The journey to global recovery from credit crisis looks to be well under way. Economies from Hong Kong to Germany to the US have popped out of recession. Consumers everywhere seem a bit more confident. Central banks are starting to hint at ways to unhook the financial community from the life support of liquidity and quantitative easing. All that remains, dear investor, is to get through the shopping mall. Unfortunately, the basement is still crawling with zombies, and the chances

are that they will find their way out in 2010 while you’re trying to navigate your way to the fields of prosperity. Some of the risks you’ll be running next year are discussed here.

Searching for a spine

Government bailouts mean risk has flowed to public finances from private banks. Increased risk typically means lower ratings and higher borrowing costs — except debt markets are distorted.

Central banks are buying their own government’s securities and commercial banks are repairing their balance sheets, to the point where even the most watchful bond vigilante will struggle to punish miscreant borrowers.

If the bond market can’t send a message, the rating companies should. Greece got downgraded this week; Standard & Poor’s revised the outlook on Spain’s debt to negative.

Bigger, higher-rated countries might be next. Investors may learn the hard way that it isn’t just collateralised debt obligations and structured finance products that can have top ‘AAA’ credit ratings one day and something lower the next.