Sunday, 27 March 2011

The pension debate - part 2

A follow-up to the previous post.

Issue 3: the reform is to crack down on budget deficit and avoid reforms in the election year.

Me: sad, but true. The pension system is overhauled because public finances are in a pitiful state, if they had not been, status quo would have been maintained.

JR: state expenses on infrastructure, education and reduction of public debt contribute to development.

Me: When I look at how private universities and private-run motorways function in Poland I can go along with this.

JR: There is no difference between government bonds and accounts in ZUS.

LB: In ZUS there is nothing, but politicians’ promises. Real securities are kept in pension funds.

Me: A very important point in the discussion in which both LB and JR are partly right. Both government bonds and promises in ZUS are promises of money made by the government. If things go bad, pensioners will have their benefits cut before the government goes officially insolvent and bondholders will be paid off. If things go very bad, both pensioners and bondholders will lose. If things went really bad, the state would probably take over all assets from pension funds (they belong to the state!) to protect itself from bankruptcy! Changing promises in ZUS into government bonds is like buying insurance policy against political risk. The problem is, for me, that insurance premium (fees paid to pension funds and costs of higher interest paid by the state on government bonds) is much too high and hence the whole insurance is not cost-effective.

JR: After the new reform, state-run ZUS will be balanced in the long run, i.e. contributions will cover benefits and the government will not have to subsidy it.

Me: I cannot check, I have no data.

LB: Pension funds will offer higher pensions, because they contribute to economic growth.

JR: Reduction of payments to pension funds will contribute to economic growth, through lower public debts.

Me: At the end of the day both effects of both moves are more or less the same…


LB: Pension funds will offer higher benefits because they propel economic growth. Scrapping pension funds undermines the trust citizens put into the state.

LB: Pension funds create huge public debt. Higher public debt means higher costs of servicing it and higher taxes (interests paid on government bonds are taxpayers’ expenses). Means in state-run ZUS are protected by the constitution, hence safe and can offer high pension.

Me: Both guys have annoyed me. Dear Mr Balcerowicz, I do not trust state that secures revenues of 14 private companies owned by multi-national corporations, when other companies struggle to compete on free market! Dear Mr Rostowski, you are promising the moon. The Polish state cannot afford to revalue balances of personal accounts in ZUS at rates you suggest and cannot afford to let part of the money paid into ZUS to be inherited!

The debate however, did not touch upon some other important issues.

A) Nobody called into question that investments on stock markets fetch higher returns than other investments. In the past it was true, but in the era of deregulation, speculative capitals flowing and ebbing, reckless monetary policy, cycles of boom and bust I would not be sure this old rule will be true. It might not be true for the same reasons for which the pension system would collapse – demography…

B) Nobody brought up the issue of real (issued securities) and hidden (obligations towards future pensioners) public debt. Mr Balcerowicz wants the to convert hidden public debt into real one, Mr Rostowski wants to increase hidden debt at the expense of real one. Both types of debts have to be settled, however hidden debt can be redeemed (for example if someone dies before pensioning off) and does not have to be refinanced on ‘ruthless’ financial markets and hence increases the state’s flexibility.

C) Both advocates and opponents of the current pension reforms cited their calculations to prove which variant offers higher benefits. Why has nobody mentioned on what assumptions were these calculations based?

D) “Last but not least” – costs of pension funds, not those borne by taxpayers as higher costs of servicing public debt, but fees paid to pension fund managers. PTEs charge a distribution fee of 3.5% deducted from each contribution and management fee of 0.6% per year. Round the total figure down, and you will get costs of a pension fund standing at around 4%. It means if you pay 100.00 PLN into a pension fund only 96.50 PLN is invested, from the rest management fee is charged over the year. Let’s calculate it. If we assume inflation is at Polish central bank’s target of 2.5%, the rate of return brought by a pension fund has to be 6.5% to break even in real terms! Can pension funds offer a rate of return averaging out 6.5% in the long term? Honestly speaking the rate until now averaged out 9%, so maybe they can. But despite this most people (me too) have less money in ‘their’ accounts in pension funds than they have paid in, because sky-high fees have eaten up the profits! Now the distribution fee stands at ‘only’ 3.5%, but in first five years (1999 – 2003) it was 10.0% and from 2004 to 2009 it was 7.0%. With such fees breaking even in nominal terms was barely feasible (interest of government bonds was high at that time). Returns of pension funds are shown in ‘accounting units’ which is another distortion, because ‘accounting units’ are not purchased by the whole sum paid into a pension fund, but by what remains after charging all fees. So all those arguments about high profits brought by pension funds to future pensioners are a spoofery. Profits are, but for companies that manage funds…

And the winner of the debate was:
- in my, my parents’ and colleagues’ opinion – Mr Rostowski,
- in fellow students’ opinion and according to polls – Mr Balcerowicz
- the ultimate winner was one of the moderator – Tadeusz Mosz, for saying a few times there is as shortage of money in Poland.

As you can see, both parties have their own “truths” (a propos truths – one of the best articles about pension reforms I have read), assumptions and calculations. But this is still a positive dimension of the dispute. Unfortunately, I want to share two unsettling observations:

Firstly, there is an old rule, dated to ancient times, saying no-one should be a judge in their own cause. In the case of pension funds this rule has been broken, as many times those who stand up for status quo draw measurable financial benefits from the reform, by having cushy jobs in supervisory boards of PTEs or being in charge of organisations funded by PTEs. It is quite clear that if the flow of money into pension funds is stemmed, their revenues (secured by the state, not earned on free market) will drop. I actually do not want to deny them the right to defend their own interests (lobbying can be civilised as well), but I would prefer if they did not hide their true intentions. PTEs do not give a damn about benefits of future pensioners, but care about their own profits. This absolutely normal and rational in business, if I were in their shoes, I would also try to preserve the current system, but I would not go overboard with resorting to feigned care about future retirees. This hypocrisy should be finally condemned.

If the punch line of the paragraph above is not clear yet, let’s illustrate it with another example. I work at a bank. The government is planning to introduce a bank tax. It is also quite obvious that if the bank tax is levied, my income can decline, as my bank will have less money for bonuses. Should I voice my disapproval and take part in the debate about the new tax? There is no clear answer to this question, but I would personally deny myself the right to do it. For sake of integrity and decency I would keep my mouth shut. And if, for any reason, I decided to raise an objection, I would stress my personal interest before stating any opinion.

