Sunday, 31 January 2016

Banking tax

In the eve of the day when Polish financial sector is encumbered with a newly levied asset tax, worth looking at whys and wherefores of the new source of revenues for the government budget.

The concept of additionally taxing financial institutions is a relatively new concept which traces back to 2009, months after several banks in developed countries had been saved by governments from going under. The general rationale for putting extra taxation on the financial sector was:
- precluding banks from getting involved in speculative transactions and
- partly compensating taxpayers whose money had been used for bank bail-outs.

The primary premise is hence not to raise more money to the government budget, but to influence behaviour of the nasty institutions. To pursue such goals, banks taxes have either:
- profits on speculative transactions or
- liabilities, other than equity and client deposits,
as tax base.
Such construction puts banks off engaging in frequent, risky speculative transactions (tax payable eats up the whole profit on a deal which renders such operations senseless) and persuades banks to seek most stable sources of funding and minimise their reliance on inter-bank loans.

Bearing in mind the above, it is hard to discern similarities Poland and developed countries where special tax for financial sector has been put in place. Firstly, the conduct of the Polish banking sector has been beyond reproach. Commercial banks in Poland have contained their business to the essence of banking, i.e. taking deposits and granting loans. No bank has been involved in speculative trading on a large scale (not fully matched client positions in banks’ books are too low to threaten banks’ solvency) nor in investments in dicey securities. No bank has ever had to bailed out from taxpayers’ money, nor even has been on a verge of insolvency. Commercial banks are strongly capitalised, have solidly performing credit portfolios and ensure clients’ deposits are safe. A bit of bitter word could be said of co-operative banks and credit unions, whose bankruptcies have been witnessed recently far too frequently. Lack of proper supervision of KNF on credit unions until 2012 and years of poor management are taking their toll on ill-run small financial institutions.

The main sin of commercial banks is that they indeed many times have not played their cards right and have not treated clients honestly. The example of CHF-mortgages foisted upon naïve borrowers, not eligible for such products, was just a tip of the iceberg. The other sin are excessive, compared to other sectors of the economy, after-tax earnings of the whole banking sector, reaching PLN 15 billion per year. An industry which produces no tangible goods for a laymen should not be allowed to continue to be a money-making machine, so let’s bring it to the heel.

The reason why banks and other financial institutions will be taxed in Poland is not to punish them for their misconduct, but to quickly raise money for merry social spending promised by the new government, actually for one 500 PLN child allowance programme. Most people believe fat cats from banks and their foreign owners are a perfect scapegoat, since it is the easiest to take away money from where there is plenty of them. Choice of tax base also reflects on taking the path of least resistance. In Poland the tax will be charged on banks’ total assets less equity less held government-issued securities less PLN 4 billion securities and the annual rate will be 0.44%.

Now let’s dissect some details on the tax:

1. State-owned banks will be tax-exempt. Currently the only bank eligible for such status is BGK (PKO BP is only state-controlled) – the government will not tax itself and its debt!

2. The PLN 4 billion allowance means favourable treatment for co-operative banks and credit unions whose conduct raises the most reservations. Good to see the government wants to enhance competition on banking services market and prevent the largest banks from growing too big to fail (top10 already are), but such mechanism means transfer of money from well-run to ill-run institutions.

3. The biggest drawback of the tax is equal tax rate for all assets, regardless of how risky they are (except for assets bearing sovereign risk). This means that the tax rate on a mortgage loan with LTV of 50% is equal to the tax rate on unsecured cash loan. This means the tax rate on a short-term loan to a prime corporate client will be equal to the tax rate on a long-term loan for a start-up (such are sometimes granted). The tax rate will be the same, while how much banks earn on different assets reflects those assets’ risk profiles. Equal tax rate is likely to push banks towards more risky lending, since income on the safest assets will not be satisfactory. Oddly enough, I have not heard this argument raised in the public discourse.

Now let’s examine where the impact of the tax will be the biggest. Common sense after reading point 3 from the paragraph below, or pure command of maths should tell you banks’ clients will feel the effects the most on products with relatively low risk and low margins. From what I observe, the costs will be passed on to customers in three ways:

1. Through higher prices of basic banking services which are inevitable for all individual and corporate clients (account fees, debit cards fees, transfer charges),

2. Through higher margins on mortgage loans, the least risky credit product offered in the retail banking. With automobile loans or cash loans where margins reach several hundred basis points and fees, commissions and obligatory insurance make up sizeable income, impact of 44 basis points banking tax will not be felt much. For mortgage loans running until now on margins even below 150 basis points the tax will eat up one third of the income. No wonder banks in unison have increased the cost of mortgage lending.

