The market is buzzing with chatter of an EU restructuring over the Easter break. Spreads to German notes are blowing out but that is a symptom not the disease. The problem is/was that peripheral Europe was able to borrow so much from the world when spreads were microscopic. We compared these countries to the US GSEs early in the crisis. Agency spreads remain locked in the 24 over T "Emerald City" while PIIGS have been blown away by the selling tornado.
Silver, Gold and The Wizard of Oz are good themes here. If the classic movie was shot correctly, the "real world (the dust bowl)" would have been color and the fantasy black and white. Such it is with Greece et. al. If the credit markets were "real" in the 2003-2007 cycle, higher yields and wider spreads would have prevailed. Fantasies are hard to "leave" however, especially when the alternative is so dire. Now markets have separated the credits (and overshot as usual) and bureaucrats are violently clicking their heels wishing to go back in time.
I would sum it up this way: "Auntie Em, there's a twister coming!"