Secondly, sides of the discussion have been beforehand categorised into better (for pension funds) and worse (against them). The consensus about pension funds can be compared to situation in Polish politics in 2007. Then it was ‘cool’ to vote for PO and ‘not cool’ to support PiS. The same trick has been done about pension funds. It is generally acceptable to be for them, and those who say something is amiss about the shape of pension reform are hailed as ‘cranks’ (oszołomy). Thus I have joined (long ago) the group of cranks, whose views are too controversial to be reckoned with. The most powerful detractor of the current pension system is the ultra-liberal think tank Centrum Adama Smitha, which has come up with a proposal to take a leaf out of Canadians’ book and reshape our pension system, so that the state would guarantee a low pension benefit (enough to scrape along by, funded from taxes) and for the rest taxpayers would have to take care on their own. This would mean scrapping both state-run ZUS (in fact only its part responsible for collecting pension contributions and paying out pension benefits) and obligatory contributions to pension funds.

The determination defenders of pension funds display is enviable. In the wake of the government’s decision Krzysztof Rybiński announced he would file a class action against the government. Alas, he did not read the new class action law carefully and did not notice the basis for filing a class action is a measurable loss incurred by each member of the class, not an estimation. The problem is that before someone retires, they cannot measure their loss. There is, nevertheless, somebody who can sue the government under that law. Those are companies that manage pension funds and charge sky-high fees. Their unearned revenues are measurable and are a solid basis for lawsuit against the Polish state…After all these companies and people affiliated with them (some of them are authors of the reform) are the key beneficiaries of the reformed pension system…

The saddest thing in the whole case is that many people believe (usually because they have been misled) assets (i.e. mainly government bonds and stocks) pooled in pension funds are their money, which is a big departure from the truth, for a single, yet meaningful reason – the ruling of supreme court, dated 4 June 2008, the money obligatorily paid into pension funds is not owned by the person who pays it

W 1998 r. ustawodawca wybrał określony model ubezpieczeń społecznych. Państwo ma zaś konstytucyjny obowiązek zapewnienia środków na zabezpieczenie społeczne każdego obywatela. Nie można się zatem powoływać na normy konstytucyjne o ochronie własności prywatnej, bo podlega ona ograniczeniom. Składka odprowadzana do OFE ma charakter publicznoprawny, zaś świadczenie z II filaru jest gwarantowane przez państwo. SN zwrócił uwagę, iż w praktyce będzie dochodzić do sytuacji, kiedy pewne osoby będą żyły dłużej niż środki zgromadzone na ich kontach, przewidywane na określoną długość życia; w takim przypadku oczywiście ich świadczenia będą musiały być finansowane ze składek innych osób. Z tego wynika, że ta składka nie jest prywatną własnością ubezpieczonego

In practice it means assets in pension funds are owned by the state and managed by private companies under public-private partnership. After all benefits from pension funds are guaranteed by the state (if the worst comes to the worst and the reform turns out to be a big flop). It also means citizens do not have any influence on investment portfolios of pension funds, nor can use the money at their discretion. Opponents of government say prime minister Tusk and finance minister Rostowski want to deprive us of our money and here is the catch. They indeed can do what has been done in Hungary or Argentina, where all assets kept in private-run pension funds under state-owned systems have been taken over. In Poland this or another government can do the same, because the law allows for it. Therefore I am against compulsory payments into pension funds. The contributions there are not safe, as my savings in stocks, bonds, bank deposits, investment funds are and assertion that transferring money into pension funds under state-owned system increases security of our pensions is a daydream…

While the government, deemed to be liberal, dismantles the reform which has been said to be pro-market one (I would call it into question), opposition parties, deemed to be rather statist, struggle to take a line on the reform. Both PiS and SLD spite the government, just for principle. PiS puts forward that each Pole should be given the freedom to decide whether to save in ZUS or in pension funds. This proposal does take my fancy, but I could not find any technical details of its implementation. Technically transferring huge amounts of money between ZUS and pension funds is barely feasible. Leftist SLD should, in principle opt for state-run social security rather than private funds, but this time their reasoning does the other way round. At the end of the day the left-wing party organised a public hearings and suggested that share of contribution paid into pension funds by citizens born after 1980 should be higher than paid by those born earlier. Those born from 1949 to 1968 should be able to return to state-run insurer. Both counter-proposals seem to make sense, but unfortunately we have too think pragmatically here and pragmatism has its painful limitations…

Is the whole current reform a good move? I have long been in two minds about it, but all things considered I am for the current reform. Given the choice, as put forward by PiS, between ZUS and pension funds, I would after all opt for the former, even if I had to put all my eggs into one basket, have a lower pension benefit and believe in promises rather than in real assets. The social security system in Poland is bound to collapse, so it the reform can postpone the moment it happens, may it be. May at least my parents get their pensions before they die, I do not expect much from the state. Obligatory payments into private companies in the way pension system in Poland is arranged are a typical example of privatising profits and socialising losses and it stands at odds with my values. Pension funds are too expensive (in terms of fees they charged) and hence cannot, as I pointed out earlier, in the long run, offer me a high rate of return. And after all I considered the failure of pension funds to be a government failure, not a market failure. Pension funds are so stringently regulated that the environment in which they operate is far cry from free market. Form of ownership is not the only determinant of a company’s efficiency.

The biggest pity about the whole issue is that most Poles do not understand what actually is going on and what is at stake…

Saturday, 26 March 2011

The pension debate - part 1

During the first year of blogging Polish pension system was a frequent subject matter on this blog. Over a year ago I wrote the last post on the issue, as I realised merely writing would get me nowhere. The topic of pension funds and pension reform returned in the second half of 2010 and its presence in the public discourse was spurred only by deteriorating state of public finances. Unfortunately it was the main reason, nobody thought about looking into the up- and downsides of the reform, long due for an overhaul…

If you are not familiar with the topic, please catch up by reading my previous posts. I have not changed my opinions since then, today’s and tomorrow’s piece are just a follow-up. The most comprehensive, yet brief drill-down into the workings of the Polish pension system can be found here!

