One move in the right direction

It’s been a while since leader of the main opposition, Mr Kaczyński, party delivered his inaugural speech in the headquarters of his party (I wanted to follow suit and deliver a speech at home, but my parents declined to listen to it) in which he focused on the economic agenda of his party. The proposals put forward by Mr Kaczyński’s grouping centre around reforming tax code, pro-family policies, turning around the labour market.

The first discussion that sparked off in the wake of the announcement was about the costs of the proposals. The proponents argued the changes would set the state budget back 11 billion zlotys in the first year and then (I infer due to multiplier effects) would bring net revenues to the public purse. The opponents, i.e. ministry of finance pointed out new stimulus package would ruin Poland’s public finances (net extra deficit of 54.5 billion zlotys in 2013 only) and compared to a Ponzi scheme in terms of mismatching inflows and outflows.

Interestingly, none of the arguing parties has bothered to present calculations and underlying assumptions which could back the quoted figures. Actually those calculations have long been forgotten amid the daily bread of political squabbling. Last week I promised to catch up with a coverage of the debate between economists staged by the biggest oppositional party.

The discussion, held on Monday, was attended by over thirty eminent economists, representing a spectre of views and… was a huge letdown for me.

Many people spoke, little has been said. The discussion was full of very general conclusions, discussants have come up with several apt diagnoses, but few proposals how to turn the states of affairs around. OK, I know the tax code is over-complicated and loopholes give room for abuses, tax offices unrelentingly chase down perplexed taxpayers, I know the pension system needs to be revamped and broached this topic several times here, I know the state is not friendly enough towards child-raising families, I know it. It is easy to say what is wrong, the real challenge is to come up with feasible solutions to the problem, not the quick fixes, such as taxing financial institutions and large retailers. Levying a 0.39% tax on financial institutions’ assets and up to 2% tax on turnover of big retail shops means simply passing on this taxes to end customers. Additional (remember those enterprises are regular payers of corporate income tax) tax burden would become a substantial drag on profitability of financial institutions (what is their return on assets?) and retailers (operating on small margins and earning on big volumes of goods sold) and in effect all firms would in unison pass the tax on their customers in form of higher fees and gross margins (difference between revenues and cost of goods sold). And if Mr Kaczyński says competition would hinder such hike, he again proves he is completely out of touch.

Such diminutive is the revenue side in the PiS’ proposal, compared to bloated expenditures. I fear rule of PiS would mean a revisiting flawed economic policies from years 2006 – 2007 when despite economic boom state budget did not run a surplus, as expenditures were raised and taxes were cut. Promising people lower VAT, higher tax allowance for children, labour market kick-starting spending and planning to fund it with additional tax on two types of companies (those hailed as hostile) is, putting it mildly, pure tale-telling. Many voters will fall for it, only few will take the trouble, or be clever enough to make out such plans do not hang together. Poland’s creditors have confidence in the sovereign debt of the country. Yields on 2Y zero-coupon bonds run below 4.2% these days, one percentage point below inter-bank market rates and less than one percentage point above looking-backward inflation. Ruthless speculators do not buy Polish bonds so cheaply because they are in collusion with the worst, hopeless government in the history of Poland. They see our public finances are run prudently, fiscal deficit, although in my opinion excessive, is still moderate and debt / GDP ratio is bound to decline to 50% by 2016. Any silly proposal that would push up the borrowing needs would shatter the excellent perception of Poland as a debtor and this, by any means, must be averted. All in all I am glad the debate was held and that many economists turned up to have their say.

The real pity is that it was a one-day event and soon after Polish politics return to its ordinary course. On Thursday I came home and stared at TV screen watching the parliament session during which deputies were once again dragging out and taking into pieces the Smolensk tragedy. It is unacceptable there was a mess when bodies of crash fatalities were laid into coffins, but why the hell have coffins become a focal point of public discourse? The world does not revolve around those who should rest in peace. In peace, which is disrupted. Let’s face the brutal truth – after the impact at the speed of 280 kmph bodies of fatalities were shattered into pieces, mangled, deformed. Putting this together was a challenge and allowances should have been made for some mistakes.

And again, I want to know what the hell the point in exhumations is. The grave, as I understand is a symbolic place to commemorate a person who is buried, a place that should serve as a symbol and the issue whose decomposing cadaver lies there is of secondary importance (if my opinion winds you up, feel free to express this). By making politics on Smolensk disaster fatalities’ grave we do not give ourselves the chance to move Poland ahead.

Wallowing in the mire of past events will not make most of us feel better. In fact most people focus on down-to-earth issues and I would prefer politicians to focus on public finances, pension system, health service, in a word on the future of us. This should make the news, not rooting about in coffins or rallies of self-styled catholics, who feed on hatred towards fellow men. They invoke teachings of John Paul II who said ‘there is no solidarity without love, solidarity is when people stand together, not against one another’. How does it square with the amount of mutual loathing in our society?

Until the end of the world

Haven't seen you in quite a while
I was down the hold just passing time
Last time we met was a low-lit room
We were as close together as a bride and groom
We ate the food, we drank the wine
Everybody having a good time
Except you
You were talking about the end of the world

I took the money
I spiked your drink
You miss too much these days if you stop to think
You lead me on with those innocent eyes
You know I love the element of surprise
In the garden I was playing the tart
I kissed your lips and broke your heart
You...you were acting like it was
The end of the world

In my dream I was drowning my sorrows
But my sorrows, they learned to swim
Surrounding me, going down on me
Spilling over the brim
Waves of regret and waves of joy
I reached out for the one I tried to destroy
You...you said you'd wait
'til the end of the world

 

If there is a perfect song on the leitmotiv of guilt, the U2’s song is for me an undisputable candidate for it.

