Sunday, July 10, 2011

adjusting the product price level to the debt grid

greece has a euro denominated debt grid

a reduction in its price level will indeed cut the trade gap
but what about the increased burden of the existing debt grid
there greece faces the same problem any deval of the national currency
 system faces if burdened with a debt grid denominated in  foreign currencies

the ability to expand foreign earnings faces the marshall lerner effect short term