The proposed changes in the pension system, i.e. cutting contribution to pension funds from 7.3% to 2.3% of a salary and transferring it into state-run ZUS, where it will be booked in separate accounts, revaluated (rates of revaluation will depend on GDP growth and inflation rates) and inherited, has given rise to a big, nation-wide debate. The biggest benefit of the debate is that it has been generally substantive and has touched the issue very important for almost every Pole (unlike the cross or Smolensk squabbling). The biggest drawback of it is that after all it comes down to insults, trading accusations and some of those who cry out loudly in defence of the current system are lobbyists… Once I was glad several articles were written, several discussions were led, but now I begin to be sick and tired of the whole pension debate. Probably mostly because any party can be proved right and arguments of both parties can be easily refuted.

Main advocates of the reform are: the government backed by parties from the ruling coalition and some economists, e.g. Andrzej Bratkowski, Jan Krzysztof Bielecki, Bogusław Grabowski, some of them have tie-ups with the government.

Main defenders of the current system are: Leszek Balcerowicz (architect of the transition into market economy who saw through the reform in late 1990s), Krzysztof Rybiński (formally a lecturer at my school, in practice during his career he delivered one dull lecture, currently trying to put in as many appearances in the media as possible), Pension Fund Managing Companies Chamber (the member of the organisation are companies which run pension funds, hereinafter PTE) and business organisations, members to which PTEs are. The two last have a vested interest in the status quo, because the current pension regulations secure their huge revenues.

The arguments of both parties to the dispute were best laid out in a debate which took place on 21 March 2011 and was broadcast in TV. It has to be said that the debate should have been held earlier. On 25 March the new pension law which diverts a bigger part of pension contribution to state-run ZUS was passed in the lower house of the parliament, soon it will be passed by the upper house and will await the president’s signature. It was agreed that the advocates of the amendment would be represented by finance minister Jan Vincent Rostowski and defenders of pension funds would be represented by Leszek Balcerowicz. The former was to convince the voters they would benefit from the reform, the latter was to debunk myths spread by the government.

Below the coverage of the debate. Starring: JR (finance minister), LB (Mr Balcerowicz), me (Student SGH, butting in waspish comments).

Issue 1: whose money is in pension funds?

LB rejects the socialist view that everything is state-owned. He points out socialism has gone bankrupt, hence savings in pension funds belong to people who pay money there.

JR refutes the assertions of his opponent by citing ruling of the Supreme Court and articles 29 and 67 of the Polish constitution which all clearly state the assets in pension funds belong to the state.

Me: LB’s disquisition was just manifestation of what he wanted it to be, JR delineated the actual state of affairs. Under the law assets in pension funds are not owned by future retirees, as they cannot be cashed in, withdrawn from the funds, future pensioners have no influence on investment policies and are compelled to pay contribution. On the top of that the state can, at any time, take these assets and do with them whatever it wants…

JR: Transfers to pension funds generate public debt. This happens because sum of contributions paid to state-run ZUS is lower than sum of benefits paid to current pensioners. The state has to issue bonds to cover this gap and bonds are bought by pension funds (government securities have to make up at least 60% of pension funds’ portfolios). The same money should be transferred to ZUS and bring down state’s borrowing needs and an expensive intermediary (pension funds) would be omitted.

LB: Transferring money to pension funds creates savings.

JR: The mechanics created in the pension system is idiotic, because we have to take out a loan to put the money on a deposit, which does not make sense.

Me: JR is in my opinion right.

Issue 2: Pension reform from 1999 was not to increase pensions, but to decrease it.

Me: Yes, this was unavoidable! Now let’s forget about promises of retirement on tropical islands by which PTEs pooled wool over Poles’ eyes 12 years ago. Pension benefits have to be lower to avoid economic disaster, but setting up pension funds with a view to increase benefits was another disaster. Reforming state-run ZUS, by turning it into institution guaranteeing very low pension in the amount based on sum of paid contributions would be enough.

JR agrees the reform was a success in 80%. Reformed ZUS and pension funds buying stocks are good, pension funds buying bonds are bad, because they create huge indebtedness.

Me: I generally agree with that concept

LB repeats the argument about savings and says pro-development expenses should not be cut.

JR asks how purchase of bonds by pension funds can be categorised as pro-development expense.

LB counter-attacks by asking on the basis of which academic paper JR formulates such hypothesis, but fails to justify why the mechanism criticised by JR is proper.

Me: I have to say I am not particularly well-educated, because I have not found any academic paper in which author justified taking a loan at higher interest rate to put money on a deposit with a lower interest rate. Sometimes common sense means much more than authorities’ opinions.

LB calls on raising retirement age, curbing privileges for farmers, judges, policemen, miners, etc.

Me: I think everyone should decide on their own when to retire. A 55-year-old man, seeing his pension would be low, would decide to soldier on, or give up his job and fall back on his private savings and I wholeheartedly agree with other remarks – pension system has to be reformed and privileges have to be scrapped, just as obligatory payments to pension funds. Other reforms also have to be carried out.

LB: Pension funds finance innovations and investments in the economy.

JR: How purchase of bonds and finance innovations? (LB fails to respond).

To be continued tomorrow

Tuesday, 22 March 2011

The pension debate - foreword

Time to catch up with the pension debate. A long two-part post is in the phase of preparation, due to be published on Saturday (part 1) and Sunday (part 2)

Today's post in the wake of yesterday's debate, to dispel all doubts concerning the owner ship of assets kept in pension funds. Don't let anyone fool you, these assets do not belong to people. Unless you call into question the ruling of the Supreme Court handed down on 4 June 2008. Some crucial excepts below, in Polish, as Poles are involved in the issue...

