Absolwent SGH

I think my second academic degree obtained in the time of running this blog is not a reason to rename the address of the blog, nor to change the nickname which is quite widely recognised in the Polish-English blogosphere.

The Master's exam I somehow passed today didn't go as smoothly as the Bachelor's exam. Many think such exam is just a formality that marks the end of one studies, at Warsaw School of Economics it's not a piece of cake, but on other hand something doable and not worth the whole stress that plagues would-be graduates. The Polish word obrona, literally "defence", fits quite well the character of the exam, sometimes you have you to prove you deserve the title of MA.

This time, unlike in 2009 I didn't buy and flowers, chocolates, nor any other gifts for the examiners. After all they do the job they are paid for and don't do me any favour that they come. The supervisor of my MA thesis turned up at proverbial "eleventh hour" (three minutes before the exam) and dashed off just after the result was announced, as he hurried to go back to work, the reviewer of the thesis didn't show up at all, but sent a stand-in who didn't even bother to stir up any problems. And the examiner in economics, despite being hailed as "the nitpicker" was surprisingly lenient.

So... If you happen to drop in on the McDonald's restaurant at the corner of Marszałkowska and Świętokrzyska for a portion of french fries, please place your order cordially:

Szanowny panie magistrze, poproszę frytki

No mercy for risk-takers

Sometimes you can hear a widespread opinion that financial markets resemble a casino, sometimes you are told prices of financial instruments do not reflect their fundamental values, but follow a random walk. Even if these assertions are half-truths, they must not be disregarded by anyone who wishes to be a market participant. If you enter a financial market, no matter if you buy, sell, borrow or lend, you take risks. Come to terms with it, put up, or ship out!

Over two years ago Poland witnessed sad stories of companies which speculated on currency options. In 2008 zloty strengthened, its appreciation was potentially detrimental to exporters, for who export sales would no longer be cost-effective. Banks found a solution to their problems – stricken exporters were offered an opportunity to buy currency options on sale of EUR at fixed rate, usually higher than market one. Unfortunately, such a hedge had to cost, so banks came up with a strategy called risk reversal. The rest was once described, there’s no need to repeat it.

Broadly at the same time, in 2008, Polish zloty (hereinafter PLN) hit its high against Swiss Franc (hereinafter CHF). Mortgage loans denominated in CHF were extremely popular in that time, as the housing boom was at its climax, and CHF gave the opportunity to have lower debt service costs, thanks to gradual decline of CHF/PLN exchange rate and lower interest rates in CHF. Then came the turmoil on financial markets and PLN plummeted against currencies of highly-developed countries, deemed to be safe havens. In early 2009 the trend again turned back and zloty’s value in other currencies was back increasing. 2011 saw Greek crisis and printing money in the United States, so EUR and USD began to be regarded as riskier assets, while CHF still enjoyed the status of safe haven and kept strengthening against other, also major, currencies. In July 2008 CHF/PLN rate was at its ever-time lows at around 2.00, in June 2011 it climbed near 3.40. This translates into financial standing of homeowners who have taken out loans in CHF in 2007 or first eight months of 2008 when CHF/PLN rate ranging from 2.00 to 2.50, and who now are facing a problem of mounting debts. Currently many of them have so-called negative equity (what’s the Polish for negative equity?), what means their outstanding debt is higher than the market value of their property, but this is not yet the biggest problem, since as long as they settle their monthly payments in time, banks do not raise any alerts. The bigger problem is posed by rising debt service costs. Monthly instalments, as loans, are also denominated in CHF and then converted into PLN. If a debtor’s rate is 500 CHF, holding everything else unchanged, when CHF/PLN exchange rate was 2.20, a monthly payment was 1,100 PLN. When the rate soared to 3.40, the instalment soared to 1,700 PLN. Makes a difference, doesn’t it. When loan repayments make up a small portion of a borrower’s income, a borrower stays afloat, but if a borrower could only make ends meet when CHF/PLN stood below 2.50 PLN, a borrower is distressed.

The parliamentary election is coming and politicians search for various ways of “buying” votes. Election year is usually a period when politicians from ruling parties are more eager to give away gifts and those staying as opposition have inclinations to come up with promises of gifts they will give away if they win. Some of the Polish politicians have taken a leaf out of Hungarian book and put forward to freeze the CHF/PLN rate at 2.75 for the borrowers who have taken out mortgage loans in CHF at rates lower than 2.75. The difference between the market rate and 2.75 would be paid by the state. But who is “the state”??? Yes, my reader, it’s you, it’s me, it’s every person and every company that pays taxes in Poland. And this ridiculous idea is just another bail-out. Someone has taken a loan in a foreign currency and exposed themselves to a currency risk – cool, now they have to face the music. The scenario in which CHF/PLN goes up by at least 50% should have been taken into account when the decision to take the loan was made! And banks should have prepared sensitivity analyses, but as far as I know the recommendation of Polish Financial Supervision Authority that curbed lending in foreign currencies came into force some two years too late…

This is actually not the first time, in 2009 deputy prime minister Pawlak proposed to cancel legally valid option contracts between stricken companies and banks. The idea to freeze the CHF/PLN rate is not as shockingly silly as the Pawlak’s attempt to turn back time, but will not meet my approval.