3. Through higher margins on loans for corporate clients with decent financing standing. Large companies until recently could easily obtain short-term funding for not much more than 44 basis points over WIBOR. Customers from that segment will have to accept higher cost of financing.

Now I wonder whether proponents of the tax in their calculations of budget proceeds have taken into account:
- lower CIT proceeds (higher interest cost and banking fees for businesses translates into lower tax base),
- lower VAT proceeds (households taking out new loans will spend and invest less),
- impact on GDP of worse performance of the property market (actually as a whole I view the impact positive, since cheaper properties are easier to buy without debt).

Negative selection (preference of banks to shift towards more risky assets with higher income potential) is just one aftermath of the new tax. The other is that for large-volume (>PLN 50 million) single credit exposures, especially those in foreign currencies, it will make sense to arrange the loan in Poland, but to establish as a lender another bank from a Polish bank’s capital group. Works on implementing such solutions are pending and I estimate this method of circumventing the new law might deplete the tax proceeds by several hundred million zlotys.

The only country in the EU to have followed the path of taxing banks’ assets is Hungary. The price to pay was heavy contraction in lending dynamics, spilling over to the whole economy. For no apparent reasons Hungarians are pulling out from the tax by decreasing its rate year-on-year.

Time to bite the bullet on it. Banking sector has been getting on well for many years, its returns are also impressive. The very idea of above-average taxation on it, as long as it is brought off wisely (a good example is copper tax for KGHM), would not bring banks to their knees (the very tax, passed onto clients would neither do). To make it wisely, i.e. without flawed disincentives, I would put forward two measures, more difficult to carry through than just taxing assets. Firstly, cut down on opportunities to transfer money to head offices via royalties, costs of services and other payments that artificially boost expenses and decrease pre-tax profits. Secondly, apply a higher CIT rate to financial institutions, but tax profits, not assets. I realise the latter is at odds with the former, so combining the two solutions does not appear too fortunate, but shows the direction which would bring the least harm to the economy.

The banking tax itself will not be an excessive burden, but if its effects are compounded by conversion of mortgage loans denominated in foreign currencies into PLN at “fair rate”, repercussions for the banking sector might be dire, since losses of PLN 30 billion of the industry as a whole would mean some smaller banks could go insolvent and their owners taking losses and walking away, leaving the Polish government and financial watchdog with the mess.

Worth noting what the “fair rate” is, since in the debate on president Duda’s proposal nobody has actually explained what the economic sense of this “fair rate”, calculated individually for every debtor is. In plain Polish, the fair rate is the CHF/PLN exchange rate to which CHF/PLN would need to soar right after loan disbursement and at which it would need to be fixed over loan’s life until now, to make sum of instalments in CHF and PLN (assuming the same loan margins and without discounting to account for time value of money) equal. In simple words the “fair rate” is the one at which a CHF-debtor is neither better-off nor worse-off than PLN-debtor.

Moreover next bankruptcies of ill-run credit unions are in the offing in the coming months. The Bank Guarantee Fund, with reserves accumulated since 2001, has been depleted by payments to aggrieved depositors (folks are lucky to benefit from Bank Guarantee Fund protection since recently thanks to prudent policies of the previous government) and the Fund now passes the hat round between banks to make up for the outflows.

The banking sector had its golden years in Poland. Those times will never come back and good for us, since if wealth is unequally divided between financial intermediation and real economy, economic development will not be sustainable. But if we go into another extreme and knock down institutions which facilitate flow of funds between depositors and borrowers, taking the credit risk away, we will knock down the whole economy. Bleak times ahead.

Sunday, 24 January 2016

Winter wonderland

At long-last, the veritable winter has turned up. First days of January brought harsh frosts (day-time highs below –10C), yet the first winter episode was snow-free. The first proper snowfall was witnessed on Friday, 15 January; lasted since early afternoon until late evening and covered the ground with eleven centimetres of brand-new white powder. For comparison, maximum snow cover during the previous winter (on 9 February 2015) reached 4 centimetres (and melted right away).

The sight I woke up to behold on Saturday a week ago. While it had snowed temperature had been barely below zero, hence the snow was wet and thick. No wonder trees were bending under its weight. Temperature overnight had fallen to some –6C, hence shyly shining sun did not cause snow caps to drop.

