It’s hard to know what to get more worried about — the United States entering territory where a return to recession is quite possible or a Europe where the financial turmoil is spreading apace to Italy and Spain.

While the US government appears to have averted the disaster of running out of money, part of the price being paid by the Obama administration is to further curb spending at a time when the economy is already showing signs of weakening again.

To divert my mind from thinking about the consequences of unemployment going well over 10 per cent again I’ve taken a punt on the country’s economy going into recession again. Paul Krugman this morning put the chances of that happening at 50:50 so I have taken a bit of Intrade’s 29%.

In Europe the price being paid by the Italian Government to borrow money has reached a new high and yields are on the rise again in Spain.