On this blog there will never, ever be any consent for bailing out risk-takers. Either you take a risk and accept the rules of the game – you win or lose, or you just don’t engage in risky transactions. If there is to be a relief for troubled borrowers, why doesn’t somebody return me let’s say 200 PLN out of almost 900 PLN I lost recently on the stock market? I knew how aggressive speculation could end up and this time the worst scenario materialised. I made a mistake and covered the loss-making position far too late, thus incurring a bigger loss, but I’m the only one to blame, and I have no right to moan, just as some people with “encumberance in Swiss currency” do. I’m sick of listening to them griping and tell them politely that if they made their bed, they have to sleep in it. And they politely shut up… Maybe I’m ruthless, but those people really have to suffer consequences of their decisions.

Keep your fingers crossed on Thursday, between 10:30 and 11:00 a.m.

Gone is the longest day

A small anniversary - this is my 250th post - I'm half way towards being half way to hitting one thousand posts :)

Today a slightly "Jeziorkish" post - I strolled around my neighbourhood between 8:00 p.m. and 9 p.m. to snap some pics during the last hour before sunset. Picked out a few best and shared them here.

To the right - houses and historical (built in the first half of the nineteenth century) church in Stara Iwiczna. Typical for this time of the year in the evening sunrays illuminate northern walls of the buildings.

To the right - ul. Mleczarska which marks the border between Piaseczno and Nowa Iwiczna, here looking north from the intersection with ul. Energetyczna. Traffic not very sparse, but it's the beginning of a long weekend (I fail to notice this being burdened with learning).

To the right - a beatifully sunlit row of terraced houses by ul. Mleczarska in Piaseczno. As I passed by I didn't spot any of the dwellers in their gardens. Ain't it a sin to stay in when outdoors it's so glorious?

Again to the right - yet another view from ul. Mleczarska. The sun is blocked out by a foliage of a tree, but the last subeams manage to break through between the leaves. Magnificent? I'd be wary to  gloat over this photo. The upshot of my mini-outing I present here do not really come up to my expectations...

Surprise, surprise - I'm taking you back to late winter 2010, thaw is in overdrive, big snows are melting to uncover dirt, rubbish and turds.

And broadly the same place almost 16 months later, when summer takes over. Field in the foreground is overgrown with some oak, wheat, potatoes or God knows what else, houses in the background have been completed. All in all the atmosphere of the place remains slightly dull...

I turn around to snap houses on ul. Zimowa, I'm looking west, but the magic is gone after the sun has been occluded by clouds. Rains and storms are about to set in over the night.

Curiosity - to prove how infrequently I dabble in photography some stats - today I took my 2000th snap with my compact Canon and I've used it since July 2007. Shame...

Are we in 2008?

The title sounds at least weird, but this is exactly what occured to me quite recently. A few days ago I waited for my friend outside her office and I remembered the time when we met, during our internship at M********* Bank, it was in summer 2008. We looked back on those times and I put our memories into a broader, economic perspective. Then I discussed it with my colleagues at the office and they shared my observations. Three years have passed and economic situation is disturbingly similar to that in 2008. Just come to think of it...

There is a rally on commodities market, just like in 2008.
Rising prices of commodities have sent the inflation rising, just like in 2008.
Stock market has been underperforming for while, although scale of the correction is not as huge as in summer 2008 when the correction turned into a full-blown bear market.
Pace of GDP growth in developed economies is slowing down just like in 2008, there is a serious threat of double-dip recession in Japan and United States.

In 2008 world saw a spectacular turmoil on financial markets following the bankruptcy of Lehman Brothers bank. In 2011 we might witness a similar disaster. This time the biggest sore points are Greece and USA.