Afternoon. After a bright morning sun has been occluded by clouds. I stroll around to gloat over the magnificence of winter. The sight caught from ul. Zimowa in NI brings to mind “White as snow” by U2. A pity we had not enjoyed such weather during Christmas. Peaceful, slightly dark, silent place. May the moment last!

Further up to Mysiadło, where side streets have not been cleared of all snow, rather it has been beaten and its compact layer is vehicle- and pedestrian-friendly. For inhabitants of terraced houses any bigger snow precipitation is a challenge, since front-yards and drives are too tiny to heap up masses of fallen snow.

Walking east, I get to premises of bygone PGR Mysiadło. Swathes of land covered with snow and a row of trees marking a boundary of the capital bring to mind… labour camps in Siberia. The association does not seem legitimate, since the only common element is a relatively large piece of flat land under the snow…

As I strut about towards ul. Puławska I notice heavy snow has not deterred motorists from moving about (I drove nearly 40 kilometres on that day, so why do I grumble?). Yet traffic jams congest side roads in Piaseczno. Here, clogged up ul. Wiśniowa, towards ul. Łabędzia, where a queue of cars before intersection with ul. Puławska is half a kilometre long. Situation is worsened by the fact some drivers use summer tyres useless in such conditions – setting a car in motion on ice is nearly impossible.

Here comes our saviour. Ul. Raszyńska in Piaseczno, tractor with a plough removes some of the snow from the street and puts down sand on it. Road clearance on roads governed by Piaseczno is a crying shame. Back yesterday, a week after the snowfall many roads were still covered with frozen slush…

And the outcome of the plough’s work. Worse than the day before. This is a regular ice, fortunately clearly visible, so less treacherous. Drive slowly, operate all pedals gently and use engine braking in advance to slow the car and provided no object cuts in on you unexpectedly, you should avoid going into a skid.

Here, an example of a frequent unsocial behaviour. The egg trader (or someone hired by him) has got rid of snow from their drive by shoving into onto the public street. The “move it away from myself (into no-one’s territory)” way of thinking is not what I put up with…

Last Sunday, level crossing in NI. Construction crews carry on working despite unfavourable weather. A weeks ago western track was ripped off nearly by the station in Nowa Iwiczna. Good to see works move on despite the winter.

And another snap of rail tracks, this time from ul. Mleczarska, the coal line. The Sunday was a gloomy day, yet the snow-covered earth brightened it up. Much healthier for one’s mood than a grey day with drizzle.

One more picture of snow-covered fields. Further from Warsaw in Mazowsze such landscapes splay out into the horizon. Here in the distance we see development in Stara Iwiczna and not very old housing estates in Piaseczno (where flat supply overhang is record-high, yet prices are not much lower than in some outer districts of Warsaw which enjoy better transport links with the city centre).

Monday, foggy morning seen from ul. Sarabandy. My journey to work lasted on that day nearly two hours (left home at 7:05, reached the office at 8:55), I guess longer than ever. Ul. Puławska was unusually congested; besides, waterworks crew dug up ul. Sarabandy at its northern end. I ended up driving there and back slowly and then, to avoid dense traffic on ul. Puławska, I turned right into ul. Karczunkowska and took a detour via Dawidy Bankowe (ul. Starzyńskiego was one huge ice rink).

Yesterday. Temperature overnight fell to –13C, morning greeted with clear blue skies and hard rime, setting on trees. Picturesque sights to lap up before they disappear for a while. Forecasters predict thaw is due tomorrow and within a fortnight winter is unlikely to return.

In the afternoon I took a bus to Pyry and marched into the forest. To my surprise, Las Kabacki was not chock full of ski-runners and walkers. Quite disappointing given the weather was conducive to enjoying gorgeousness of the winter which will soon be gone.

Heading towards the bus stop, I take a shot of ul. Puławska from the footbridge over the artery. Note the white shade of asphalt. Road clearance in Warsaw, compared to Piaseczno where the town’s services have buggered it up all along, seems beyond reproach, yet massive amount of salt on the streets are the price to pay. The footwear deserves watering when I get to the office and then at home, not to let salt mix up with the leather. The car looks horribly (in some spots the bodywork is virtually white) and is due for a decent wash-up as soon as thaw arrives. Roll on spring!

Sunday, 17 January 2016

Triple Bee Plus, Outlook Negative

Friday evening. Negative news, as the one from August 2011 on US sovereign rating downgrade, are issued at the end of the working week after markets close, to let market participants “get over” the news and avoid turmoil when trading is resumed on Monday.

