This is pretty much how things are going to be: JP Morgan gets some more of the tax payer`s money in form of a more than generous bailout. Fed will bring back to life credit markets by injecting a massive more than a trillion dollars QE3, giving some more crack to the market, buying some time until the presidential elections. Some more debt ceiling circus in the autumn, followed by some more black box economics. What about Europe? About that, in the next episode.
How do banks maintain the required return on capital when yields are record low and capital constraints are more and more restrictive ? By increasing the risk and consequently decreasing the Value at Risk. Until it all blows up.