Stagflation cometh? Already here?

The next reading of the CPI comes out in mid-July. A negative number will mark the third straight decline and will surely inflate the volume of talk about deflation. (As the historical data show, we haven't seen four straight monthly declines in the CPI since the 1930s.) But when considering the risks of deflation, we shouldn't look at the CPI in isolation. The phenomenon of prices falling modestly at a time when the economy as a whole is growing at a 3 percent click, as it is today, isn't much to worry about. "The combination of slow growth or stagnation and deflation is the thing that's scary," says Michael Bordo. In other words, look out for stagflation.

That is enough to get me worried all the more about a disastrous combination of employment stagnation and deflation, about which I have blogged enough ... Here is a post from back in October 2008 where I quoted extensively from Dr. Doom himself!

Speaking of him, here is Roubini's comical response to Financial Times' quick survey of summer vacation plans:

Where are you going on holiday this year?Recently I have lived like the George Clooney character in Up in the Air (a film I watched on a plane). If I get a vacation this summer it would possibly be a tour of crisis-hit countries – if I am still allowed in them: Spain, Ireland, Iceland, Latvia, Greece and, maybe, the oil spill-ridden US Gulf Coast.