You could feel the fear in the market Wednesday and to be honest, it's about time. Everything from economic data to Spanish bank failures points to a turbulent road ahead and yet, until today, the sense of urgency somehow felt lacking even as stocks declined by more than 6% for the month (see here). Things felt different Wednesday however as optimism regarding a euro zone banking union was quickly extinguished by Germany and polls showing the anti-bailout Syriza party is well on its way to winning the (re)election in Greece on June 17 (translation: between Germany and the Greek voters, this thing is sure to fall apart). These events, coupled with news that, as we predicted (see here) the ECB rejected Spain's rather ridiculous plan to pump Bankia full of Spanish sovereign debt which the bank could purportedly pledge as collateral for cash--the ECB wrote the plan off as being dangerously close to so-called 'monetary financing' (although if it were being honest with itself, the ECB would know it has been financing governments since the first LTRO). This means Spain will be forced to issue more debt in the worst possible market (yields on the Spanish 10-year note shot-up 21bps Wednesday to a frightening 6.66%) to recapitalize Bankia although it is unclear whether this is even feasible given that rates could rise above 7% before the plan even gets off the ground. The spread between Spanish and German bonds widened to a euro-era high. Worse still, deposit outflows from Spanish banks reportedly topped 31 billion euros in April. All of this helped European shares to close down nearly 2% across the board, while stocks in the U.S. we're off more than 1.2%. Meanwhile, the two best gauges of fear, benchmark 10-year Treasury bonds and the VIX simultaneously shouted "risk-off" from the rooftops as the yield on the 10-year touched an all time low of 1.63% and the VIX rose 15%. Look out below if the ADP and NFP numbers miss Thursday and Friday. Also, the VIX/VXV term structure is still pretty steep, indicating traders do indeed expect volatility (fear) to spike considerably as Greece exits and Spain seeks a bailout.