Finally preferred investment banks and few main street banks will get a breathing space in United States. These banks now found a scapegoat in taxpayers and will sell all their toxic worthless shit called mortgage backed securities at a price above what free markets would normally pay.

Investment banks and main street banks will be on a consolidation spree and emerge stronger.

How the last few months and coming 2 years effect emerging markets?
China and OPEC countries will be on the receiving end as they are bag holders of Dollars. While US will be busy printing $700 Billion, the net worth of these country’s dollar holding will be depreciating.

Indian IT majors like Infosys, TCS, Satyam, Wipro will pay the price for their own stupidity. These company’s stocks will be on a slippery slope. Their market caps may shrink more than 50% of their closing market cap on last friday (oct 3rd, 2008).
These IT nava ratnas have run too far in outsourcing business blindly and often stupidly. They didn’t diversify at all in their product offerings. They simply misused Indian IT talent for coding and servicing foreign clients. They were so obsessed with their outsourcing models that they shifted their attention from US to Europe for outsourcing. In order to report bumper earnings, they started hiring IT folks from China, Vietnam etc.

In one line, IT outsourcing giants will see their stocks decimated in this panic moments which will last atleast 8-10 quarters.

Where will $700Billion go?
Once US investment banks and main street banks clean their balance sheets and consolidate/merge, they are not going to pump that money back into US economy. The reason is, US consumers are already in deep debts and do not have appetite for more debt. Instead these banks will take that money and provide liquidity lifeline for emerging markets where there is potential for growth.

Liquidity will flow to India and China where it is needed most.

Real Estate will crash another 20% in India as banks will be more careful in lending money.