Fun online poll: Could you pass a GCSE Science exam?

Try your luck in the side bar!

I'll try and research the correct answer and publish it next week.

Via Obnoxio

The People Who Don't Matter

From The Metro:

Adair Turner, chairman of the Committee on Climate Change, has predicted sharp rises in energy prices as he called for cuts of at least 34 per cent in Britain's carbon emissions by 2020. He said these higher electricity and gas prices could push another 1.7 million households into fuel poverty by 2022...But it added that 400,000 households could be lifted out of fuel poverty by energy efficiency measures in their homes...

Lord Turner said: "Climate change poses a grave threat to human welfare... The reductions required can be achieved at a very low cost to our economy: the cost of not achieving the reductions, at national and global level, will be far greater."

Shouldn't that read "Pork barrel spending associated with measures taken to deal with non-existent climate change poses a grave threat to human welfare"?

And how, if at all, does The Committee on Climate Change respond to headlines like "Arctic blast sweeps across Britain"?

Well, that's my excuse anyway.

From The Metro.

Quango of the week

... The National Housing and Regeneration Agency.

If your day is uneventful and you lose the urge to stab yourself in the thigh with a plastic fork or to jump behind a train, try dipping in!

I'm feeling a lot better, doctor ...

... can you sew them back on again, please?

The People Who Matter

EU Commission President, José Manuel Barroso explains why the UK should join the Euro:

"I know that the majority are still opposed, but there is a period of consideration underway and the people who matter* in Britain are currently thinking about it."

* As Christina Speight asks, "...and who might they be, if not the ‘majority in Britain’?"

Today's debt-for-equity-swap. Possibly.

Lola has drawn my attention to this.

"Yadda, yadda, unit trust manager in trouble, who cares?" I hear you mutter. Well, me neither frankly, but the interesting bit is this:

The asset manager says a further announcement will be made when the outcome of discussions with its bank syndicate is known but reports suggest the firm is negotiating a debt for equity swap with the banks...

Hargreaves Lansdown investment manager Ben Yearsley says: "Until New Star sorts everything out with its banks the shares will be volatile. It is possible it will go private as the market-cap is now meaningless as the value is now in the £20-30m bracket, where as the debt, which is the crucial figure, stands at £230-£240m*."

Precisely. In economic terms, the debt-holders own ninety per cent of the business. They have a choice, of course. They can force it into liquidation, break it up, sell off the bits and repay themselves as much as they can salvage, but as the value of New Star relates largely to intangibles - customer relationships, contracts, reputation(?) etc, which largely evaporate on a break-up, that's probably not a good idea.

So the least-bad option from the debt-holders' point of view is to waive part of the debts (let's say a fifth of it, in nominal terms) and give themselves new shares instead. New Star's debt/equity ratio would thus fall from an unhealthy 9-to-1 to a much healthier 3-to-1 or 2-to-1, and with a bit of luck, one day the current debt-holders will have shares worth far more than the value of the debts that they now waive.

The important question is, how many times will the banks do this sort of thing before they realise that the same principles apply to them? Banks, with their lousy capital ratios are in exactly the same position as New Star; instead of taking medium term loans from the taxpayer at savage rates of interest, they could also do deals with their debt-holders and let the taxpayer off the hook.

* UPDATE: Ed in the comments has tracked down why a company founded eight years ago has so much debt:

New Star's debt burden was taken on last April in order to facilitate a return of cash to shareholders. At the same time, New Star moved to the London Stock Exchange's main market and Mr Duffield and his family interests sold their stake down from 20 per cent to 12.5 per cent.

Outbreak of commonsense

... in Switzerland.

The free provision of heroin to addicts won the overwhelming support of Swiss voters yesterday.

Projections based on early results indicated that 69 per cent of voters approved the programme, believed to be the first of its kind in the world, in a poll called under the country's system of direct democracy.

Crime by heroin addicts has fallen 60 per cent since the initiative to allow health clinics to administer controlled doses of the drug began 14 years ago, according to the Swiss Federal Office of Public Health.

The support for the plan came in a referendum called by opponents of a government policy that treats hardened drug users as patients rather than criminals. Critics, including conservatives who called for the referendum, object to the annual cost of 26 million Swiss francs (£14 million), covered by the health insurance that all citizens pay and the Government covers for those who cannot afford it.

Yes, there is a cash cost to such schemes. I personally see no harm making addicts pay a few quid (or indeed Franks) per pop towards it; but even if it were free at point of use, the cost would still only be a fraction of the current cost of heroin related crime, medical treatment and existing 'treatment programmes', that are run by the largely useless quangocracy anyway.

Via Obo, via Rog T.

Another day, another desperate throw of the dice (9)

From The FT:

RBS promises mortgage respite

The political and public campaign to force Britain’s banks to do more to help customers weather the economic downturn will gain impetus on Monday with a promise from Royal Bank of Scotland to give at least six months’ breathing space to homeowners who fall behind with mortgage payments.

The promise, which will put pressure on other banks to make similar commitments, comes as ministers prepare to outline plans that could see voluntary codes of practice for the banking industry placed on a statutory footing.

*sigh*

1. Don't we taxpayers now own the bulk of RBS? Weren't we promised that the government would make an overall profit on the bail outs? As an involuntary shareholder, I'd like the RBS to minimise mortgage arrears; if the price of that is more repossessions, then so be it. I'm not aware of any "public campaign" to the contrary.

2. Is the government also prepared to subsidise all tenants who are up to six months in arrears? Probably not, and if so, they shouldn't be.

3. One thing they haven't announced yet is Council Tax exemptions for people with mortgage arrears, but I suppose that's only a matter of time...

4. Is this all maybe just another feeble, ultimately ill-fated and hugely expensive attempt to prop up house prices by keeping properties off the market?

Bastards.

*/sigh*

"London Scottish files for administration"

... reports The FT.

In the light of earlier developments, I wonder who else saw this one coming?