Standard and Poor's, one of three main rating agencies downgraded Poland’s sovereign rating from A+/stable to BBB-/negative. The move was par for the course; it was likely to happen, yet not now, but when effects of PiS government’s fiscal and (affected by them) monetary policies would impinge on creditworthiness of Poland. The most astounding aspect of the whole matter was not only the change in rating, but also the outlook. The blow was dealt without warning (i.e. changing rating outlook to negative while upholding the A- grade). On the same day Fitch upheld its A- grade, while Moody’s is bound to review the rating of Poland this year. The saddest aspect of the whole story is that we are witnessing the first downward move in the rating in the history of Poland (it was last upgraded in February 2007 when PiS was in power and upheld throughout eight-year rule of PO-PSL).

The justification (thank you Michael for sharing) of the rating chance indicates at sound macroeconomic foundations of the Polish economy and points at unsettling political moves which disrupt the system of checks and balances, i.e. calling into question independence or empowerment of institutions whose role is also to hinder reckless policies of the government. The impaired constitutional tribunal, paralysed by the new law, with 3 judges elected by the previous parliament and not sworn in, is, according to the recently binding law, not authorised to hand down rulings. Politicians of PiS have openly admitted support for monetary loosening was one of the criteria in choosing among candidates to Monetary Policy Council. Not a scenario creditors of Poland would wish on themselves.

Ministry of Finance in its press release dubbed the Standard and Poor's decision “incomprehensible” (worth reading, as the content of the release holds water, if you turn a blind eye on their command of English). PiS politicians and befriended economists argue rating agencies should focus on performance of economy only. In practice, every sensible lender, to the extent permitted by law, evaluates conduct of their borrower. If you lend money to a private individual you should assess not only their sources of income and spending needs, but also their lifestyle (in practice often prohibited by law), because paradoxically a poor granny who lives off a tiny pension, but dutifully repays her loan might be more creditworthy than a lad in this twenties who has no family and earns well, but leads a lavish lifestyle, goes on a bender every weekend and throws about money. If you lend money to an enterprise you should assess not only numbers in its financial statements, but also its corporate governance rules, strategy and its viability, management and its credibility.

Your opinion of Standard and Poor's assessment might be low. The rating agency has discredited itself many times, yet the grades it issues are respected around the world and affect perception of Poland’s credibility. You might agree with the downgrade or not, but higher yields on Polish bonds will be a fact, also the Polish currency might stay weaker for a while. At the end of the day the taxpayer will pay the bill. I bet on (blue) Monday the WIG20 index opens 3.8% down from Friday’s close (partly driven by dire trading in the US and falling prices of oil and copper) and closes 1.7% down from Friday’s close. I also expect a slight strengthening of PLN, though in mid-term it is likely to be under pressure of general negative sentiment around the world, except for impact of local policies.

You can also ask who pays Standard and Poor's. In general those are potential or existing holders of Polish debt, i.e. in practice financial institutions who (at least partly) rely on the rating agencies’ evaluation in their assessment of Polish bonds’ credit quality. Theoretically, Standard and Poor's should attempt to deliver the best service to their clients, because its role it to attempt to protect their interests as creditors of Poland. The truth might be different, as the example of worthless AAA+ ratings assigned to junk mortgage-backed CDOs best showed.

Finally, is it the revenge of “banksters” for introducing the financialinstitutions tax (president signed the law on Friday) or for the draft of currency mortgage law presented also on Friday? The exact timing is in my view coincidental, but indeed the downgrade might be a form of warning (get your hands off the financial sector) combined with punishment. But on the other hand, if you want to borrow money from somebody, you actually must agree on some conditions and constraints set by lenders and if they perceive you as more risky, your cost of debt will be higher. The principle is simple, if you want to mess with lenders, do not ask them for more money, but reduce your debts. PiS government wants to have a cake and eat it – they will need to borrow more (I do not believe the turnover tax, the financial institutions tax and improving VAT collection will be sufficient to fund 500plus programme, especially in the current macroeconomic environment), and simultaneously ask bankers in and tell them to kneel. I know many can’t wait to finally see bankers on their knees, but such sight is too beautiful to be true!

