Two years past the invasion

2 years and 1 days past the day the russian army launched a full-scale invasion into Ukraine, I am looking back at my coverage of those days. For some time I have not been an ardent blogger, but I carry on to save my thoughts for posterity and for myself. Those first days of war were a shock. Until recently majority of us got accustomed to the cruelty behind Poland's eastern border, especially since for months fights on the front were not moving on.

Currently there are more and more reports on scales tipped towards the invaders and military intelligence notes telling despite its failure in the Ukraine, Russia is slowly preparing for a war against NATO, which might break out in 3 to 5 years.

Politicians from countries neighbouring on russia began to speak openly about the eventuality of a war. Those at the biggest peril are:
- Sweden (not a NATO member, the country has not experienced war since 1815),
- Finland (a NATO member since April 2023, badly tainted by Soviets during WW2, having the longest border strip with russia in Europe),
- Norway (remember it borders russia at the northern edge of the continent),
- Baltic countries (used to be a part of the soviet empire for half a century, thus being a natural target),
- Poland (russia's everlasting enemy as a matter of principle) and
- Moldova (a god-forsaken land between Ukraine and Romania).

Preparations for the war should move from a verbal realm into actions, especially military training and manufacturing. It needs to be stressed Europe has supported Ukraine with its own military resources, but over that time effort to rebuild Europe's depleted defence capacity have not been taken. Several countries have run out of their stocks of ammunition or military vehicles, thus NATO's ability to ward off an attack is impaired. Even if the armaments serve a purpose of a deterrent, they are worthwhile (a decade ago I would argue military spending is a waste of public money). Nevertheless the united Europe seems too sluggish. For many years EU countries have not managed too agree on ceasing to move clocks back and forth and switching to daylight saving time, so will they be able to get their act together, especially if for Western Europe the russian soldiers are thousands kilometres away.

Putin's army did not conquer Ukraine, but incurred severe losses in the battlefields. Human-wise, its resources are limited, yet sending millions of conscripts to die in a warfare has never been a problem to the uncivilised empire. Resourse-wise, military manufacturings is running at full blast and there are signs the russian economy has been switched into the military mode. Economic sanctions imposed on russia are bypassed (through countries such as Armenia or Kazakhstan), despite being cut off from modern technologies, russia is not on its knees.

Whatever fate Ukraine meets, Europe has to support it to help the evil invader bleed out there. There era of peace in Europe might soon be over, but let's buy time to defer the moments it goes down in history.

Currently the biggest threat lies in the USA, where the presidential election is due in less than 9 months. If the narcistic, unpredictable psychopat wins, Europe will have reasons to quake. NATO's power largely hinges upon the defence power its overseas ally.

The picture to the right is the cover most recent issue of "Wprost" weekly. Keeping fingers crossed for its poor predictive power, ley ot be contrary to its cartoonist's illustratory skills.

A demographic disaster?

With the recently released birth statistics in Poland we might easily admit the problem with ageing and declining population in my homeland is getting horrific.

As the graph with preliminary figures for 2023 shows, albeit the number of deaths is not rising (COVID-19 accelerated many deceases), the number of births is plummeting. Had it not been for migrants (predominantly Ukrainians), merely 252,000 infants would have been born last year. Actually the 252,000 thousand is the rough number of children born with the Polish citizenship.

The major reason for the number of births getting lower is the echo of the previous demographic wave, with a high of new births of 724,000 in 1983, but then decreasing gradually to around 350,000 in 2003. Since then for over a decade the number of births was getting higher, with some boost in 2017 put down to 500+ child allowance in place.

Within 6 years the number of birth, upon
adjustment for inflow of Ukrainians has gone down by more than 35%. Over that time fertility rate of women fell from nearly 1.5 to around 1.3, compared to 2.0 around 1990. Needless to say, if a country’s population is not about to dwindle, the rate should be slightly above 2.0 in mid-term.

