I remembered in 2007.. we had an European banker coming to Singapore to pitch a private equity project..
'the eyes/wheels/whatever you call ferry wheels'... then, all these wheels were sold on the business case of the london eye, which broke even after 1 or 2 years.. and everything was so rosy..
So the guys were like guaranteeing 5% p.a. for the next 10years, and company to redeem the investment at the end of 7 years or bump up the interests.. got one of my banking colleague very excited.. saw it as a '7y principal guaranteed investment product with 5% p.a. return'...
What is the problem ? well, obviously as a banker my colleague failed to recognize the most basic issue that the entity that were giving these guarantees are themselves not credit worthy.. so whatever guarantee they give is only good until they go bankrupt.
Same in these cases.. for someone to give a 10y 10% p.a. guarantee when the pound rates are like 1%.. makes naive buyers think its free money but obviously doesn't match the in versus the outs..
but well, the world need stupid money for the smarter ones to profit.. we just have to live with it