Problems of the former have kept us company from May 2010, when it transpired the country would be soon unable to roll over its debts. The default was somehow staved off with a huge bail-out package, but the issue remains unresolved and pain in the necks of European politicians and bankers is getting more and more severe. For the last 13 months Greece has been effectively a corpse, artificially kept alive by a drip of money flowing from the IMF and EU. If it hadn't been for those loans, the stricken country would have gone insolvent on 19 May 2010. This was fended off by the EU mostly because bondholders of the Greek government are mainly French and German banks, which had bought Greek gilts after collapse on sub-prime securities market, as government bonds were at that time deemed to be a risk-free investment. Those banks, if Greece defaulted on its debts would have to write off large sums of money, losses would deplete their equity, or even gobbled them up at all. To prevent a knock-on effect, governments would have to shore up capitals of those banks, but in 2011 it wouldn't be as easy as three years earlier. Then government bonds were treated as safe haven and so called "investors" were eager to help the governments meet their borrowing needs. Today, as government bonds are more or less risky assets, it would be impossible to finance another bank bail-out programme, or at least it would be hard, as potential debt buyers would require a generous rate of return. EU countries are bending over backwards to stave off the Greek disaster, but this looks unfeasible. If the next tranche of the EU / IMF funded rescue package is to be disbursed in July, Greece has to pass an austerity programme that would involve tax hikes and painful cuts in expenditures. Greeks, accustomed to welfare and bunking off, don't give a green light to the programme and the odds it will be carried out are getting lower. If Greece fails to meet requirements set by its lenders and the lenders don't give in and turn a blind eye on Greek governments fecklessness, the real bankruptcy is in the offing. And even if the next tranche is disbursed, problems of the country and its creditors won't be solved, but only postponed. Best case scenario for bondholders is soft restructuring, meaning write-downs on Greek government securities will bemade over time. And Greece itself is poised for a downfall, well-earned downfall... Grrece has long been effectively bankrupt. Everyone realises it, and everyone is afraid to speak it out.

USA are in a slightly better situation. For no apparent reason their debt is rated AAA, despite the fact the country is on its way towards a technical default. If the congress, where republicans have the majority, doesn't raise the debt ceiling by 2 August, the US government will have no money to buy back its treasury bills (by rolling over the debt), what means effective insolvency. Funnily enough, rating agency can downgrade US rating only if the debt ceiling is not increased. So if they keep on running up debts, triple-A rating would be reaffirmed. A farce? No, this is real, so the rating agencies grading US debt as prime investment are in for a disredit comparable to the one with sub-prime securities and Lehman rating. But United States have a way with its creditors that Greece doesn't have. USA can print as much money as they want and monetise their debt - this is the only way it will can be paid off, with the detriment to those hapless guys who hold US treasury bonds. I hope Barack Obama's face will adorn $10,000,000 banknotes and Ben Bernanke will deserve to look at Americans from a $100,000,000 note.

I'm looking forward to both imminent defaults. Both wretched Greece and wretched United States have worked hard to go default and there's no point in averting it. Of course many economists and probably all politicians would disagree with me and do their best to ward off the bankruptcies, as these bankruptcies would give rise to a turmoil on financial markets much bigger than the one following Lehman's collapse. Indeed, they would, but we need to suffer this stress to clean the air and finally learn the lesson from the crisis. Price for living beyond our means should finally be paid, conclusions should be drawn, bail-outs should become thing of the past, moral hazard should recede to the realm of academic discussions on economics.

But they won't...

And please don't ask me what the safe haven for money now is.
Government bonds - no longer
Stocks - will plummet
Commodities - will plummet
Bank deposits - why not, but given the current inflation profits in real terms are negative.
Gold - seems overvalued
Properties - somethign tangible, but don't expect the market value to increase in the coming years...

Won't make it before Euro 2012

Not much time has passed since I wrote about privatisation flop, but BGŻ IPO is a petty failure in comparison to big delays in Polish big road construction programme.

The road-building programme in Poland is one the longest ever developed in the world. Its beginnings can be traced back to late 1970, when socialism in Poland reached its growth limits and central-planned economy began to wound down. Late 1970s were the time when construction of Berlin-Moscow motorway was due to kick off. It did get under way, but soon works ceased for next 30 years. 1980s were the time of dreadful economic misery; in 1990s few roads were built. Road construction programmes saw better days in late 2000s, but the pace of development was surely too low. Before workers coul set out to work, clerks had to get to grips with all bereaucratic procedures that drag on and on. Then local residents showed how NIMBY approach works in practise, at the very end some eco-terrorist chained themselves to trees and put back to onset of construction works.

Finally, Poland became a big construction site (to draw on official propaganda dictionary) in 2009. Bereucratic procedures were completed, National Road Construction Programme was passed in parliament, Poland received a generous cash injection from EU funds for investments in infrastucture and, last but not least (to make the post look like a school essay) there was a big motivating factor that spurred the road construction spurt - the imminent Football Championchip due in 2012. According to all plans, most expressways and motorways are due to be opened less than two months before Euro 2012.

