I am using a Displacement Modifier with an Image Texture.
Now in the Displacement Modifier panel you can chose the Texture Coordinates. On this page http://wiki.blender.org/index.php/Doc:2.4/Manual/Modifiers/Deform/Displace I read that "Global – take the texture coordinates from the global coordinate system" and "Local – take the texture coordinates from the object’s local coordinate system". First, I don't understand what is meant with a local and global coordinate system but I guess since I am using a Texture Coordinate (generated) that I should chose LOCAL ??