8 things for markets to watch out for in 2010

Jean-Claude Trichet's term as president of the ECB will expire in 2011, but by the end of 2010 the jockeying for his job will already have started. They can't have another Frenchman, nor can they go for the European Union's default option of appointing an obscure Dutchman. They have already done that. Why not an Italian? True, it's not a nation one associates with sound financial management, but Mario Draghi has impressed the markets as Bank of Italy governor. And, hey, he worked at Goldman Sachs Group Inc. The Goldman alumni already run the rest of the world, so they might as well add the ECB to the list.

5. UK Strikes

In May, Britain will get its first Conservative government since Margaret Thatcher became prime minister in 1979. The country is in an economic hole now, just as it was then. The Conservative Party leader David Cameron will want to get the pain in early, cutting public spending and slashing corporate taxes to revive enterprise. With that kind of provocation, he will find the unions are still a force to be reckoned with. Expect some long, bitter strikes and plenty of wobbles for the pound as currency markets wait to see who wins.

6. Irish Economic Comeback

The Irish are in the doldrums. The economy has shriveled. The budget deficit will be catastrophic at 11.7 percent of gross domestic product this year. But remember, the phrase “the luck of the Irish” wasn't coined for nothing. Alone among the developed economies, the Irish have been ruthlessly purging the excesses of the bubble. They have cut public spending, let house prices fall to a level where people can actually afford them, and kept corporate taxes low. By the end of 2010, while the rest of the world tries to figure out why taking on more debt isn't the best way to fix a debt crisis, the Irish economy will come roaring back.

7. The Lawsuits Start Flying

When the going gets tough, the lawyers get busy. There were plenty of deals struck during 2006 and 2007 that have about as much chance of making a profit as Bernard Madoff does of spending Christmas at home with the family. Funnily enough, no one ever rings their lawyer to complain about a deal that made money. When it loses money, it turns out that it was fraud. Expect a wave of lawsuits as dozens of private-equity managers, hedge-fund investors and bank traders decide that big deal they did in 2007 was illegal — and they want their money back.

8. 'Long Fuses' Drive Us All Crazy

In the aftermath of any debt crisis, it takes a long time for the problems to become apparent. It depends on when debts come up for rescheduling, or how much cash companies have tucked away. Like Dubai, they will detonate, but they are on a long fuse. The trouble is that there are lots of long fuses out there and quite a few explosions to come. So while it's a perfectly good phrase right now, by the end of 2010 we'll be fed up with it. We'll probably be fed up with the debt explosions as well.

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