A big stride was essential if Poland wanted to play host to one to two millions of football fans coming from all over Europe. Our infrastructure was so run-down and underdeveloped that it required a huge effort to bring the whole mess into order. It was doable, but everything was launched far too late and schedules were so demanding that a small delay could pull the house of cards down. The time for facing the truth has come.

Real problems emerged recently. The glitch in construction of stairway on the National Stadium in Warsaw will postpone its opening ceremony by a few months, but it still doesn't herald any disaster, as it will be opened a few months before the first football match kicks off. Other stadiums are currently finished and they will be completed. Worse is the case of motorways, with key section linking Łódź and Warsaw. Tenders for five sub-sections have been won by three companies, including a Chinese overseas construction company - COVEC. In May it was revealed that COVEC failed to pay its subcontractors, the Company had serious problems with liquidity and it turned out that the construction project was beyond their capacity. Works on construction sites have been suspended and now the Polish government runs negotations with the Chinese company. The infrastructure minister avowes the motorway will be 'passable' (not mistake for 'finished') in early June 2012, but there are few people who believe it...

There's no doubt this motorway is simply vital to make driving from Warsaw to Poznań bearable. Actually from Warsaw to Poznań it even is, but the other way round it is much worse. Once you get off the motorway in Stryków, the ordeal begins. I travelled there last time in April and the journey lasted over six hours - average speed was then lower than 50 kmph... Next time I'll go to that Client by train...

For me much more necessary is the southern bypass of Warsaw which should facilitate everyday commuting to work. It is also quite sure that the section from Konotopa to Airport will not be finished - progress on construction of some junctions is pitiable and there is no chance it will be caught up. Plus there are some other obstacles, such as a council block still waiting for a demolition with its dwellers waiting for an eviction. Until today I had some glimmer of hope for construction of "Elka". Today I ventured to scrutinise the progress of works on the junction of the bypass and expressway towards the airport and ul. Marynarska and all my hopes were dashed...

I ventured there in the morning. The route, taken with all possible shortcuts, was covered on bike within 35 minutes. To the right - I cycled through a path linking Mysiadło and Jeziorki, at this time of the year more and more overgrown by grass and weeds, yet still cycleable. Just after taking this shot my camera signalled its battery was low so I gave up snapping until reaching my destinantion. Later it turned out it just bluffed, just like every mobile phone does when it cries for charging long before a battery is down...

I went up ul. Nawłocka, ul. Trombity, ul. Kórnicka, ul. Baletowa and the pot-holed ul. Hołubcowa. Then turned left and trespassed onto private property (I noticed the peculiar traffic signage on my way back, I still have remorse, caused by my innate respect for other people's privacy).

Then came the inspection. To my surprise ul. Hołubcowa still cuts across the bypass. The tarmac wasn't even ripped off the local street. Looking east - looks like a road in the future. In a distance one can see a flyover that takes ul. Poloneza over the expressway.

Looking west - and I'm totally disillusioned - the tunnel under the tracks is not digged in. When peeking at the site from trains I suspected the works were much more advanced, in fact the tunnel under the tracks still waits for its time...

Seeing the site from the train has the drawback of seeing everything very shortly. Getting there on foot doesn't give the opportunity to see everything anyway. Access to most parts of the site is restricted, and this is correct, but little can be seen if one does not look from above. To the right - I suppose this is a viaduct that will take the regular S79 road towards ul. Marynarska. Or not...

I took two more photos, but as they show very little stuff, there's no point in uploading them. The whole journey wasn't as enjoyable as planned, as despite hanging around for over a quarter I couldn't even snap any plane touching down... On the site the camera did not moan about battery running low so on my way back I could indulge in snapping... To the right - ul. Hołubcowa near ul. Sztajerka - a really enchanting place, but I wouldn't dare to go there by car... Unless I was a SUV-owner... Not, this is not a reason, nor a justification to buy such ridiculously big vehicles...

The next snap shows a run-down house by ul. Baletowa. Three years ago part of the roof wasn't sunken...

Where ul. Kórnicka meets ul. Trombity I turned back and spotted billows of smoke wafting somewhere over Okęcie. Back home I checked the news in the Internet and found out another bus was ablaze...

And at the very end, another pot-holed road, ul. Nawłocka. I don't know who imposed a speed limit of 40 kmph, as I would be afraid to drive there at more than 20 kmph, unless I was very intent on doing down underchassis of a vehicle... Maybe in a winter driving here on beaten snow would be safer...

