In his dream Danny is still playing his guitar. His somnambulistic fingers pick at the collective unconscious strings in his dream. His reflections get mixed up between thoughts of his grandad and the impression that he is tired. This of course coalesces into a rendition by Jimi Horlicks of ‘Castles made of sand slip into the sea with Wee Willie Winkie.’
Danny then becomes aware out of the corner of his dream there is an elf sitting on top of the giant mushroom and, wait a minute, what is that? There is an electrical socket in the Scottish hillside with a night light pugged into it. Danny thinks, in his dream, this is a bit ridiculous that those pesky anti-social elves are unlawfully tapping into an illicit electricity supply. They have probably connected to the local hydro-electric power plant. Danny makes a mental note in his dream to write to the government to deal with these elves living rent free on the Scottish hillsides and stealing electricity from people who pay their taxes.
Then he thinks about the night light and realise that the elves are probably using this to organise night time lectures on the ecological benefits of hydro power rather than nuclear power stations. So, this counters his antipathy towards the elves and he goes back to dreaming of playing his guitar.