Categories
Economics

[1114] Of KKR at the gate

After the euphoria, the important question comes up: how the hell KKR manages to convince other people to pay for their fun ride?

At the NYT today:

In an unusual twist that may soon become common, the banks are going one step further than simply providing the debt financing involved in the deal, in this case a daunting $24 billion of debt.

The banks are also lending $1 billion to TXU’s buyers, Kohlberg Kravis Roberts & Company and the Texas Pacific Group — not as secured debt, but in the form of equity using the bank’s own cash.

[…]

The risk to the banks is that the value of TXU could fall sharply below the $69.25 being offered. Yesterday, TXU shareholders welcomed the deal, driving up the shares 13 percent, to $67.93. [Private Equity Buyout of TXU Is Enormous in Size and in Its Complexity, Feb 27 2007]

Also, humor:

The deal still must undergo months of scrutiny from state and federal regulators. And while the deal has won support through pledges to cut electric rates and scale back a plan to build coal-fired power plants, the private equity firms must still overcome a perception that buyout buyers are temporary owners who are not beholden to shareholders or customers.

Talk about building bridges. [Private Equity Buyout of TXU Is Enormous in Size and in Its Complexity, Feb 27 2007]

If KKR sounds familiar to you and you are unfamiliar with modern economics or finance history, you might be thinking of Barbarians At The Gate, based on the book that goes by the same title. Heh. I bet somebody is going to write a book on this, just like what happened the last time KKR had fun at RJR.

Categories
Environment

[1113] Of intellectual dishonesty, palm oil and biodiversity

I know bullshit when I see one. Dr Yusof Basiron, CEO of Malaysian Palm Oil Council wrote in the NST earlier:

Malaysia utilises 90 per cent of its agricultural land for rubber and oil palm, which are essentially planted forests yielding timber and fibre in addition to rubber and oil as co-products. They contribute significantly to biodiversity as both rubber and oil palm behave as forests. In industrial countries, biodiversity on agricultural land is rarely mentioned. [The palm-oil advantage in biofuel, NST, Feb 24 2007]

Though the article has many valid points, especially on carbon neutrality of palm oil, it asserts that rubber and palm oil plantation contribute to biodiversity is downright absurd.

Consider for instance the biodiversity of a kilometer square of untouched Borneoan rainforest versus a kilometer square of palm oil or rubber plantation. Between the two, which would have more species of flora and fauna per kilometer square?

Any basic sampling will prove the former is richer in term of biodiversity. Therefore, how does converting rainforest into monocultural plantation plots contribute to biodiversity?

Surely, conversion reduces biodiversity.

In my opinion, if the article needs to be effective in convincing concerned individuals and groups that such plantation is sustainable, the article needs to prove that rubber and palm oil plantation-related deforestation does not occur. Alleging monocultural plantations lead to greater biodiversity does not help convince people like me that deforestation related to plantation activities does not occur. It sounds as if the article is defending such conversion!

In fact, such absurd assertion regarding biodiversity amounts to intellectual dishonesty at best, a lie at worst.

Categories
Economics Environment Politics & government

[1112] Of all hail to Environmental Defense

When KKR, a coal power plants operator and the Environmental Defense are mentioned in one article in the same paragraph, one would expect a report on vicious political skirmish. Quite to the contrary and to my surprise, the three groups are working together!

The buzz first came up a couple hours ago but it is only just now that I accepted it. I was like running into a think see-through glass door — it takes a moment to realize what is going on after a pang in the face. This might signal the greatest cooperation between the greens and the grays yet:

Early Monday, after several weeks of marathon negotiations that brought together both environmentalists and Wall Street bankers, TXU announced that its board of directors had approved the bid from Kohlberg Kravis and Texas Pacific for about $45 billion, which would be the largest buyout in history.

[…]

The deal was noteworthy not just for its size, but for the confluence of business decisions and environmental concerns that drove the ultimate transaction. Because private equity firms are unregulated and historically have valued their privacy, neither Kohlberg Kravis nor Texas Pacific were eager to become an “enemy combatant” of the environmental groups, people involved in the talks said. Reducing the coal plant initiative will also free up billions of dollars in planned spending that the firms will be able to use for other projects or to help finance the transaction. [NYT, Feb 26 2007]

I have a newly found respect for the Environmental Defense! That whole lot spams I received through email, tons of snail mail I received in my mailbox and that couple of bucks I donated to them while I was at Michigan worth every single bit!

This is the crux of the deal, as far as the environment is concerned, as stated in an email I received from Environmental Defense:

As part of the sale agreement, Environmental Defense helped negotiate an aggressive environmental platform that will, among other things:

  • Terminate plans for the construction of 8 of 11 coal-fired power plants TXU had hoped to build;
  • Stop TXU’s plans to expand coal operations in other states;
  • Endorse the U.S. Climate Action Partnership (USCAP) platform, including the call for a mandatory federal cap on carbon emissions; and
  • Reduce the company’s carbon dioxide emissions to 1990 levels by 2020.

