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: Soothsaying is not a very respectable profession. Like Cassandra, those whose forecasts are correct tend not to be believed. Most people are drawn into extrapolating from current trends and are thus surprised when things change. That is one reason why economists are so hopeless at predicting recessions.

In late 2007 Buttonwood ventured to forecast that both commercial property and eastern European economies would be a source of trouble in 2008. Although those predictions turned out to be right, neither was remotely close to being the big story of the past 12 months.

The sheer scale of the damage wrought on the banking sector by the credit crunch was a surprise to almost everyone. It is true that some people forecast that the debt burden of English-speaking consumers would lead to economic calamity, but many of those Jeremiahs had been predicting disaster for a decade or so.

If 2008 was the year of systemic risk, particularly in the financial sector, 2009 seems likely to be a year dominated by specific risk. In other words, we can be sure that more companies will default on their debts. The current default rate on American high-yield bonds is less than 4%. Barclays Capital is predicting a rate of 14.3% by the second half of 2009.

Inevitably some of the defaulters will drag other companies down with them. Equally certain is that the downturn will lead to the emergence of financial scandals, along the lines of Enron and WorldCom in 2002. Recessions uncover what auditors do not, as the old saying goes.

But corporate collapses would hardly count as the big surprise of 2009. What would? Country risk also returned in the course of 2008, with Iceland the most notable example. But although emerging-market bond spreads have widened, they have not done so to anything like the same extent as high-yield debt. There may be some more country defaults in 2009, as export volumes and commodity-related revenues slump, and as Western banks, under political pressure, focus on domestic rather than international lending.

Markets have a terrible tendency to inflict maximum pain on the maximum number of investors. For example, if the consensus is bearish on the dollar, investors will be positioned for a decline in the American currency. If the greenback then rises, investors are forced to buy the dollar, pushing the currency up even further.