James DeLong wonders what the business model is for Wall Street.

Or, “We borrow from the government at low rates and lend back to the government at a premium, and for that we get paid a lot.” (From the investment analyst GaveKal, on the Greek bailout: “European banks should now make enormous profits by acting as a permanent conduit for ECB [European Central Bank] lending to various weak EMU [Economic and Monetary Union] governments. After all, borrowing money from the ECB at 1% to lend it back to EMU governments at 5% plus, while enjoying a permanent liquidity guarantee from the ECB, is not a bad business to be in!”)

Like me, he is puzzled that folks who do not seem to have produced the social benefit that would correspond to their incomes are viewed as necessary to bail out.

Also, via Tyler Cowen, we have this article, in which Steve Barrow of Standard Bank gets to make a simple but obvious point.

He that says if they had wanted to “save” the euro, they would have tightened monetary conditions, but these have in fact been loosened .

I hope so. The talk of “sterilization” suggests instead that the European Central Bank is undertaking Piggy Bank operations rather than monetary expansion. But the decline in the euro is consistent with monetary expansion. As Scott Sumner says, competitive devaluation would be a good thing.Meanwhile, I have rejiggered my portfolio, just so you know. I decided that TBT may be a good way to play short-term movements in interest rates, but I find it unsatisfying as a long-term bet on high inflation and high interest rates. As rates move up and down, they seem to lose more when bond prices rise than they gain when bond prices fall. At least, that’s how it looks to me. Maybe they are net long options, so they are paying an insurance premium. In any case, I shifted more into PCRIX instead. My thinking is to use commodities as my reserve currency. But I refuse to be a gold bug. I am pretty far off the deep end as it is, and that would be just about the last step.