Way to go!

w00t! w00t!

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — and Al Gore won the Oscar for An Inconvenient Truth!

Categories
Sports

[1111] Of let us buy referees instead of top players

On Sunday, second-placed ten-men Ajax was held to a 1-1 draw with third-placed AZ. I have not seen the goals yet but AZ’s equalizer is controversial. Too controversial.

At Ajaxtalk:

Fucking corrupt match officials ….. what a load of cunts these Dutch officials are. That was a clear foul on Stek.

edit: It’s time Ajax has the nerve to go to the KNVB and tell those sad fuckers they are not going to put up with this crap anymore.

More:

Let’s stop investing huge amounts of money on top players : learn from our friends from northern Italy and buy referees.

Amen.

PSV is now eight points clear of Ajax. Fourth-placed Twente, conveniently for both Ajax and AZ, was held to a scoreless draw.

With only eight more matches, this is going to be tough.

Categories
Liberty Science & technology

[1110] Of liberty-threatening technology applications

Technology has no inherent value by itself. Just like any tool, it sits neutrally in the middle of value spectrum. Such neutrality however does not prevent any technology from being utilized towards specific value, be it for better or worse. Nuclear technology for instance could be harnessed to provide humanity with electricity or as weapon, to strike terror to us all. Such duality is no different when it comes to closed-circuit television (CCTV) and radio frequency identification (RFID) in public space.

Both CCTV and RFID technologies are beneficial in many ways. Within private commercial spaces, both are used to make processes safer or more efficient or both. CCTV could be installed in places where no human could operate safely while RFID makes traceability of goods far easier. On the other end, if applied in public spaces, both infringe privacy.

CCTV perhaps needs no introduction. Between CCTV and RFID, the former has entered public consciousness far earlier in the 1990s. As a teenager, it was common for me then and even now to spot cameras in large stores. And I do remember there was a huge hype when CCTV was introduced along Malaysian expressways to discourage speeding. Despite public familiarity with CCTV, it is only until recently it has proliferated public sphere; the state is central to the proliferation. Cameras are installed in so many places by the state in the name of crime fighting that it chokes innocent but liberty-conscious persons.

I suppose, the first case of massive installation of cameras within public realm occurred in London. Given how frequent London is cited in any debate regarding CCTV and privacy, I would venture to say that London might have been the pioneer in the introduction of CCTV within public space. That might not be true and might be the result of a biased observation because I used to visit Samizdata — a UK-based libertarian group blog — frequently.

Nevertheless, from London or whatever it might originate from, the idea of CCTV within public space has reached Kuala Lumpur. While in the UK, the introduction has met some resistance, in Malaysia, I have yet to meet any protest at all, apart from myself. The image of Orwell’s Nineteen Eighty-four has been recalled again and again by those that oppose the installation of cameras in public areas but I do believe Oceania fits Malaysia better due to what I perceive as the willing acceptance of Malaysians of CCTV. I definitely refuse to accept CCTV in public space, more so if the operator of the CCTV is an illiberal state. The moral police would especially cherish the idea of electronic Mat Skodeng.

While CCTV could be a threat to privacy, RFID could be as many times more hostile to civil liberties.

I might have encountered RFID far earlier than I thought I had but my first conscious exposure to it was during a consulting competition at Michigan. During a research, I learned how RFID is used to record inventory and through such information, the realization of just-in-time philosophy that Wal-Mart practices. Despite the positive aspect of it, just like CCTV, the utilization of RFID within public realm is questionable from civil liberty point of view.

Malaysian passport for instance uses RFID. In fact, it is the first RFID-passport in the world. The RFID chip within the passport contains sensitive personal information and that information could scanned and read from afar. Many advocates of RFID insists that information within the chip is secured. Nevertheless, there are reports that point to the contrary. At a blog by Reuters:

With the debate over genetic cloning in full swing, hackers could not have cared less at a conference in New York City, where two presenters demonstrated the electronic equivalent of making a copy of an implanted RFID or radio frequency ID chip.

The point was to show just how easy it is to fool a detection device that purports to uniquely identify any individual.

As time progresses, it is all too possible to track everybody with RFID. At the hand of illiberal bureaucrats that respect no right, RFID could be the tool to suppress civil liberties. This used to belong in the realm of science fiction. Soon, too soon, it will be science.

Despite the rant, I am not an anti-technology or back-to-the-primitive preacher. On the contrary, I believe technology should be used to enhance our living experience. Technologies such as carbon sequestering to reduce carbon emissions and life-saving stem cell technology are essential to build a bright future for us and our children. But when any technology is used at the expense of certain ideals, it is only right to oppose such application.