An Englishman’s rented flat is his castle

This is quite brilliant.

The two factors destroying market liquidity are finance and price volatility.

A simple (and administratively cheap) process for hedging against future price changes will allow far more buyers and sellers to trade.

This offers wider economic potential: higher returns on assets (pensioners moving out of big houses, etc); more geographic mobility (employees moving to places with better employment prospects and productivity); and better income smoothing (families better able to smooth income changes by releasing/ repurchasing hedged equity).

Win all round. Certainly, there is enormous potential for financial services to raise productivity and living standards.

Anybody in doubt should investigate how Britain funded the fleet that won at Trafalgar, how Britain funded Waterloo, how Dutch and British merchants conquered the world, and why canals, railways, mines, factories and agriculture received enormous investment in Northern Europe but nothing in the Catholic half.

Efficiently operating financial markets are crucial for living standards. There is enormous potential for further improvement, and a market to hedge house price volatility is pretty fundamental.

I personally wouldn't want JC Flowers as co-owner of my house.

Ummm... overvalued asset, complex financial instrument + new source of demand in market that suffers from unresponsive supply side. In what way does that present a solution, apart from to financial intermediaries see to get a slice of the action?

I thought the Economist was meant to be a little more critical in its thinking, there is the whiff of a puff piece after a long lunch with a couple of market actors to this piece.

Must do better