Haydn Shaughnessy, Forbes.com

Has Spain put itself in an impossible position with the Euro? The mixed messages coming out of Madrid over the past  24 hours suggested both that Spain was acknowledging it had nowhere left to turn other than a bailout. And at the same time insisting there would be no bailout – requested or accepted – or as the Finance Minister put it graphically, the men in black would not be coming. There are only 24 hours to go before we find out, 24 hours before Spain launches its next bond auction, 24 hours to sink or swim.

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Even at the 11th hour Spain is insisting it will receive money with no bailout conditions. OK, they say, we can have some kind of a bank bailout that is not an IMF bailout, a bailout that is not painful.

Spanish Finance Minister Montoro also suggests that Spain is too big to bail out, “From the technical point of view, Spain cannot be rescued”, El Pais quotes him as saying – a worrying signal to send to the markets.

Under the no-bail out scenario, the European Central Bank would simply supply money to the Spanish banks, rather than the Spanish Government receiving aid. There are good reasons why that won’t happen, and the Spanish leaders know it. So the unanswered question out there is what happens next – and by next we mean the next 24 hours before Thursday’s bond auction.

Here is why the EU will not step into save Spain’s banks, without a formal bail out:

1. A direct bank bailout needs constitutional change that cannot happen quickly. Countries like Ireland would have to hold a referendum first.

2. Germany, Holland and Finland all oppose it. Germany already stated it won’t do it and Germany does not have to back down.

3. If Spain gets an easier ride than Ireland, Portugal and Greece, what happens then? Germans are asking this question - will the Irish come back and ask to change the conditions of their bailout? Will the Greeks force the German’s hands?

So why will Spain’s behavior break the Euro? Spain has made it a matter of honor that Germany does make this what Newt Gingrich might call a grab your ankles moment. They firmly believe German banks should carry a substantial part of the burden. They believe Germany is being unrealistic about where it’s wealth comes from – the single European market helped Germany to become wealthy and the single market is in trouble, not Spain.

On the other hand Spain has still to come clean about the extent of its banking losses and once the aid process begins we will find that these losses are much larger than the Euro 19 billion requested by Bankia. Bankers are already talking about Euro 40 billion, and that’s before the banks open their books. Seekingalphaville quotes veteran analyst Mark Grant’s estimate at close to Euro 400 billion

Come Thursday there will be blood on the carpet though. The full extent of Spanish financial humiliation will be clearer, if not fully known. The Eurozone’s 4th largest economy will be in an IMF program and the bad blood between debtor and creditor nations will have reached an irretrievable low. Spain will feel betrayed and will see the EU as inflexible, incompetent and vindictive.

Of 17 Euro zone nations, four will have been bailed out. Eyes will turn to Italy with a sense of inevitability. Whichever way you look at it, the European economy will look and feel broken. The end of the Euro can’t come soon enough, for everyone in the south and Ireland.