Paul Krugman has said he supports temporary rent caps to curb speculation in the housing market, while arguing that the underlying fix is simple. In an interview with Euronews, the American economist said building more housing and removing the restrictions that make construction difficult was enough. He acknowledged that the current housing market is unbearable for many people.
Krugman described the Berlin model as imperfect but said it would not take long to take effect if construction advanced. “We are talking about a few years at most,” he said. “The positive effects come very quickly.” The Berlin model is extended to 2029 and allows price updates up to 10 percent above the local comparable average.
France’s debt and the euro
Krugman turned to France’s public debt, which the article puts at 119 percent of GDP. He said that if France were on a credible path to fiscal sustainability, it would not have to tighten its belt in the short term.
He said France’s problem was relatively simple, pointing to a retirement age he described as extremely low. A French crisis, he warned, could bring down the entire euro system. “This would be a catastrophe for Europe,” he said.
Limits of a rescue
Krugman said it was not possible to rescue 20 percent of Eurozone GDP. “There are not enough resources to do that,” he said.
He also called for temporary protectionism. “Unfortunately, now is a time for some temporary protectionism,” he said.
Source: Euronews
