Does A Spanish Bank Bail-Out Give The Vigilantes The Green Light To Move To Italy?

The biggest news this morning is the talk that Spain's Rajoy will discuss 'how to shore up' his banking system with the EU officials this weekend. As SocGen noted earlier, EURUSD managed a 30 pip bounce and then promptly sold off - 'That says it all really'. A  'bailout' of Spanish banks poses a lot more questions than it answers.  Specifically that this crisis began with Greece and now has spread to Spain. Will the focus move on again?  The market believes that European officials have yet to put in place contingencies that will stem contagion and stress on other European countries. Hence the anemic response from currencies. What is clear is that Greece, and now Spain, have set the dismal example for their peers: 'Crush the banks, then get bailed out' which leaves only one course of action it seems, banks will be shorting themselves to force action from their overlords in Berlin and Brussels. If we get a risk-on bounce in Italian banks, on any weekend 'interim' resolution for Spanish banks, then shorting into that strength seems more than appropriate (or long credit, short equity as burdens are shared).