If you want to see the best indicator of market expectations for the likelihood of widespread fiscal failure in Europe, you need look no further than the shorter end of the Irish yield curve.
Ireland is supposed to be backed by a line of credit that will float our finances for maybe 2-3 years. You shoud (should) feel relatively comfortable about lending to the Irish government over such a term given that they the EU/IMF credit line will provide funding for close to that period. And up until only a few months ago markets appeared to feel that way. Not so now. 3 year Irish bonds are yielding 9% to maturity.
Markets have a high expectation of a default event. The only way you could be fearful of such a scenarion would be if you believe the much trumpeted EU support fund, the EFSF, will burn through its €750 billion leaving nothing additional for Ireland to call on. The only place such demand will be coming from is Spain pretty much.
And this fear doesn't really appear to have hit the media headlines yet. This is the markets say that the Eurozone is going to default.