At the end of the day I've reconciled to the thought these roads won't be finished by the football championchip, I don't want them to be finished that soon because I know haste would do more harm than good. I would rather see them opened in two years and finished properly. And for June 2012 - time to think about taking holidays and staying away from Warsaw when crowds invade the capital :)

Between the generations

Not uneventful weekend comes to a close. Suntan is itching the skin, temperatures stay unrelentingly high, the blog reminds about the duty of weekly dose of writing for posterity (number of comments under recent posts and google stats imply the interest in my blogging diminishes, as my lust for thoughts-sharing does). Nevertheless, I promised myself and some other people to soldier on. If the weekend is about recharging batteries, blogging can be a part of it, even if it means staring at computer screen.

Over the week there's little time for posting (I'll try to change it when days get shorter), as most of the time is filled by work; and the post is dedicated to work-life balance. The concept, growing on popularity over the last decade, became an inspiration for Gazeta Wyborcza journalist, then the link to the article was spread on facebook, through which I've found it. I've read it, read it over, taken the trouble to go through the thread of over 300 comments and I'm still left with ambiguous feelings.

The article sets out two different types of approach to work, represented, in the author's view, by two generations which clash at workplace. The author call them respectively: 'Generation X' and 'Generation Y'. Here comes the first trap - these names are misnomers. My English-speaking readers probably are familiar with sociological concepts of Generation X and Generation Y known in the Western Culture. Polish society, until 1989 shaped in the shadow of being a part of Soviet bloc, couldn't evolve as Western societies did, so these names can't apply to Poles. Maybe for that reason the author decided to redefine Generations X and Y. Brief description below:

Generation X:
- loyal,
- available for employers in their free time,
- often think that Y's are simply lazy,
- tend to work overtime and keep late hours in offices, because they want to show their commitment.

Generation Y:
- private life is more important than work,
- work mustn't collide with pastime activities - go to the gym in the morning and can't knock on at 8:00 a.m. - don't take this job,
- work is just means that leads to the end (making the most of life),
- during job interviews openly express their expectations about earnings and perks,
- prefer flexible working hours,
- fail to accept rules set by corporations,
- prefer task-based working time, rather than nine-to-five jobs.

I told about the article some of my colleagues from the office, they read it and the next day we had a short discussion during the lunch. They also ended up in two minds about what the perfect approach to work is. None of us opted directly for X nor Y, we all could discern downsides of each approach.

If you are 'X' you risk a lot. You spend a lot of time at work and little having fun. There's a shortage of time to spend recharging batteries. If work fills your time, you have less time for hobbies, for family, friends, your life begins to be empty. To fill it in, you can either break away from the treadmill or work even more and more (until you drop). Staying longer at work and working overtime (often without being paid for it) is another plague - employees are on every beck and call of an employer, ready to give up their private plans to work more.

If you are 'Y', your expectations and inflated and you should after all learn some humility. Life is not only bread and butter, but you have to earn a livelihood somehow. Coming to a job interview with exorbitant demands gives an instatnt impression that a candidate can only take and refuses to give. An 'Y' employee can be unreliable, flexible working hours may mean they will show up at work late, go home when it's convenient for them. If you drill down into comments to the article, you'll surely read lots of stories of people who encuntered typical 'Y' employees and spoke anything, but highly about them.

All things considered in our assessment of two approaches, we've leant towards 'X'. My colleauges appreciate the importance of private life, but during our talk they looked back on good time in banking (years 2002 - 2008) when salaries were high, bonuses were sky-high, deals were pulled off one after another, companies were queuing up for loans, banks were foisting loans upon companies and... they worked 60 hours per week. They said this was the price to pay for opportunity to develop and earn a lot of money. There must be a trade-off. Either you choose to work eight hours a day and knock off, earn less, don't get promotions and have more free time, or you work more and climb the leader of career. You just can't have the cake and eat it. I was also advised to make best use of those years before I get married, as the best time to learn is when one doesn't have much obligations. So what's the definition of making the most of life: having fun or working twelve hours a day? I work around up to nien and a hlaf, but only if the task require to do so, if not, I knock off at time - no need to show my manager my dedication by staying longer than necessary.

And we've come up with an explanation why with time approach to work has changed. Those people who come under "generation X' grew up some time ago, experienced austerity of late PRL, atmosphere of early capitalism and, the overacrhing point, unlike 'generation Y' weren't spoilt by abundance. Xs' parents didn't give them everything they wanted, but they had to earn it with their own sheer hard work. Ys in their childhood, teenage years and as student would usually receive everything from their parents and this has spoilt them.

Personally I have to admit, unlike my peers, I'd also rather identify with 'X' concept. The 'Y' approach smacks of selfishness and complacency. Young people who enter job markets with inflated expectations are in a way similar to trade unionists - both appear to me as spongers...