„środki te na podstawie przepisów ustawy z dnia 28 sierpnia 1997 roku o organizacji i funkcjonowaniu funduszy emerytalnych, znajdują się w ograniczonej dyspozycji ich członków, co może świadczyć o ich częściowo prywatnym charakterze. Jednakże z uwagi na to, iż powstają one z podziału funduszy o charakterze publicznoprawnym, to jest z podziału składki na ubezpieczenia społeczne (art. 22 ust 3 ustawy o systemie ubezpieczeń społecznych) stanowią formę realizacji zadań w zakresie zabezpieczenia społecznego wynikających z art. 67 ust. 1 Konstytucji RP (…)

System emerytalny ma charakter powszechny i jego celem jest urzeczywistnienie zawartego w art. 67 ust. 1 Konstytucji prawa każdego obywatela do zabezpieczenia społecznego na wypadek osiągnięcia wieku emerytalnego. Nie został on skonstruowany przez ustawodawcę dla indywidualnych ubezpieczonych (…)

…system emerytalny oparty na zasadach ubezpieczeniowych charakteryzuje się przymusem ubezpieczenia społecznego związanym ściśle z obowiązkiem odprowadzania składek , a powstający z mocy przepisów ustawy systemowej stosunek ubezpieczenia społecznego ma charakter publicznoprawny. Inaczej rzecz ujmując, środki na ubezpieczenie społeczne, w szczególności emerytalne, są i będą przeznaczone na wypłatę świadczeń dla innych podmiotów aniżeli mich płatnik i w tym znaczeniu są środkami publicznoprawnymi (…)

Składki na ubezpieczenia emerytalne nie są prywatna własnością członka funduszu (…)

…składka emerytalna, z uwagi na jej przeznaczenie na tworzenie funduszu emerytalnego, posiada publicznoprawny ubezpieczeniowy charakter, który zachowuje nadal po przekazaniu przez Zakład jej części do funduszu.”

Almost three years have passed and I still feel sorry for Mr Mielczarek, a financier from Warsaw who waged war against pension funds on his own and lost it...

To be continued on Saturday and Sunday...

Sunday, 20 March 2011

Winter timeline

A diary that was written over last four months; today, in the eve of spring, comes out.

Before it hit – according to long-term forecasts winter 2010/2011 would be long, chilly and snowy. But until the last decade of November the predictions were wide of the mark – first two decades of November were balmy, with temperatures of +17C and sunshine occurring on 1 November and 14 November.

25 November 2010 – first light snow, lingers on the grass for two days, temperature hovers around 0C.

26 November 2010 – 27 November 2010 – chilly, nothing heralds the imminent nightmare.

28 November 2010 – overnight snowfalls, temperature still doesn’t fall much below zero, some of the snow melt in the afternoon, forecasters predict the first winter attack for the next week

29 November 2010 – for that day meteorologists predicted heavy snowfalls and blizzards and unfortunately got it right. Flurry begins around 7 a.m. in Warsaw and continues for the whole day. 27-centimetre-high layer of snow brings the capital of Poland to a standstill in the evening rush hours. Temperature drops continually from –2C in the morning to –8C in the evening. Polish Met Office warns of extreme cold in the coming days.

30 November 2010 – Warsaw gets over the paralysis caused by snowfalls. Main roads are even clear of snow, traffic is not heavy since many drivers left their cars in garages and on car parks. Temperature goes down to –11C, but the frost doesn’t make itself felt as the air is still.

Average temperature of November 2010 in Warsaw: +6.0C, 3.3 degrees above long-term average. November 2010 was categorised as very warm.

1 December 2010 – it takes 17 days for temperature to drop from +17C to –17C. Is “seventeen” a magical number then? Day-time low of –18C in Warsaw.

2 December 2010 – another snow storm paralyses Warsaw, this time in morning rush hours. The biggest havoc is wreaked to rails.

3 December 2010 – cloudless dawn, just –12C at daybreak, no wind chill. The temperature doesn’t rise above –5C, in the evening some snow showers.

4 December 2010 – winter eases up a bit. Day-time high hits –5C. Sunshine and still air make it seem it’s even warm.

5 December 2010 – respite from all imaginable disastrous side effects of winter continues. Not a single snowflake falling to the ground, but the layer of snow lingering in the capital of Poland has reached 33 centimetres, 20 centimetres short of the recent record dated 16 February 2010. Long-term forecasts don’t leave much hopes for any thaw before Christmas.

6 December 2010 – 8 December 2010 – a heat wave (after a week of harsh winter temperature increases overnight by almost ten degrees) comes over and hangs around for three days. In the afternoons temperature even creeps slightly above zero. An almost-thaw is accompanied by snow showers which don’t disrupt traffic.

9 December 2010 – thaw decides to stay the night, so snow doesn’t fall, but is melted by pouring rain, around five centimetres disappear within a few hours. Over the day the temperature falls.

10 December 2010 – sub-zero temperatures and snow showers come around. It’s not really cold, but wind chill makes it below –10C.

11 December 2010 – morning greets Warsaw with clear sky and moderate frost (-7C), then clouds take over and around midday it begins to snow. Forecasters have bad news for those who expect the annual Christmas thaw (unless you think the snow melts when it’s below –20C).

12 December 2010 – the last day of thaw, gloom takes over for good, temperature stays above zero for the whole day. Rain showers melt some snow

13 December 2010 – melted snow and rain fallen the day before freeze over as the temperature overnight drops to –5C. Roads are pavements are slippery.

14 December 2010 – second cold snap this winter begins. Temperature rangers from –10C to –5C, but wind chill factor makes it around –15 (unless you find a shelter). Snow precipitation: 2 centimetres.

15 December 2010 – meteorologists know how to cheer us up. They say if it wasn’t how the layer of clouds, earth would give off heat over the night and temperature would fall much below –20C. Lucky us? If it’s ten degrees warmer than it could be, might we consider ourselves lucky?

16 December 2010 – 18 December 2010 – cold snap continues, temperatures range from –14C at dawn to daytime highs of –7C, the only day of sunshine is Friday, 17 December. The only upside is that it doesn’t snow.

19 December 2010 – after overnight flurry sunshine takes over and it’s gets much warmer, in the afternoon temperature rises to –5C, as no wind blows, it feels like around 0C.

20 December 2010 – 10 centimetres of snow fallen in the morning, then weather changes rapidly – southerly winds blow in warm air, temperature rises to +4C. Snows turn quickly into slush and dirty puddles… It has to be said forecasters predicted daytime high of –1C and were wide of mark. Hopes for white Christmas – dashed?

