Roubini outlines the “new normal”

Lake Como, Italy: New York University professor Nouriel Roubini said expectations of decoupling will not be met as economic slowdown in the US impacts China, Japan and the euro zone. The ''new normal'' for 'Dr Doom', as he has come to be known after his accurate prediction of the onset of the US recession, is that even if there is no double dip it will still feel like recession.

"We have to expect the new normal," Roubini told CNBC on the shores of Lake Como, Italy at the Ambrosetti Forum economics conference. "We do not need a double dip for it to feel like recession."

"In Europe, Germany is strong but the rest of the continent is pretty dismal," he said. "The rest of the world cannot cope without the prop of the US consumer. Chinese growth in the second half will be 7 per cent."

''Get used to it," Roubini said. "Deleveraging has to continue as governments and consumers deleverage in the developed world."

''The biggest banks have been backstopped, but 800-plus small- and medium-sized banks in the US remain on the critical list and half of those will go bust."

According to Roubini, the dollar, the yen and the Swiss franc may turn out to be better investments than gold should the world economy slip back into recession.