Roubini's Global EconoMonitor: Deflation and Stag-deflation Coming Soon

This is some scary stuff that President Obama and the rest of us will be dealing with next year.

From RGE - Nouriel Roubini's Global EconoMonitor, chosen as one of the world's best economics websites delivering "ahead-of-the-curve global economic insights":

(L)ast January I argued that four major forces would lead to a risk of deflation (or stag-deflation where a recession would be associated with deflationary forces) rather than the inflation risk that at that time – and for most of 2008 – mainstream analysts worried about: slack in goods markets, re-coupling of the rest of the world with the US recession, slack in labor markets, and a sharp fall in commodity price following such US and global contraction would reduce inflationary forces and lead to deflationary forces in the global economy.

How have such predictions fared over time? And will the US and global economy soon face sharp deflationary pressures? The answer deflation and stag-deflation will in six months become the main concern of policy authorities. Let me now explain in more detail why…

The political ramifications if Roubini is at all correct in his assessment will see new policy prescriptions from a President Obama constituting a new New Deal that will have Republicans screaming into the next century.