21 December 2010 – yesterday’s thaw lasted no longer than four hours. Three days before Christmas Eve temperatures doesn’t rise above –2C, falling snow (just five centimetres) paralyses Warsaw in evening rush hours, traffic is snarled up even late in the evening. These days forecasters don’t fare well. Weather is so changeable that they fail to predict temperature and precipitation even for coming six hours…

22 December 2010 – the last day before Christmas thaw means the last day to take delight in winter scenery. Next day I won’t see trees beautifully cloaked in snow (unless forecasters get it wrong, again). –1C = excellent temperature, could stay like this until Boxing Day, but won’t…

23 December 2010 – thaw takes over, Poland’s capital is swathed in the fog all day long. Snows melt and layers of brown flakes, blended with frozen slush and mud emerge. Slush, gloom, slush… in abundance…

24 December 2010 – temperature even in the dead of night doesn’t drop below 0C. Christmas Eve is white, just because so much snow couldn’t melt in two days and it won’t melt before new snow falls. Traditionally, Christmas Eve is the warmest day in the whole month (in the afternoon +7C, well above forecasts)…

25 December 2010 – to put it briefly – gloom & zgnilizna. It’s colder hour by hour, and by the evening it begins to snow… Not the dreamt-up Christmas Day (in terms of weather) for sure.

26 December 2010 – winter returns with some flurry, not yet very cold – some –5C.

27 December 2010 – temperatures drops to –12C in the morning and refuses to incline to more than –7C over the day, but weather makes up for chill by clear skies.

28 December 2010 – gloomy and chilly, between –10C and –8C all day long, it somehow reminds of North Korea…

29 December 2010 – still chilly and but cold is accompanied by gusty wind, wind chill around –20C, in the evening it begins to snow.

30 December 2010 – after an overnight snow Warsaw is bestowed with 5 centimetres of totally superfluous white powder, the upside is rising temperature –4C from dawn to dusk.

31 December 2010 – snowfalls cease around midday, by that time we have a few more centimetres of snow. Temperatures rise. Fortunately, the night is quite windless and not really cold.

Average temperature of December 2010 in Warsaw: -5.5C, 5.1 degrees below long-term average. December 2010 was categorised as anomalously cold.

1 January 2011 – howling, gusty (up to 70 kmph) wind wakes some inhabitants of Warsaw up in late morning. As every child knows, snow + wind = blizzard. Before midday temperature creeps above 0C, for the first time since Christmas. Unfortunately, thaw stays just for a few hours and wind chill takes the edge off it.

2 January 2011 – Polish example of changeable weather: 11:15 – sunshine, clear skies, 0C. By 11:30 skies cloud over, snowstorm breaks out, temperature drops to –2C.

3 January 2011 – mild winter returns. Temperature hovers between –1C and –3C, unfortunately, the snows refuses to hold back from falling to the ground.

4 January 2011 – sky is overcast in the morning and the partial solar eclipse can be hardly observed in Warsaw. It is slightly dim only, skies clear up in the afternoon. Winter stays mild – around –5C.

5 January 2011 – this year the annual early-January cold snap does not hit as it did in three preceding years. 4 January 2008 was the coldest day of the year with day-time low of –14C, 6 January 2009 was the coldest day in 2009, temperature at dawn fell to –22C. 4 January 2010 saw temperature of –19C, four degrees warmer than on 26 January 2010. This year the weather pattern does not recur. Cloudless sky lets the earth give off heat, but temperature in the morning drops to only –12C. It will not return to double digits below zero for a while…

6 January 2011 – The last day of proper winter with sub-zero temperatures, clear sky and chilly wind. North Atlantic Oscillation seems to be perking up for good.

7 January 2011 – overnight rain freezes on roads and pavements. All usual routes, no matter if used by pedestrians or vehicles, turn into genuine ice rinks (layer of ice is even 0.5 centimetre thick). A definite upside is the temperature – day-time high of +6C (well above forecasters’ consensus), a downside – lack of sunshine. Snows are melting rapidly.

8 January 2011 – 9 January 2011 – the big thaw continues over the weekend. Day-time highs hit +5C, day-time lows are above 0C. Balmy, but gloomy; melting snow uncovers general dirt, turds, rubbish. I like it anyway.

10 January 2011 – 12 January 2011 – nothing heralds the end of ongoing thaw. Temperatures hover slightly above zero and occasionally drop below zero at night. Deficiency of sunshine makes itself felt, but I still prefer it to frost and snowfalls. Yes, snows, the only remnants are old mounds of snow mixed with salt, grit, soil, mud. Grisly…

13 January 2011 – 14 January 2011 – gloom and warmth continue. Grotty mounds of iced snow melt very slowly. I asked a few people whether they prefer a proper winter with snow and frost or a gloomy thaw. Unanimously all opt for the latter.

15 January 2011 – temperature hovers around +5C. Pouring rain does the job of melting temperature-resistant snow mounds. By and large, the old snow has gone, now there’s enough room to store new, due around 20 January.

16 January 2011 – temperature rises to +7C, gloom slowly gives in, but skies fail to clear up for good yet. After yesterday’s rainfalls some areas in Warsaw and around are flooded.

17 January 2011 – temperature doesn’t fall below +6C and hits month-time high of +9C, the only missing piece is sunshine; despite upbeat forecasts (sunshine from dawn to dusk), clouds unremittingly occlude the sun.

18 January 2011 – 19 January 2011 – heat slowly retreats. On Tuesday it is not well felt yet, as sunbeams warm the air up, but on Wednesday temperatures are no longer well above zero. Sky is generally overcast and the fortnight-long hot spell draws to a close.

20 January 2011 – morning wakes us up to the temperature of around 0C and one-centimetre-thick layer of wet snow. Beauty of the winter is properly dosed – snow sets on threes, fences and plants, but melts on roads and pavements immediately, which means the dream of Warsaw’s road-clearance services has come true.

21 January 2011 – 22 January 2011 – the winter treats us gently. Temperatures still fluctuate around 0C, snow lingers everywhere but on roads or pavements, so it is generally bearable…

23 January 2011 – morning: light frost means falling snow is heavy and wet, the overnight precipitation brings five centimetres of such wet and heavy snowflakes. Before midday snowfalls cease, skies clear up, temperature rises to 0C and snow begins to melt.

