads have been flying for the PIIGS and especially for Greece. It reached an astonishing 405 bps but lowered to 390 by the time I was writing this post. With the lowering spread a rally seems to be forming before the close in markets around the world (probably on bail-out news).

The Germans and the IMF seem to have a lot of pressure to bail-out poor Greece and in the end, probably will. But until then, the safety trade of US treasuries will be an attractive trade as credit concerns drive investors to safety. The 1-month t-bill even went negative.

Once a bail-out will come, markets will seems to resume "growth" only until the next crisis arrives. Japan, any of the PIIGS (maybe not Ireland yet), England, Dubai are only a few place where the next crisis could come...... will we see a sovereign default this year, it is possible, anything seems possible now.