A bankers dream: Subsidies and bailouts

During the recent bubble in real estate in Spain, banks amassed a nice gargantuan sum of loans (created more or less ex nihilo through the fractional banking process) which are now not worth their carrying value.
To match their balance sheets with reality, they are forced to write these assets at market value. This will mean a massive balance sheet contraction and a subsequent unwillingness of banks to further expand credit due to losses, and a weak economic outlook forces them to retrench without additional credit demand.
According to business.hr, Spanish banks need 65 billion euros of fresh capital.:

“Eurozone finance ministers agreed on Saturday that the Spanish government needs to borrow up to 100 billion euros to help banks after the bursting bubble in real estate markets and banks have problems with uncollectible loans.”

Well, this is what happens when you try to short circuit the wealth generation problem through credit expansion. Interest rates shoot up to signal a shortage of available savings to complete the initiated projects and the asset side of the balance sheet contracts. Gee, I wonder where the money is going to come from? Savings? Future taxes? Credit expansion?
Its really unbelievable that even after the crash, politicians are still fixated on generating overall aggregate demand to offset the credit collapse. They are fixing a debt issue with more debt. Brilliant. And after the banks receive this cash, just as they did with LTRO and LTRO II, where are they going to use thus liquidity? To increase loaning out to business ventures. I doubt it. They will use these funds to offset their loan losses and add to their loss provisions.
Certainly, they will pay no taxes in the immediate future, thanks to the tax carry forward loss.  Lavish bonuses will be paid and everything will look fine until the bill is due once more and the loan has to be rolled over at an even higher yield.
The ring-around-the rosy continues.