24 January 2011 – till now the second winter episode is not obtrusive. Temperatures do not fall below –5C and snow does not paralyse the traffic. May winter stay merciful…

25 January 2011 – snowfalls give a rough ride, yet it’s not a disaster. Temperature is a bit lower and hovers around –4C all day long. Longing for the sunshine.

26 January 2011 – sub-zero temperatures linger and any thaw is unlikely to give us a relief from winter. A consolation to me is a reminiscence of the previous winter – exactly a year ago, on 26 January 2010 temperature in Warsaw hit its four years’ low of –23C. If it is twenty degrees warmer, grumbling is forbidden.

27 January 2011 – mild winter continues, temperatures hover between –5C and 0C and are bound to stay on. Weather forecasts say uplifting sunshine and mild frost may cheer us up in the coming days.

28 January 2011 – 30 January 2011 – three consecutive days featured by gloom and chill and temperatures ranging from –11C to –2C. Weather spites forecasters, who for each of three days foresaw sunshine and temperatures between –3C and –1C.

31 January 2011 – sunbeams still fail to break through the clouds. Uplifting weather can be found in the forecasts only, but good news is that the first half of February is said to bring temperatures above zero.

Average temperature of January 2011 in Warsaw: -0.5C, 1.7 degrees above long-term average. January 2011 was categorised as normal.

1 February 2011 – 2 February 2011 – ‘North Korean’ weather continues. I call it ‘North Korean’ because I watched two films shot in winter in North Korea and it looks that bad there: chilly, cloudy, windy and little snow on the ground. But winter in the northern part of Korean Peninsula are much harsher than in Poland and the country is anything but joyful…

3 February 2011 – winter slowly retreats. Temperature rises above zero for the first time since 26 January, snows slowly melt. A period of a few warm days is set to come. The downside of the early-February hot spell will be the lack of sunshine. Downpours and gusty winds will take the gloss off the thaw.

4 February 2011 – in the morning the weather is even clement. Sun breaks through the clouds and temperature lingers above zero. In the afternoon wind blows only stronger, sleet falls on the ground.

5 February 2011 – gale does not let me sleep a wink. Overnight downpour accompanied by relatively high temperature of +7C melts the whole snow within a few hours. The day is blustery, yet warm.

6 February 2011 – 8 February 2011 – three subsequent days marked by high temperatures, ranging from +4C to +10C, blend of sunshine and overcast sky. Gales and teeming down rain do plague intermittently.

9 February 2011 – 11 February 2011 – it is getting colder, day by day, yet not below zero. Winds are not as strong as they used to be in the previous days. Sometimes sun breaks through the clouds. Residents of Warsaw are bracing themselves for a return of frosty winter.

12 February 2011 – sunny, windy, chilly – Saturday is the first day since 2 February when the temperature over the day stays below zero. Very little snow precipitation – does not augur well for lawn and plants in the garden. Ground needs a natural cover to be protected from frost, this why usually cold snaps are preceded by bountiful snowfalls. This time it did not happened.

13 February 2011 – looks like pre-spring. Temperatures hover below zero, but thanks to sunshine and lack of wind it feels much warmer. And nothing heralds the advent of biting frosts.

14 February 2011 – February cold snap no. 1, day 1, lots of sunshine, temperature in the morning goes down to –11C, windy.

15 February 2011 – February cold snap no. 1, climax. Temperature in the morning drops to –14C, but howling wind makes it –20C. In the afternoon the absolute temperature is some five degrees higher, but wind chill hits –21C. Ghastly.

16 February 2011 – a bit warmer than yesterday and the last day of with sun on. Look outside the window and you would not guess it is winter at all. There is almost no snow, what means ground is freezing up deep.

17 February 2011 – sun is occluded by clouds, snow showers remind that winter is here. The temperature does not drop that low overnight, day-time low is –8C. Winds relentlessly blow strong.

18 February 2011 – February cold snap no. 1 draws to a close. Snow falls all day, temperature stays between –4C and –2C, wind chill around six degrees lower. But it feels warm.

19 February 2011 – snowfalls recede, yet the temperature does not climb above zero. Winter gives temporary relief, before it hits again. According to current forecasts, the second cold snap will be worse than the first, but this winter’s chill record for Warsaw (-18C on 1 December 2010) will not be broken.

20 February 2011 – snow showers interspersed throughout moments of glorious sunshine. Looks lovely when you stay in. Outside temperature does not rise above –8C.

21 February 2011 – temperature in the morning drops to –16C, with sunshine and still air quite bearable.

22 February 2011 – today’s low hits –17C. The record dated 1 December 2010 has not been broken and nothing augurs it will be broken. Next night should be a bit warmer. Russian high is said to linger until Friday, so three consecutive days should be dry, sunny and frosty. Hang on! It is late February and it is much dreadfully cold. If the same mass of air had come over Poland a month earlier, temperatures would have been some five degrees lower. –22C. Oh, we saw it in January 2010, January 2009, January 2006.

23 February 2011 – the worst is officially over. Temperature dropped to only –16C. I actually got immune to the cold. Temperature is predicted to surge over the weekend, for next Monday meteorologist expect balmy 0C.

24 February 2011 – actually this –17C in the morning is getting boring and doesn’t impress me much.

25 February 2011 – Winter, three months on. First snow fell on 25 November 2010, I can’t even say the end is near. A few days ago forecasters said today it would get warmer. Over the day it was, but morning saw another drop to –15C

26 February 2011 – now it’s really noticeably warmer. –5C, overcast skies, no wind.

27 February 2011 – no wind??? Woken up by a howling wind. Sun breaks through the clouds in the afternoon, temperature slightly above gives a foretaste of spring, which is yet beyond the horizon…

28 February 2011 – in the morning –7C, but shining sun take the edge off frost. In the afternoon –1C and sunbeams melt some snow.

Average temperature of February 2011 in Warsaw: -4.0, 2.7 degrees below long-term average. February 2011 was categorised as a bit frosty.

1 March 2011 – the first month of meteorological spring begins with temperature of –10C in Warsaw. Over the day it barely makes it above zero, but forecasts for the coming days in terms of temperature are upbeat!

