Straight Outta Davos: Top Economic Risks of 2010

(MoneyWatch)  Feast on this, you pessimists, doomsayers and closet lovers of calamity: The World Economic Forum's 2010 global risk report!

It's a dangerous planet, alright. You've got your economic risks, your environmental risks, technological, geopolitical and societal risks. Me, I'm a sucker for infectious diseases and (as a New Yorker) coastal flooding. Not surprisingly, the Forum, the good folks who bring you the annual Davos gab-fest, kicks off its report by focusing on the disaster du jour -- fiscal crises and unemployment:

Government debt has reached historical levels for peace time in a number of advanced economies. Though necessary at the time, the costs of their interventions, combined with the long-standing burden of pensions and health spending, have left several major economies in a historically weak fiscal position with mounting debt....

Governments, in the U.S. and the United Kingdom in particular, are now faced with a set of tough choices, all with consequences for future global risks. The most pressing is how to time a gradual and credible withdrawal of fiscal stimulus so that the recovery is sustained but not so late that fiscal deficits cause fears of sovereign debt deterioration and a flight to safety that could drain their economies of capital and confidence.

That spiraling U.S. debt has led some economists to question if the leader of the free world., which faces a paltry $66 trillion financial gap, is in fact bankrupt. Banks are toppling like ducks at a shooting gallery. Health and retirement costs are soaring. The national savings rate is minuscule. Hey, is that an iceberg dead ahead (click on chart to expand)?

Ah, but what about hope? You know, that fragile thing that keeps us lurching forward through the gloom toward the happy ending that comes just before the credits roll? Why, it springs eternal, of course.

Even as the U.S. economy continues to lose jobs, some sectors show signs of life. The financial sector has backed away from the precipice. And now that Wall Street is minting profits again, talk in Washington has finally turned to helping the truly needy -- small lenders and businesses. Even the congressional psychodrama over financial reform appears to be reaching a head, as the White House leans harder on mega-banks.

So much for the good news -- now back to the fun stuff. Without further ado, here are (in no particular order) the Forum's top global economic risks of 2010. Enjoy:

• Food price volatility. Rising and volatile prices affect poor consumers globally (those whose consumption basket is more than 50% food)

• Oil price spikes. Sharp and/or sustained oil price increases place further economic pressures on highly oil-dependent industries and consumers, as well as raising geopolitical tensions

• Major fall in the U.S. dollar. An abrupt, major fall in the value of the U.S. dollar with impact throughout the global economic and financial system

• Slowing Chinese economy. Sudden reduction in China's growth to 6% or less

• Fiscal crises. Overstretch of fiscal positions generates unsustainable levels of debt, rising interest rates, inflationary pressures and sovereign debt crises

• Asset price collapse. A collapse of real and financial assets in advanced and emerging market economies leads to the destruction of wealth, deleveraging, reduced household spending and demand

• Retrenchment from globalization (developed economies). Multiple developed economies adopt policies that create barriers to flows of goods, capital and labour and fail to engage with multilateral governance structures to address global challenges

• Retrenchment from globalization (emerging economies). Multiple emerging economies adopt policies that create barriers to flows of goods, capital and labour and fail to engage with multilateral governance structures to address global challenges

• Burden of regulation. If not balanced, regulation can have unintended consequences for industry structures and market competition, distorting the allocation of capital and constraining investment and the power to innovate

• Underinvestment in infrastructure. Failure to invest in physical or intangible infrastructure hinders growth and development