Next posting, providing no sunstroke along the way will be rather 'light' (less serious) and spiked with photoes

Privatisation flop

It seems that privatisation lucky streak of PO-led government has come to an end or has just been suspended for a while. A bit of a pity, given that from 2006 to early 2009 privatisation proceedings resembled an obstacle course. Privatisation through stock exchange was brought to a halt in 2006 when PiS-led government took over and wasted several chances to sell stakes in state-owned firms above their intrinsic value (rampant bull market allowed for it). Then came the bear market of 2007-2009, when it was hard to sell anything to private investors and when market made it hard for private investors to make profits on IPOs.

The tide has turned in 2009, with the comeback of upbeat market sentiment. In the first half of 2009 the government finalised the privatisation of Coal Mine Bogdanka, one of the best-run and most profitable coal mines in Poland. IPO price was considerably low, as the bull market starting in February 2009 was still in teething phase and market participants were still wary of relapse of bear market. The government sold shares in Bogdanka for 48.00 PLN per share, while the open price on flotation day was 56.10 PLN - investors who had subscribed for the stocks could reap a profit of 17% right away or wait until October 2010 for a tender offer, under which a Czech company wanted to buy up shares of Bogdanka at the price over two times higher than IPO one. Those who earned the most on the transactions are future pensioners, as key buyers were Polish pension funds. This means that the Company is still state-owned as assets in pension funds are not owned by members of pension funds, but by the state. In the meantime the state sold (to itself, with intermediation of expensive financial instututions) another stake in Bogdanka, on 9 March 2010, for 70.50 PLN per share.

2010 saw three spectalular privatisations.

PZU was floated on Warsaw Stock Exchange on 12 May 2010. The IPO price was 312.50 PLN per share, when the market opened, stocks were traded for 349 PLN, the same day market closed at around 360 PLN. Investors, including me, enjoyed returns of 12 - 16%. This was the first privatisation run as part of 'civic shareholding' (akcjonariat obywatelski) programme. Number of stocks for which a single investor could subscribe was capped at 30 (what gave an equivalent of circa 10,000 PLN) and stocks were sold with modest discount, to let ordinary people earn. PZU IPO, mostly after years of squabbling with Eureko was perceived as a great success. Currently PZU stocks cost around 390 PLN

Tauron Polska Energia stocks were first traded on 30 June 2010. This time there was a dent on the government's offer. The initial issue price of 6.30 PLN was too high for institutional investors and the stocks were eventually sold for 5.13 PLN. The flotation day was, coincidentally, the day when the biggest market correction in 2010 hit its trough and open price was no higher and no lower than 5.13 PLN. Profits weren't reaped, but according to analysts' valuations the Company was much undervalued. I also bought these shares in IPO and first quotations were a big let-down for me. My exit strategy was to buy up some more stocks, if the price went down and I followed out my plan. A few months later Tauron stock began to increase in price and within six months fetched a return of 35%. Patience was rewarded. In 2011 the price dropped, I began selling and buying back stocks with a view to earn more. Currently Tauron stocks are traded for around 6.60 PLN, not much below their ever-time high of 6.92 PLN from 17 December 2010 when they were becoming a component of WIG20.

Warsaw Stock Exchange went public in November 2010. IPO price was 43.00 PLN and was deemed to be overvalued. Despite this, demand on WSE shares was record-high and with open price on 9 November 2010 at 50.75 profits for a private investor reached 18%. Not bad. I didn't subscribe, as I thought the price was too high and I was wrong. Since then WSE stock price hit its low of around 44 PLN and high of 54 PLN and still seems to me overvalued. But after all this means the government has made a good deal on behalf of taxpayers. Currenly you can buy one share of WSE for around 52 PLN.

Over 2010 the PO-led government has established an excellent track record in terms of privatisation through stock exchange. But one success following another increases risk of complacency and hubris. Perils wait just round the corner and treasury minister Aleksander Grad had to learn a hard lesson this year.

One of two big IPO planned for 2011 were Bank BGŻ and Jastrzębska Spółka Węglowa. The former has already been floated, the latter is due to become public in July.

First step of Bank BGŻ hapless IPO was its issue price of 90 PLN, with P/E at 34x. Such high price-earnings ratio implied the bank was much overvalued. Demand from private investors was not as high as in any of three big offers in 2010, but was high enough to cover the whole tranche of stocks earmarked for them. Investment and pension funds categorically refused to buy BGŻ stocks at such sky-high price and as a result the issue price had to be brought down to 60 PLN, much closer to the intrinsic value of these shares. The state had planned to raise 1.44 billion PLN from sale of 37% stake in BGŻ, but eventually it had to make do with 344 million PLN from sale of 12% of shares. Minister Grad now waits until the bank's value gets higher (this may take some time) and thinks hard how to bend over backwards to meet privatisation proceeds targets for 2011. In the meantime it was revealed that some time ago Rabobank, the majority shareholder of BGŻ offered the state 74 PLN for one share of BGŻ - 14 PLN per share more than the market wanted to pay, plus savings on IPO costs. The Polish adage saying that "an avaricious man loses twice" proved right. Shares of BGŻ were floated last Friday. Individual investors could subscribe for 120 shares for 90 PLN each, and eventually were assigned 20 shares per 60 PLN each. With opening price of 62.50 PLN one could earn 50 PLN minus transaction costs and capital gains tax. Lovely... I still hold 20 shares, my strategy on what to do with those security is rather unclear, but today as I was passing by a BGŻ branch I felt like an owner.