2 March 2011 – 3 March 2011 – days of winter are numbered! Daily temperature fluctuations are staggering. In the morning it drops to –8C or even –10C, but it definitely does not feel that cold; as the sun goes up, temperature shoots up to reach around +3C in the afternoon. Days of clement, sunny weather might be also numbered.

4 March 2011 – the last day of glorious sunshine, temperature ranges from –5C at dawn to +5C in the afternoon. The ground is still frozen. Winter quite probably will not return for good, but it may smack us one or two times.

5 March 2011 – overcast sky, chilly wind and occasional short moments of sunshine best describe the day. In the evening a drizzle.

6 March 2011 – morning brings a thin layer of flurry, yesterday’s drizzle had frozen on the ground (-2C overnight), so pavements are treacherously slippery. Moments when sun shines intertwine with snow showers. Although it is slightly above zero, wind makes it feel like –10C.

7 March 2011 – I officially declare the winter is over.

Next days proved I had been right. Dawn-time temperatures hovered around zero for a few days, it took the leftovers of snow three days to disappear, ground was frozen for around three days as well. The next weekend was exceptionally warm, with day-time high of +17C on 14 March. Winter gave up the ghost considerably early, although a light snowfall was observed on 19 March 2011 in the morning and today temperature dropped to –2C.

Wednesday, 16 March 2011

Polish teenagers and assertiveness

Lesson from the last weekend (everything ended up happily) learnt: unfavourable circumstances will happen, but they should not serve as an excuse to hold back from blogging. The only fix are short, up-to-the point postings, like this one.

Commuting to town by train, though not as convenient as in one's own car has the same advantage as travelling by bus. Being tinned like sardines with fellow passengers means overhearing their chats and going unpunished with it. Apart from listening to ordinary grumblers who gripe about how much work they have, how stupid their boss is, one can hear what contemporary teenegers talk about with one another. I have commuted to Warsaw for almost eight years and have watched the subject matters of those talks drfiting from school goings-on, family affairs and friendships towards... partying. Almost every day I hear teenagers reminescing last weekend's booze-up, bragging about how much they drank, what they did after they got hammered, who puked first, who licked whose... Never mind... I have to say when I was 14 or 15 I wasn't an exemplary teenager. I wasn't a problem child, but I partying didn't affect negatively my performance at school, I never got really badly pissed, I never smoked, never did anything I would regret or could be ashamed of. Generally it has never occured to me that indulging in boozing can be something I can be proud of.

Yesterday I took the fast train from Radom at 7:07 from NI. I travelled with a group of first-year students who tried to cadge some money from fellow passengers, because they were suffering from hangover. They planned to knock back a few bottles of some kind of low-budget alcohol to survive first two lectures, then get hammered again and sober up during the last class. Fortunately, none of the passengers granted their request. I also said 'no'. Without hesitation, yet I wonder whether I should have used foul language to give them to understand what I thought about their stupidity. On the other hand, this could provoke at least a verbal scuffle and I actually wanted to spend the day at work, not somewhere else.

Today I took the 7:55 Warsaw-bound service. On my way to the station, as I was passing a local shop, I spotted a girl. Somehow she immediately caught my eyes. With hindsight I realised she had reminded me of someone (another long story, should be titled "I could kick myself for what I desisted from"). She looked kind of strange - unzipped jacket and low-cut blouse exposed her cleavage to easterly, chilly wind and she staggered a bit. We moved closer, staring at each other's eyes. Passing me by, she smiled, as the one she reminded me of used to smile, grabbed my arm and asked if I could buy her something... Before she finished the sentence several thoughts ran through my head. Was she hungry and wanted me to buy her food? Did she stagger because she had not eaten breakfast? Should I give her money or go with her to the shop? Surely the latter. ...because I'm under eighteen. "I'm sorry, I won't help you", I rebutted and walked away, still slightly mesmerised by her smile and bufuddled. I knew I had done what I had been supposed to do by refusing to grant her request, but unanswered questions kept nagging me...

Should I have told her off?
Should I have asked her what exactly she wanted me to buy (she could mean only cigarettes and alcohol)?
Why did she look like a tart?
How old was she? She looked like 16, but it was just next to middle school so she could be younger...
Why was she desperate to get what she wanted to get?
Should I have asked what the hell she was doing with her life and why?
Should I have tried to show interest in her situation, should I have stopped for a while and talk to her?

I have been thinking about the sitaution for some 13 hours. I told the story my colleagues at work, they treated it as an anecdote and expressed their concern about their teenage children. I worked normally but I had the girl in my mind all the time. It even prompted me to do what I do very seldom - I posted something in the middle of the week!

If I happen to meet her, provided I recognise her (I have no memory for faces), should I react anyhow? I'm not indifferent, yet I can't honestly say I care about her fate. She was a splitting image of my 'wasted chance', she reminded me about her, what actually was a reason for my emotional reaction...

Sunday, 13 March 2011


Look back on 10 March, look back on early morning on 11 March. Think of millions of Japanese... How many of them thought on 11 March in the morning their country would be devastated by a destructive earthquake Japan had not seen for decades? I bet the number ranges somewhere between 0 and 100 and is slightly misleading, as to carry out this experiment correctly we should exclude all geologists, seismologists and other people who deal with earthquakes day in, day out. But ordinary people? It struck them out of the blue. This is the life, its charm consists also in unpredictability...

On Friday I watched footages of monstrous tsunami waves wreaking havoc to Japanese coast and apart from sympathy I felt a strong admiration for that nation. Film coverages showing people's behaviour during the earthquake showed an amazing picture of people who, confronted with a dreadful danger, kept a cool head, do not fall into panic and try to wait out the worst. Japanese construction technology again has proved its mastery. Very few building were destroyed by the earthquake of magnitude of 8.9 Richter degrees itself, that was the tsunami wave that really went on the rampage. Trains did not derail when the earth was quaking, they were wiped out by the blast of seawater. Japanese communication and early warning systems also worked perfectly. Thousands of people from coastal areas were told to evacuate just two minutes after the giant wave formed near the epicentre of the earthquake. Given the scale of the disaster, death toll of 10,000 to 20,000 is not a striking figure. Probably if the same happened in any other country, in densely populated area, the number of fatalities would be much, much higher...