Most (but not all) European countries are facing the same problem, yet in the Western Europe fertile migrants tend to make up for the shortfall of domestic births. The key reasons cited for the trend by both experts and home-grown specialists are:
1) a cultural and lifestyle shift in which raising a family is not the only option, but one of many, with decreasing social pressure for having children,
2) priority of career pursuit / convenience for many people (not only women),
3) shortage of mature male partners to women who would become responsible fathers participants in upbringing and household works,
4) housing problems, especially high property purchase and rental prices, compounded by lack of non-commercial accommodation alternatives,
5) financial insecurity,
6) lack of systemic support for parents wishing to combine professional duties with taking care of children.

Another problem, less often mentioned is that many couple confine themselves to one child only. Back at school, I was one of very, very few only children, with everyone around having siblings. With hindsight I see having a sister or a brother teaches empathy, sharing and social skills. A child which is not an only child quickly realises they are not a hub of the universe, but sadly, several “only childs” these days are brought up in such way. I am holding back from assessing parents choosing a 2+1 model (the motivations are the same as for declining overall fertility), but I see several drawbacks of such option.

To show the declining number of children per woman is not necessarily an option, let’s look at the example of Czech Republic, not a catholic nation, with wide access to abortion in early pregnancy. Surprising to the pro-life wackos, they do not have such problem as Poland. Reasons why our southern neighbours have done so well have been listed by Łukasz Pietrzak on his X profile:
1) the highest number of in-vitro inseminations per citizen in the EU,
2) low unemployment and higher job security,
3) a well-developed network of public nursery schools (low-cost daily care for children aged 3 – 6),
4) a young-parent allowance is paid to each parent until a child turns 4 (helps combine professional duties and parenthood),
5) 100% salary equivalent is paid during a maternity leave,
6) generous tax allowance for parents,
7) flexible labour market schemes for young parents, including part-time jobs and home office.
Some of the above are already in place in Poland, on others the Polish new government needs to work on. Given the overall cultural context of many youngsters ruling out parenthood altogether, it will partly go in vain, but if we look at the upsides, it will benefit the planet.

Property market in Poland – going bonkers indeed?

As prices of residential properties soared in a double-digit pace in Poland in recent months, pricing several first-time buyers out of the market, many wonder, whether the market is already red-hot, how big the imbalance of it is and where the property prices are heading. I will try to come up with a cool-headed analysis, with my judgements underpinned by 3Q2023 NBP and Amron-Sarfin reports (charts come thereof).

Looking at the past two decades, one sees property prices skyrocketed between 2005 and 2007, then levelled off on unsustainably high level, to decline by 20% - 25% in nominal terms by late 2012. For the next five years dwelling prices where in a slight uptrend, which began to accelerate in 2018. In nominal terms, peak levels from 2008 were hit over a decade later. The pandemic did not cool the market down, but the increasing interest rates did it in 2022. In nominal terms prices levelled off, but upon the inflationary adjustment, they fell by 15% - 20% within one year. Then in the second half of 2023 prices increased again, driven by a generous mortgage subsidy programme…

Looking at the graph which shows how many square metres an average salary in major Polish cities would buy, one could infer the market has not gone crazy. The underlying analysis by NBP has some critical drawbacks:
1) salaries are gross-of-tax, which fails to take into account changes in taxation (Polski Ład), which benefitted those who earn less, but hit the middle class,
2) it does not take into account costs of living, especially:
- a portion of net-of-tax wages need spent on payments to landlord by those who reside in rented flats,
- rising costs of basic expenses, such as dwelling upkeep costs and nutrition.

As I coincide with the conclusion dwellings were most affordable in 2016 and 2017, the uptick in affordability in 1H2023 is doubtful given that salary growth did not catch up with rising costs of living around that time.

Analysts from Amron-Sarfin have come up with an enhanced housing availability index, which takes into account more factors, including purchasing power of disposable income and access to mortgage lending. According to their measures, the dream of an own residential property was harder to come true already in 2021 and by the second half of 2022 it declined to levels unseen since a decade. Currently an ordinary man finds it as difficult to buy a flat, as they did in 2011.

