RiskTrade

Avoid Banks' Common Shares; Opt for Preferreds, Minibonds

Pointless Article. Buying pref rather then common makes little sense. Buying pref only caps your upside while really exposing you to the same risk as common. In a default pref holders and common holders both get nothing. Whats worse is that bank pref suffers from the risk of forced conversion to common. Further pref usually involves liquidity risk relative to the common. Also from a relative value perpsective it makes more sense to buy the sub debt rather then the pref.

Government Risk Rises: Credit Markets Face Structural Collapse

The reason some traders have bought protection on the US Sovereign is not because they expect the US to default but because they think things could get worse and spreads will widen thereby allowing them to close their position at wider spread levels. If the U.S were to run in to trouble with its budget deficit we would more likely see a downgrade rather then an outright default/ or debt restructure. Downgrades are not credit events and so the CDS is unlikely to be triggered.
Honestly, if the US were to default the rest of the world would be in far more problems as they are dependent upon u.s consumers, and investors.

Yields on treasuries will no doubt rise, and the u.s dollar will at some point fall, and markets will take a while to recover but we are not in danger of a systemic collapse.