Despite this I'm looking forward to next IPO of Jatrzębska Spółka Węglowa, which may be hampered by demands of brazen trade unionists (read spongers) from the Company. May those deals be brought off wisely - I make this wish both as a taxpayer and as an investor, or to make no bones, a speculator.

In praise of free speech.

Six o'clock in the morning. Functionaries of Internal Security Agency break down the door and trespass onto a flat inhabited by 25-year-old chap. Are we back in 2006 or 2007 when various people were arrested in the spotlight (some of them have never been proven guilty and acquited)? No, we are in luminuous times when enlighted Civic Platform is in power and civic freedoms are thriving. This statement was borne out on Tuesday when a guy who ran antykomor.pl site had his computer forfeited by secret services, just because he had run a website on which he had ridiculed president Komorowski.

From 2005 several websites were set up with just one goal - to make laugh of late president Kaczynski and his brother who wielded power as prime minister. Politicians of PiS and believers of the sturdy party expressed their outrage at the fact ordinary people wanted to make fun of clunky twins. Usually the key explanation was that all those people couldn't do it off their own bat and must have been inspired by an overarching, invisible force, called the System.

Times have changed. Since the Smolensk disaster it is no longer passe to admit to support Jaroslaw Kaczynski and his party. A group of people who declare they used to be drowned out for years can easily have their say. Antykomor was created in that time, in the surge of anti-PO movement. He did what many people had done during president Kaczynski's term. Let's face it - the current and the previous president have both been mediocre and no wonder such websites spring up. It is quite natural in the civic society, in which people have to have a right to give vent to their emotions.

I first heard about the site after its closure, so google cache memory was my only source of information on the content of antykomor.pl. I have to say I didn't find anything what would justify stepping into Antykomor's author's flat early in the morning, maybe except one photomontage on which the president appears to be compelling a drunk girl to do him a blow job.

This one was below the belt, but the guy should be wise enough to know there are boundaries that must not be overstepped. This still doesn't justify the forfeiture of computer, he could only be requested to delete offensive content and materials he hadn't had copyrights to.

Officiousness is worse than fascism. After the hapless action PiS scores another point and PO slides down on a slippery slope it has been for months of its feckless rule. Who the hell hatched the idea of detaining author of such website? It is absolutely normal in mature democracies that some people are dissatisfied with the politicians in charge of their countries and ridicule them. Think about all mockery at Nicholas Sarkozy, George W. Bush or Barack Obama. I think the article 135, paragraph 2 of Polish penal code which defines punishment for insulting the president (up to 3 years of imprisonment) should be overruled. Why should a president enjoy any special protection? He indeed is a symbol and deserves respect, but other people also deserve respect. So what's the difference between liability for insulting a president and insulting a prime minister. Should only the former be punished? Wasn't the legislator a bit ticklish? Isn't the situation in Poland ludicrous - people who accuse state officials of high treason and felonies go unpunished and the guy who pokes fun at president's numerous missteps has to play host to Internal Security Agents?

I was okay with making fun of president Kaczynski and I am okay with ridiculing president Komorowski (he gives us ample reasons for doing so) and I will be okay if any other president is mocked at, of course within reason, what means with offensive remarks, insults and lies. I was counting down days till the end of Lech Kaczynski's presidency, so why not do same with Komorowski?

Judgement day coming soon

An odd posting on a working day, prompted by the news about the upcoming worldwide disaster due this Saturday. We have survived many ends of the world, for the past few years there haven't been many such events. The most popular until now was the Mayan date of the last day, 21 December 2012, but recently it has been superseded by the closer one, 21 May 2011, as predicted by weird broadcaster and preacher Harold Camping, aged 89. The Family Radio he runs unremittingly spreads the news about the imminent judgement day and those prophecies have also reached Poland. The nearest billboard informing about the event can be found in Warszawa Jeziorki, near ul. Karczunkowska.

It says the Bible certifies it and we should cry out to God for mercy. For some of us it's too late...

