Tighten your belts - it is starting

From Nouriel Roubini writing at the Financial Times

Mission impossible: stop another recession
The first half of 2011 showed a slowdown of growth � if not outright contraction � in most advanced economies. Optimists said this was a temporary soft patch. This delusion has been dashed. Even before last week�s panic, the US and other advanced economies were odds-on for a second severe recession.

America�s recent data have been lousy: there has been little job creation, weak growth and flat consumption and manufacturing production. Housing remains depressed. Consumer, business and investor confidence has been falling, and will now fall further.

Across the Atlantic the eurozone periphery is now contracting, or barely growing at best. The risk that Italy or Spain � and perhaps both � will lose access to debt markets is now very high. Unlike Greece, Portugal and Ireland these two countries are too big to be bailed out.

He sets up the scene and then gets to the heart of the matter:

Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery. Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions � all have been tried. But now we have run out of rabbits to reveal.

Fun fun fun... Meanwhile, from Reuters:

Gold hits record over $1,715/oz as risk assets slip
Gold vaulted above $1,700 an ounce for the first time on Monday after pledges by the G7 and the European Central Bank to quell the turbulence in the financial markets did nothing to put investors at ease.

Gold prices go up when everything else becomes uncertain.