FTSE 100 banks stay under pressure

LONDON — Investors seized on clear signs of policy support from Japanese and European central banks on Tuesday, driving world shares higher and denting appetite for safe-haven German bonds. Heightened expectations the U.S. Federal Reserve will soon taper its stimulus programme and a rebound in Japanese stocks saw the dollar strengthen by 1.3% against the yen, its biggest one day gain in nearly three weeks.

The EU has accused Spain of overstating its 2011 budget deficit thus making it easier to make progress in 2012. Furthermore the EU is upset about delays in austerity measures ahead of regional elections next month.

EU officials have hatched a plan to make banks and bondholders take losses for risks, not now of course, but after 2013. In the meantime, taxpayers will shoulder 100% of the losses for bank lending stupidity. On this confidence inspiring news, European bonds rallied sharply. Bloomberg reports EU Bank Writedown to Exclude Pre-’13 Debt

Greek banks have been shut off from regular ECB liquidity operations due to lack of sufficient collateral. Today the Banks have that collateral thanks to a disbursement of funds from the EFSF which in turn will be used as collateral for more loans from the ECB. If this makes little sense to you it is because it should not make any sense to anyone. It is another act of desperation in a long line of desperate acts.