I actually thought the news about such rare events as ends of the world are niche products for bored to death geeks, but the reality has taken me aback. Not only tabloids such as Fakt and Super Express informed about the event, but the sensation was also picked up up by System-controlled TVN24 and Gazeta Wyborcza... Moreover I heard people discussing the issue at work (another upside of open plans) and in a train. Two days ago I logged in to facebook and was hit by a question...


Finding myself totally unable to plump for any option I didn't tick any way of spending the time left until the end of the world.

Whenever I hear about such self-styled prophets, I ask myself what will they say, if nothing happens. Family Radio provides me with the answer...

What if May 21 ends and nothing occurs?

The Biblical evidence is too overwhelming and specific to be wrong. Christ's people can look with great confidence to this date because God promises His "beloved" He will not come upon them as a thief in the night.

God in His mercy has revealed the vital information needed to know the day. Judgment Day on May 21, 2011 will occur because the bible declares it. Anyone whom God has not saved will arrive at that day with no hope for salvation. God warns simply the "door will be shut."

I'm looking forward to seeing what they say when indeed nothing occurs. I've come up with a few versions:

a) someone tampered with the calendar and 21 May 2011 was not 21 May 2011,

b) the God gave us another chance,

c) we have made a minor error in our calculations, but beware, because the end is nigh.

Now a simple explanation why there should be no end of the world on Saturday. The end of the world will hit out of the blue, not when people expect it.

At the end of the day, whenever I hear such prophecies I'm afraid one day the mechanism of self-fulfilling prophecy may work. An idiot may try to fulfil the destiny, press some red button, launch a nuclear missile or do something equally dangerous...

Beware... of false prophets...

Longevity

My paternal grandfather turns 85 this Tuesday. Maybe it's not yet a grand old age (although far longer than average lifespan), but there's a chance that he makes it to the next round, 90th, anniversary. He'd been in a very good health until the age of 80, then he had several attacks of epilepsy and some other problems with general health. This year, after passing out unexpectedly he spent a few days in a hospital. He still cleans up the house and does the shopping, mentally he's fit enough to do the household chores unaided.

His birthday made me think a bit of the determinants of length of a human life. I've even drawn up a short list of factors.

1. Genes - probably the most meaningful factor. Length of our life, no accidents permitting is written in the genes at the moment of birth. Some are predestined to live 90 years, some have to die 25 years earlier. Genes of longevity may be passed on to next generations. In my family the fateful age was 87. Three out of seven of my great-grandparents, whose dates of deaths are known, died aged 87, my maternal grandfather also passed away aged 87 (he had predicted it seven years earlier...).

2. Resilience - stronger people, who don't give up, bear up what fate brings should live longer.

3. Temper - patient, kind-hearted, joyful people are more likely to live longer than aggressive and hot-tempered ones.

4. Social activities - the more friends you have, the better your relationships with your family are, the more time you spend with other people (nad enjoy it), the longer you should stay on this earth.

5. Sport - people who do some sports and have a daily, or at least weekly dose of physical exercise, should stay fit longer and hence the probability that they die from heart attack should decrease...

6. Train your brain - I'm not sure if it can extend life, but for sure if brainteasers, crosswords and books keep you company, risk of senility in the old age should go down.

7. Stress - here the correlation is negative. The more stressful life you lead, the shorter might it be...

8. Happiness - works just as in the case of social activities.

9. Place of residence - generally refers to factors other than listed above. On where you live depends how well-equipped hospitals are, how well-trained doctors are and how easy access to medicines is.

10. Wealth - sadly. Well-off people can afford to undergo costly therapies that can save their or their relatives' lives. Not everyone can.

11. Awareness of health - look at the example of breast cancer prevention. Those women who suffer from it usually were oblivious of the possibility to have their breast examined each three years or were afraid of the very examination. Results are dire.

12. Smoking, drinking, other addictions - it is said that each smoked cigarette shortens your life by 18 minutes. I've never had a cigarette in my mouth in my life but I still wonder how long would live those people who died aged over 100 and smoked several cigarettes a day over decades. In small doses alcohol also should not hamper one's health.

Anything to add to that list?

Actually if the factors above were that very crucial, my paternal grandparents, both aged 85, married to each other for over 62 years, would not be predestined to live that long. So is everything written in the genes? Or somewhere else?

At the very end of this short (again, but easier to digest) post a small reflection. It is said, in the context of imminent collapse of pension systems, that people will live longer and longer. Is it so certain. "Live fast, die young" - look at young yuppies who break their backs to make roaring careers and make lots money and ask yourself, if they'll be able to carry on like this for 40 years. Imagine a man working 60 hours a week for four decades when he retires in his sixties. What will be left? Who will be left?

Provocative paragraph, but if it's a bit controversial, it suits the blog very well :)