On Saturday early morning everything seemed to herald a nice weekend for me. The twist of fate hit my family and me out of the blue. Fortunately, things are slowly getting back to normal, but I had to cross out a few items from my weekend to-do-list, so during this short spring episode (at least the weather is uplifting - sunny, temperature "in its teens") I had to do without the first bike ride this year and gave up on writing an important post about Polish pension system reform. Big apologies for such a short posting.

Hopefully, things will straighten out and next weekend I will publish a post which has been written since late November and will be the longest published on PES. In two weeks, circumstances permitting, I will catch up with the issue of pension reform, the post planned to released today will be supplemented by coverage of a TV debate between one of the biggest advocate of the reform, finance minister Jan Vincent Rostowski, and one the biggest opponent of the reform, Leszek Balcerowicz, tentatively scheduled for 21 March.

All in all, life has reassured and convinced me it should not be the bed of roses. All difficulties toughen us up, if we do not let them kill us, they make us stronger, they shape out resilience. This is the leaf to be taken out of the Japan's book. The earthquake and the subsequent tsunami did bring the Japanese to their knees. Mentally they will get up of their knees quite soon, but the damages will pose a much bigger problem for the economy. Japan is the most indebted country in the world, with the public debt accounting for almost 200% of GDP. For this reason the earthquake will take a heavy toll on the Japanese economy...

Sunday, 6 March 2011

Out of the frying pan into the fire...

I managed to give up on politics for a month only. Time to revert to the touchy topic, this time approached from a different angle...

Jokes about fellow head of state's wife's infidelity...
Sitting down joyfully when guests are standing...
Another president standing in the rain without an umbrella over his head...
Setting out to eating when the host is speaking...
Calling several meetings to arrange the date of parliamentary election and not rulling out 30 October right away...
Inviting a former president Jaruzelski to a delegation travelling to Rome for JPII beatification ceremony and then declaring to think it over?
Saying in an interview to a newspaper he does not know if he would entrust Jarosław Kaczyński the mission of creating a government if the party Kaczyński runs wins the elections.

The list of major missteps of Polish president made this year only numbers seven slip-ups. Probably slated, bad, ex-communist president Kwaśniewski did not make so many blunders during his ten years in office.

First four gaffes are quite obvious, I will just take a liberty of commenting on the last three ones.

Date of election is not the biggest problem our attention should focus on. It should not be held just before All Saints' Day because it is the period when Poles get around the country and hence the turnout would be lower. And two-day election, as put forward by Mr Komorowski is a big waste of money. Politicians of PiS reject the idea by saying it makes room for irregularities (typical for the mistrust-driven party), I say if holding one-day election can save 50 million zlotys, this money must be saved. With our ailing public finances we cannot afford this. Over!

General Jaruzelski remains a big problem in Polish politics. It is quite clear that in his state of health he would not go there, even regardless of his atheism. But invitation is about protocol. Mr Jaruzelski, no matter what you think of him, repeatedly met with the Pope and after His death was a witness during the beatification procedures. Has nobody thought of it? Manners of Mr Komorowski remind us of what late president Kaczynski did in March 2006, when his officials mistakenly awarded Mr Jaruzelski a medal for his WWII gallantry. Mr Jaruzelski later sent it back to Mr Kaczyński and after all he, not the president saved face. Handling Mr Jaruzelski will remain a problem for Polish politicians for a while...

The statement in Mr Komorowski interview for Newsweek is much simpler. He, as a president, is duty bound to assign the leader of victorious party the task of forming the government. Those are voters, who go to the polls to decide who should be the prime minister, not the president. May he remember about it. If Kaczynski's party wins the election, he has no choice, just as Lech Kaczynski in 2007 properly, but to do it without a murmur!

And this is the man I voted for... Some eight months ago I exercised my right to vote, now I want to exercise my right to criticise! I did back him, because I realised there was no other choice. I knew he would be a mediocre president, but his mediocrity has gone far beyond my expectations. I now regret not voting for Mr Olechowski in the first round, but not regret voting for Mr Komorowski in the run-off. If time could be turned back, I would do the same, despite everything. I have observed what Mr Kaczynski and Mr Napieralski have been doing since the election and I know they do not make a reasonable alternative. Mr Komorowski is, pardon the expression, a 'lout', but does not turn the country upside down. Mr Napieralski, with his background and education not only does not have any makings for a head of state, but also for any minister. Can you tell me which ministry could he take charge of?

Who said before the presidential election we should vote for Komorowski if we did not want to be ashamed of our president when he goes abroad? I am ashamed of him not only when he travels abroad, but also when he plays host to foreign guests in Poland. Jarosław Kaczyński would not make all those blunders, but on the other hand many of those meeting Mr Komorowski attended would not have taken place. Foreign policy, as pursued by PiS, consisted in not pursiuing it, or pursuing it selectively.

All in all I in my voting decisions I was guided by model of presidency and views, not by manners. Mr Komorowski's views fairly squared with mine, his unbiased presidency is a big step towards in comparison to his what his precedessor did. Unlike late president, Mr Komorowski could appoint a governor of central bank who was not his henchman, but was competent to take up that position. He has two economic advisers, one (Jerzy Pruski) has liberal views, other (Jerzy Osiatyński) has rather statist views and the balance is struck.

I was not that really ashamed of Lech Kaczynski, I rather disagreed with what he did as a president. I felt sorry for him. I knew he was not cut out for such office, he felt uncomfortable and stressed out between movers and shakers, who have never been his breed. He was a bit gauche, but his ineptitude rather evoked my sympathy. He was in a way one of us, he embodied our shortcomings, yet in most situations he was self-concous. Mr Komorowski, in turn, is overly self-confident and hence uncouth. A proper balance of self-conciousness and self-confidence is essential to behave well in all situations when impeccable manners are required. It seems to me Mr Kwaśniewski has had that knack, Mr Kaczyński and Mr Komorowski, although they are both proud to boast their 'noble' descent, simply lack good manners which should have been instilled in them at homes.

After all Mr Komorowski has messed with me much more within seven months than PO-led government managed to do within over three years. I have voted for both and I will be watching their doings.