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Object Zero
@Object_Zero_

In the UK,

I can buy index linked senior Gilts that yield 5.03% (22/03/29) and on the same day I am advertised similar fixed term mortgages for 3.8%

I could borrow £500k against a property, pay the bank £19,000 pa interest and sink the cash into inflation proof Gilts that pay me £25,150 pa.

Obviously I have skipped taxes for the sake of simplicity (everyone’s taxes are different), but you shouldn’t be able to carry trade the risk free rate of return INSIDE a currency?

Why are UK banks seemingly offering this arbitrage?
Are they just trying to prop up their residential property books?

It feels one of those things you notice that screams “something is going to break soon”.

https://x.com/Object_Zero_/status/1954821166029250751

The main mortgage lenders are in the business of borrowing from their depositors at 1-2%, leaving them very well able to compete downwards to below 4% lending rates.

Sure: but then why lend to people at all, when you can earn a (much) better return lending to the government?

Volume?

The volume of mortgage lending exceeds even UK government borrowing per annum. Plus there's nothing stopping banks from doing both - and if both are profitable, then why not do both and make a profit on both volumes.

If you only lent to the government and cut off mortgage profits you may increase your proportional profit but not your actual gross profit as you'd be leaving profitable business on the table to be snapped up by someone else.

It's just a weird artifact. You would expect that 30 year index linked gilts would trade at a discount to mortgages, because banks would choose to purchase them in preference. Simply: they have a smaller capital charge (from a risk weighted assets point of view), and are currently offering essentially guaranteed better returns.

In an efficient market, you would expec them to trade at a 25-75bps premium to mortgages.

I don't think the average UK consumer realises just what good deals the UK mortgage market gives them. The profit is all in customers being on the svr - something the USA doesn't really have with the very long terms there

Plod telling people to have a go is the most irresponsible advice I've heard. People will get injured or sued or prosecuted. If robbers know people will try to stop them they won't stop robbing they will just build in the need to handle the stoppers. And they will likely both be tooled up and handier than the would be heroes.

Just stand back and let crime happen.

The thing about this is that you just know that 99% of the people saying "The public should have a go at the shoplifters!!!" would be far too cowardly to 'have a go' themselves. And half the other 1% would 'have a go' at people they don't like the look of regardless of any perceived offence, and the other 0.5% may, just about, manage to cough and say "excuse me".

Thanks for the conversation on the previous thread - very interesting. I have a couple of points to come back to that I have not answered.

The thing that has surprised me about these proposals is that so far they seem in general to have broad brush support. Even when the Telegraph tried to make a culture war, they were being thoroughly beaten up by their own readers in the comments. eg:

DT you've had all day to correct the impression that we oldies will be subjected to full driving tests every 3 years. You know it's only eye tests. I can only conclude that you are either guilty of clickbait or the article was written by some young oik who hates pensioners and wants to start a campaign against them.

As a young man of 81, I agree. What is so onerous about the idea that compelling people of an age when eyesight deteriorates to protect themselves and the rest of road user from accidents?
https://www.telegraph.co.uk/news/2025/08/10/labour-told-make-driving-test-pass-rates-gender-equal/

Insurance tends to be very high in two age brackets, males between 17 and 25, and all drivers over 75. For under 25s restrictions on passenger numbers/younger ages seems to be among the most popular ideas.
I'd be in favour of both eye tests for over 80s and something for cognitive response, perhaps similar to the hazard perception test?

There are many aspects of driving in the UK which should be reformed. First, B + E tests should never have been scrapped (car plus trailer), this was the Tories idea to get rid of to cut a backlog of driving tests and lorry tests. Result, more inexperienced drivers on our roads towing. Also no one passing a car test should be automatically allowed to drive a 28T tractor and trailer outfit without sitting a full tractor test.

Even DT readers realise there are issues at the end of the age spectrum we need to do better on, with cases like the one I linked to in Edinburgh. I agree the law needs changed to make roads safer

B + E tests and the associated regime was one of the stupidest things the government had ever done - it needed scrapping. The old rules actively incentivised towing trailers with unsuitable tow motors.

