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Patrick Allen on Europe
CNBC.com | December 01, 2011 | 02:32 PM EST

The big bazooka will come at the very last minute. When RBSin the UK was finally nationalized following the collapse of Lehman, the then-Chancellor of the Exchequer, Alistair Darling, said it was 45 minutes from going under. The hard line rhetoric from Angela Merkel and the German authorities will mean similar stresses will be needed before the German Chancellor can sign off on a multi-trillion euro policy response needed to avoid the collapse of the euro zone bond market and financial system.

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.

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