Sunday, 10 January 2016

The Big Short - film review

Not a secret I am fond of films inspired by the financial meltdown in 2008. Quite naturally, plenty of such films (documentaries or fictional) were shot shortly after the crisis (Let’s make money, Inside job and Margin Call just to name those reviewed on PES), yet new productions come up even seven years after the climax of the market turmoil. The Big Short, which premiered in late 2015 is one of such pictures. So yesterday, instead of joining KOD in picketing for freedom of expression in the public media, I drove to a cinema to watch Big Short in the silver screen.

The films is generally based on facts and tells the story of a handful of astute investors who predicted the collapse of the U.S. subprime mortgage market. Same old story recounted, you would say. True, and because of this you can easily guess how the film would end. Yet, the insight into the crisis is shown from a rarely highlighted angle of those who predicted it in advance and for years were scorned. This, compounded with the word “fraud” (and its derivatives) uttered several times induces a question, whether perpetrators of the crisis were mercenary, greedy bankers attempting to makes us much money as possible before subprime time bomb went off, or did they genuinely believed they had invented a perpetual motion machine.

The simple answer to the question is, I believe, straightforward. As the Polish saying goes, Siebie oszukujemy w miarę potrzeb, innych w miarę możliwości (you deceive yourself as much as you need to, while you deceive others as much as opportunities permit).

The more complicated answer draws on flawed foundations of the banking system and the principal – agent problem. Let’s consider a situation when a specific market (may there be subprime mortgages in the United States or CHF-denominated mortgages in Poland) is getting dangerously red-hot.

1. As long as the market keeps rising, your stakeholders expect you to stay on the market (US investors wanted fund managers to invest in CDOs, head offices of Polish banks wanted them to grant CHF-denominated mortgages).
2. But if the circle keeps turning and you back out, you lose clients and earn less (therefore few fund managers liquidated their exposure to subprime securities before the market subsided, therefore few banks voluntarily gave up on CHF-denominated loans).
3. When the market collapses, everyone makes roughly equal losses, so as long as you do not fall short of your peers, your stakeholders put up with your mistake, as everyone has made it (investors across the world could feel duped, but for reasons different than mortgage market downfall, head office of foreign banks have not laid off a single executive involved in aggressive origination of CHF-denominated loans, though now these mortgages as a portfolio are loss-making)
4. But when the market crashes and if you have had the courage to swim against the tide and reap horrendous profits and your bets, would it be appreciated? History gives negative answer (ever heard of elated investors extolling their fund managers for earning them 500% profits, name a bank proud today of staying away from CHF-denominated mortgages).

While you leave out the leitmotiv of the crisis, mortgages, debt, derivatives, defaults and other notions confusing for laymen, this is a film about human psyche. Big short is about having the courage to swim against the tide. In 2005 someone betting against the mortgage market was dubbed a downright moron. Despite hard facts supporting the conclusion residential housing market fundamentally was bound to fall down, speaking it out publicly was out of favour. A tough test for one’s guts to stick to what you deeply believe, while everyone else laughs them off. A tough test for one’s humility to tell nearly everyone, including renowned financiers and bankers, are wrong. A tough test for one’s investment strategy as well, since the market can stay irrational longer than you can stay liquid.

Yet, before you realise market is in a bubble, craze has rubbed off on everyone around and valuations of assets have strayed from fundamentals, you need to realise dreams cannot come true if you cannot afford them. Dream of home ownership simply must be out of reach for those who cannot afford to repay a mortgage.

The problem of the financial system is that the price to pay for taking excessive risks is too low, while the price to pay for refraining from taking excessive risks is too high.

Sunday, 3 January 2016

Marching towards common happiness

Those guessing I would be writing on personal life this time have been misled. I am launching a new tradition in which the first post in a month will be dedicated to attainments of PiS-government and their president (who officially is also the president of Poland). Since the blog is by no means objective, I will hold back from describing facts (assuming they are known, though all media, no matter if straightforwardly pro- or anti-PiS, seem to distort the reality to shape the communication to their audience) and focus on my observations instead.

Disclaimer: I am employed by a financial institution and hence my professional and financial well-being might be impacted by some of the events I comment on, especially by financial institutions tax.

PiS, in express-fast pace, have pushed their new constitutional tribunal law through both houses of parliament and their notary (Mr D.) signed the law without further ado, despite harsh condemnation from nearly all representatives of judiciary power and despite doubts whether the amendment was in breach of constitution. Brushing aside all the errors made by PO in June 2015 and the whole turmoil in late November 2015 around swearing in newly elected five tribunal judges, we need to see the end that justified the means. The tribunal, the strongest representative of judiciary power (legislative and executive already taken over by PiS) had to be pacified. The tribunal was not just a stronghold of elite which had ruled Poland over the last 25 years, it was a hindrance for the good change being brought about by PiS. This has been said by Mr Kaczyński. Whoever stands on their way to unfettered power will be wiped out. The notable style of manipulation is typical for PiS: sling mud at your enemy, make people believe your enemy embodies evil, to justify an impetuous crackdown on them.

