And Now, Courtesy of Bridgewater... It's Italy's Turn

Earlier today, by way of a simple graphic, the world's biggest hedge fund, Bridgewater, was kind enough to remind the world just how pointless any debates about Europe's future viability are if the primary funding conduit: the EFSF/ESM hybrid can not provide the cash needed for even half the combined funding needs of Italy and Spain. Now, Bridgewater strikes at Europe once again, this time redirecting the general attention to where it is long overdue: Italy.

Because while Spain has for months now, ever since the publication of the 'Ultimate Doomsday Presentation' right here in Zero Hedge on April 7, been punished with ever widening bond and CDS spreads, and a local stock market which recently hit a 12 year low, Italy has largely avoided the vigilantes and general bearish scrutiny so far. The main reason for this is the assumption that Italian Banks had loaded up on enough LTRO cash that they had sufficient dry powder to buy up Italian bonds in the primary and, more importantly, the secondary market for at least a few more months. We bold "the assumption" because as Bridgewater calculates, the 'dry powder' number is far, far less than conventional wisdom had been expecting. In fact, at negative €48 billion in residual LTRO capital, Italy flat out has no additional cash with which to plug ongoing debt funding needs.

And with that, it is time to wave goodbye to the always wrong conventional wisdom, and to wave in the arrival of the vigilantes, who had been so missed in Milan since the fall of 2011 when they nearly toppled Europe's fulcrum economy, and only the sacrifice of Silvio Berlusconi prevented an all out catastrophe on November 8, 2011. This time, the token replacement of an unelected token technocrat (and Goldman crony) will no longer appease anyone.

Source: JP Morgan's Michael Cembalest