Accidents involving heavy trailers (which is what the B+E rules prohibited) are negligible. Insofar as there is a problem with accidents involving trailers at-all (which we don't really) the main problem is large surface area lightweight caravans towed behind cars which aren't heavy enough getting crosswinded by lorries on motorways. And that's always been legal without a B+E so long as the combination isn't very heavy.

Again, zero point in making people take a tractor test. There aren't many accidents, and almost none of them are had by people who aren't perfectly capable of passing a tractor test. Most of the lads running round at a million miles an hour in FastTracs have taken a tractor test anyway, the farm lads all do it at 16 so they've a means of driving home from the pub.

Making everyone do a tractor test just stuffs up people like me who jump in a tractor for a couple of weeks a year to help my mates cart in silage via 1/4 mile of single track lane (risk of serious accident approximately nil).

I get the impression that there is some overlap in the Venn Diagram between those cheering on us "taking back control" of our laws and regulations and those bemoaning how many folk the government employs.

Yes we can have fewer laws and regulations to go with cutting the state payroll. Sounds like a win/win to me. Fewer busybodies gumming up the system slowing everything down because there's less idiotic regulation and endless appeals for planning or deportations etc...

Cutting jobs and cutting regulations go hand in hand, you just can't see the forest for the trees.

Hasn't cutting regulations been the go to mantra for government since 1979?
Why don't we live in a Paradise?

And yet we have more regulation than ever before and more restrictions on freedom than ever before. Weird that our per capita growth rate has slowed to a crawl while governments for the last 30 years increase regulations and decreased personal freedom, it's almost as if the two are intrinsically linked to risk taking and growth.

Just one of several WTAFs today.

The White House will now be “vetting” Smithsonian museums to ensure their exhibits comply with Trump’s “vision” and “interpretation” of history.
https://x.com/NoLieWithBTC/status/1955322096671715594

Trump's people at DHS are referencing here "Which Way, Western Man," a book by white supremacist William Gayley Simpson that was published by an American Neo-Nazi organization, the National Alliance.
https://x.com/ReichlinMelnick/status/1955293964723986905

Terrible as it sounds, is this vastly different in principle from curators ‘decolonising’ our museums? Once we allow that all history is up for debate, surely it is no surprise that labels swing back and forth with whomever is in power.

Yes, it is very different.

This is truly incredible. Skinner is a market trader/barrow boy who lives round the corner to me and who I’ve seen out here and there in Brentwood…& he’s knocking about with the VP!

The power of social media

Here is a pic of Me and Vice President @JDVance towards the end of the night after a few beers🍻 I’m overdressed in my suit, but when the VP invites you to a BBQ, you don’t risk turning up in shorts an flip-flops😂 Cracking night in the beautiful English countryside with JD, his friends and family. Once in a lifetime. Bosh❤️🇬🇧🇺🇸

https://x.com/iamtomskinner/status/1955373110640947300?s=46&t=CW4pL-mMpTqsJXCdjW0Z6Q

The irony for British Trump-haters is that this is probably the most Anglophile US administration in living memory

I struggle to think of one which is so clearly pro-Britain (and doesn't give a fuck about Ireland or the EU by comparison). Trump is passionate about his Scotch heritage, Vance is obviously pro-Anglo Saxon/hillbilly Celt

This does not make Trump any less crazy or dangerous, but it does add to the whole paradox. Trump and Vance are almost certainly more pro Britain and patriotically pro British than Keir fecking Starmer

The Trump-Starmer relationship is bewildering. Sir Keir prostrates himself at The Donald, only to be subjected to humiliating take downs such at that recently at Gleneagles, where, if it were revealed Trump’s spiel had been written by Nigel Farage, it could pass muster. Starmer sat there, as Tom Peck of The Times put it “… staring hard in to the middle distance, clenching his teeth and trying to prevent his eyes widening ever further. It was the kind of look that can get you chucked out of an Ibiza nightclub.”

Yet there are few criticisms of Sir Keir’s approach, nothing like the attempts to make “hand in hand” stick on Theresa May

I think Kier is a total idiot re Trump. In fact, the whole liberal order is.

Ed Davey has been trenchant in his criticism so not the Liberal order.