The banking tax draft law has gone through both houses of parliament and now awaits the notary’s (my apologies to all notaries, you at least read documents before you sign them) signature. The banking tax (actually financial sector tax) will take effect on 1 February 2016 and will be equal to 0.44% of an institution’s asset, with allowance for assets up to 4 billion PLN and government securities. The tax should fetch proceeds of 4.4 billion PLN (wonder whether this calculation takes into account lower CIT inflows from banks and enterprises) to finance pro-family policies. Effects will be analysed here in a few months, let’s give them the chance. My only comment is that banks have worked hard for their miserable reputation, but the tax base the government has applied will bring more harm than good, since banks will have a disincentive to pump money into the economy, especially the asset base with the best credit profile (and running on the lowest margins) is likely to cease to grow. It is naïve to think banks will not pass the tax into customers (they are already doing so). To make the criticism constructive, it would be wiser to: (1) apply a higher CIT rate for financial institutions – let’s tax profits not assets, (2) curb numerous ways of transferring money into Polish institutions’ head offices (and thus decreasing pre-tax profits).

Similar is the status of the supermarket tax. The proponents have shifted from shop’s area to turnover as tax base, a move in a good direction. Critics of the new tax argue it will translate into higher prices. My view is a bit more sophisticated. It will be partly absorbed by retail chains, partly by customers, but those hit the most will be suppliers (small entrepreneurs), already now exploited by their off-takers having incomparably higher bargaining power. Dear small entrepreneurs who deliver goods to powerful retail chains, prepare for even lower margins and even more stretched out payment terms.

The media law, bringing public radio and television to the heel, is also likely to take effect before long. Public media, bastion of anti-PiS journalists, overly supportive to PO and Nowoczesna, will soon be brought into “balance” by nominees of the ruling party. The goal is to restore the balance in the public media. Still too early too assess the outcome of the new law. Let’s wait a few months to behold the cure!

The government is working to undo the reform pushing six-year-old children to start education. Finally, the defenders of the nation’s offspring will disallow the evil people to take away a year of childhood. Does not matter demographics is relentless, does not matter in most European countries children start schooling at the age of six (are Polish children intellectually inferior to them?). Most parents are happy. Instead, work should be done to make schools more friendly to six-year-old children, since teaching methods should be adjusted to the age of pupils.

The flagship project of the government, 500+ child allowance programme is in consultancy phase and likely to kick off in 2Q2016. The later the scheme comes into force, the bigger the relief to the public finances, so I hope its introduction is deferred by a few months more. Had the draft been ready as Mrs Szydło claimed during the campaign, while she waved a pile of documents subsequently shown to nobody, the progress of the scheme introduction would have been better. It needs to be noted, if PiS went back on its main promise, many of the voters, bribed by the 500 PLN monthly per child, supported PiS and secured outright majority in the parliament for the party. Once they turn their back on PiS, the party will be in a fix. By the way, if somebody offered me a job change in return for 500 PLN or 1,000 PLN monthly pay rise, I would laugh off and reject the proposal!

One thing that cannot be denied to the new deputies is that they work as arduously as no other parliament before. One thing I have learnt over five years spent in the corporate world is that while you work furiously fast (I have experienced it many times), the risk of making mistakes rises greatly. However, with all safety valves (independent president, independent judiciary power) disconnected, no stumbling blocks lie on the path towards lifting Poland from ruins into which it slid, run by PO-PSL government and president Komorowski.

On 22 October 2015, Mr Kaczynski said: To musi być czas pracy ludzi władzy. Polska niech się bawi, ale władza musi pracować. We must not forget those words. Prezes told us between the lines to have fun, mind our own businesses and let them take care of the country. The message is not to interfere, while they are doing their vicious job. Much of nation have turned out to be disobedient. Thousands of people taking to the streets to defend democracy are now displaying their strength and representing millions disgruntled with PiS machinations, but how long before they run out of steam? Meanwhile millions of other people are enjoying what they had been waiting up for – PiS bringing Poland into order. Waiting for the good change to come.