Arguably, the property market in Poland is not in a most buyer-friendly shape, but let’s look where it might be heading.

The factors which are likely to drive property prices up are:
1) ongoing first-time buyers schemes extended recently by the government – in Warsaw given the tight criteria they will not spoil the market badly,
2) overall conviction of market participants that prices will go up, turning into self-fulfilling prophecy (this means bubble-like conditions),
3) stringent technical requirements residential buildings from the primary market must meet – they elevate construction costs and jack up property prices on secondary market too,
4) supply constraints – as property developers still have it uphill to get the planning permission.

On the other hand, the market is facing some headwinds, which makes good news for buyers:
1) interest rates remain on a high level and prospects for a material monetary loosening are weak,
2) rental yields are already low – current net income from dwelling subletting is these days lower than on a bank deposit or from government bonds, while risk and liquidity of property investments is incomparably higher,
3) the long cycle is drawing to a close, as examples of countries where prices began to rise earlier than in Poland (Germany, Scandinavia) show,
4) more and more buyers are priced out of the market, which dents the demand.

I have no bloody idea which group of factors will have a bigger impact on the market in real terms (note property price growth below in the inflation rate is an actual decline), but there are several solutions, which might let ordinary people have their housing needs met.

Firstly, let’s build more dwellings, yet without allowing for pathological solutions (which should be theatrically verified by the free market, but under conditions of constrained housing availability, such mechanism does not work).

Secondly, levy taxes on multiple residential property owners (those in possession of more than two properties), which would be progressive (higher tax rates for each next dwelling) and  which would hit harder uninhabited (including not sublet) dwellings. This would curb speculative purchases, which have done a lot of harm to the market (a flat bought for speculative purposes is empty, i.e. not rented and a speculator bets they will gain only from value growth, which is typical for a bubble-like market).

Thirdly, increase protection of landlords – sadly tenants are overly protected by the law in Poland and hence many property owners are afraid of subletting their flats. With a higher supply of flats, rents would go down, which would mean demand from investors would decrease and properties would become more affordable to those who seek their own roof over their heads.

Questions unanswered (in random order)

Is it meant to last or was it bound to fail?

Do doubts from the very beginning bode well?

If it could fall apart so many times, what keeps it together?

How do I know when downs prevail over ups (or the other way round)?

Do we complement each other actually?

Is the balance between giving and taking struck?

Haven’t I forced those common goals upon?

Is carefree life a value itself?

Where do you yourself life-wise in five years? Is it a part of any plan or do you just flow with the tide?

When can you say a human is emotionally mature?

Is being an adult overwhelming?

A career, earning and spending, dog-breeding, sport, consuming, chasing pleasures of life – is it fine enough? Can I seek depth in it? Can I chase sense init?

Does parenthood alter a human? Does it deprive them of freedom? Is it being slowly regained as offspring grow up?

How much patience does it take to tolerate a life companion? Was he right to say a fellow (wo)man will always f**k you up, so you need to love them to bits to put up with them?

Is sticking to values and goals more important than continuity of a relationship?

Why do people get stuck in mediocre set-ups? Out of convenience or out of fear?

How long will she be deferring that decision? By the time she lives it up fair enough? By the time she earns more money? By the time she carefully thinks it over? By the time she grows mature? By the time it’s too late?

Are we playing for time?

How fed up could I get to realise there can be a better way?

Can a mere fascination be considered infidelity?

Can fatigue of being taken make a man act like a single?

When indifference become a warning sign?

Is a frank conversation overrated?

Is she still a girl scared of responsibilities adulthood involves?

Does she hope it gets too late and I will accept it?

How much space is between a perfect match and a perfect mismatch?

Am I picking nits or are we arguing about elementary stuff?

Are we just passing time?

What holds me back from moving ahead?

What brings out a fear of taking a wrong decision?

How long can we carry on like this?

…and many more…