4. Strong banks will clean up.
Once the bazooka has been fired, and it is very unclear what kind of bazooka could finally be fired, those with the ability to ride the ‘risk on’ rally to its full extent will clean up. Whether this involves riding the stock market higher, making huge profits on bond holdings made good by the ECB or EFSF or snapping up assets off rivals on the cheap, the winners will win big. At the end of the year, expect a number of big banks that win to be paying big bonuses to staff despite the screaming of politicians and voters.
5. U.S. debt will dominate.
When the dust settles on the euro zone debt crisis and a plaster has been attached to stem the bleeding, investors across the world will remember the U.S. federal debt is now over $15 trillionand rising fast. In an election year with votes to be won, nothing will be done to significantly lower federal spending, and the real-time debt clock will keep ticking higher. How this will be brought under control — whether U.S. debt is worth 100 cents on the dollar and how much that dollar is worth in euros, pounds, francs and yuan — will dominate as America heads to the polls.
The sun as always will rise in the east, and the woes of the west will see Chinese influenceincrease, even if their return on their dollar reserves does not.