Calm down. The Fed will continue its policies until eternity or the system crashes, whichever comes first. At its present rate of expansion, the Fed balance sheet tips an S&P 500 of about 1950 by the end of the year. Attempts to shrink the balance sheet will lead to a market sell-off. Recall that the last time the Fed tightened the money supply in 2006-7, the stock market entered a bear market that did not end until QE began in earnest in 2009.
The Borgias and D'Medicis would be proud. After two months of political intrigue, Italy will finally have a government. The Grand Coalition will pass electoral laws attempting to limit the power of the 5 Star Movement and make some necessary economic reforms. After the government does the dirty work, Berlusconi will attempt to bring it down and seize power in another round of elections. Just when you think Italian elections are over, you realize that they have just begun.
No good deed goes unpunished in politics. The Socialists/Greens took over for the Independence/Progressive Alliance, who were responsible for Iceland's banking crisis in 2008. Since then, Prime Minister Johanna Sigurdardottir has guided the country back from the dead. Her policies have led to easily the best economic performance among the crisis countries. Compare Iceland and Ireland since their banking crises erupted, and you would think that the Socialists would have the support of the people:
Think again. Icelandic voters are set to reelect the parties that got the country into trouble in the first place. Good leaders that make tough decisions to help their countries are seldom appreciated. Note in appreciation for his shrewd leadership that the British threw Winston Churchill out of office one month before the end of WWII.
With all of that central bank money swamping markets, another short squeeze is on tap for 2013. As shorts abandon their positions, stock prices hit dizzying heights. There may be an opportunity here. US Steel and JC Penney have taken a beating, and there may benefit from a relief rally.