According to the most common interpretation, the lyrics illustrate the last momenta of the relationship between Judas Iscariot and Jesus, told from the perspective of the former. References to biblical story, including the last supper, betrayal in the garden and Judas overwhelmed with pang of conscience appear clear, but somehow I have never been fond of this elucidation. Mentioning ‘being close together like bride and groom’, or ‘playing the tart’ verges on hinting on a homosexual relationship between Jesus and Judas Iscariot, which would have been a pure sacrilege.

From the first time I heard it, in late 2002, I have construed the song as a confession of a man who seduced a woman and is full of remorse on account of his deeds. “Until the end of the world” has besides and thus has a very personal dimension for me.

Today, while sitting about in an empty office, trying to oversee content-related aspects of a new supporting IT tool for underwriters (incidentally, I believe this will be a huge botch-up, the implementation phase reveals this is bound to fuck things up, rather than revamping the current process, this always happens when a man is harness to serve its tools, not other way round), I let my mind drift away and pondered upon relationships between women and men, or rather a single facet of them, namely why usually women pair up with older man. The reasons why men fall for younger women are quite obvious (albeit I have not reached the age when younger girls would impress me and still prefer a bit older ones), while motives behind women’s preference of older males remain a bit puzzling for me. I know women seek mature, responsible, wealthier guys, but are these the only reasons? Is it the matter of cultural stereotypes, stating a male should be older? I believe in the era of thriving liberties such prejudices should not play any role. Among the readers of this blog there are surely men married to much (more than 5 years) younger women, so maybe they wield the key to the door? Or maybe before posting comments they should take their wives’ advice?

Tomorrow the main opposition party will host a debate of economists on its recently announced economic agenda, by many hailed as disastrous for public finances. Many renowned economist are expected to turn up, albeit some eminent figures, such as dr hab. Leszek Balcerowicz and governor of the central bank, prof. Marek Belka declined to attend it. The debate will be held tomorrow at 10:00 a.m., so I will not be able to keep track of it and hope I will find an extensive on-line transcript of it. This will help me not only assess key proposals in PiS’ economic agenda, but also review the economists’ stance on it. I hope the discussion will be purely substantive and I am looking forward to more such initiatives. PiS have finally showed they want to do something to move Poland forward, rather than simply slating the government (faring worse and worse indeed).

Meteorologists are forecasting a full-blowm summer to come over around the next weekend. Temperatures in the last days of September are said to hit +30C which would mean record-breaking temperatures during astronomical autumn. So if this comes to a pass, the coverage of the debate might be delayed by one week, so I am apologising in advance. If the last of the summer beckons, resisting to indulge in outdoor activities would not be forgiven.

QE3

Here we go again! Less than two years after the launch of QE2 the Federal Reserve has announced a new round of monetary easing. This time the quantity and time frame of the bond buy-up programme are unbounded. Would it lift the ever-ailing US economy? I seriously doubt it.

Let’s face it, the economy of the United States has seen better and worse days since 2008. Despite near-zero interest rates and two completed rounds of injecting ample liquidity into the banking system, economic growth is brittle, labour market shows little signs of improvement and housing market, which quite probably bottomed out is still in a slack, as access to credit stays tight. The very last factor, as I have pointed out many times, foretells the ultimate failure of the QE programme.

Quantitative easing basically consists in changing structure of commercial banks’ assets by the central bank. The Fed buys government bonds (mainly those with longer maturity, thus exerting pressure to move down to long end of the yield curve, which in turn relieves mortgage debtors) from commercial banks and changes them into cash. This means banks have more liquidity that can, theoretically, be used to grant loans to businesses and households. This does not happen, as banks keep restraint in lending, which they perceive risky and additional cash is goes into financial markets where it pushes up price of risky assets such as equities, commodities and currencies of emerging markets.

According to theory of economics, increased money supply, the direct consequence of the QE, should, holding everything else unchanged, give rise to inflation. This has not happened, as the new money does not flow into real economy, but is diverted into artificial financial markets. If the above holds true, does the real economy benefit from the QE? I uphold my theory Mr Bernanke again favours speculators betting on financial markets over non-financial businesses and households. The QE3 might peter out and then he may launch another QE4, QE5, …, QE100 and extend the balance sheet of the central bank he governs until the end of the world and keep helping the US government financing its mammoth debt, but without solving structural problems of the US economy, he is going to attain nothing, except for gratitude of bankers. I could call for further deleveraging, turning the savings rate positive, switching from imports to domestic production, tax reforms and other moves that would change the distribution of income between the poor and the rich. The cradle of modern capitalism is no longer the country where you can grow from rags to riches. Once you are born as the underclass, you are very likely to die as the underclass…

Recent action of the European Central Bank are not such a crying shame, but cannot be deem commendable though. The key institution of the monetary union announced it is conceivable the ECB would buy up on secondary market bonds issued by distressed eurozone governments. Technically the PIGS bonds would be swapped for money market bills issued by the central banks. Here no new money flows into the financial systems, so the beneficiaries of the operations are commercial banks, which have a better credit quality of assets and distressed governments, as yields on their bonds go down. The move does not solve any structural problems of economies under water, it only defers their ultimate collapse, which still looms unavoidable.

To explain the results of both programmes run by central banks we have to invoke the mechanism of self-fulfilling prophecy. If market participants expect the Fed pursues QE3, they believe the money is not injected to real economy, but into financial markets, as it always used to be. Consequently, their inflation expectations do not change and consumer prices do not go up, but they expect prices of risky assets to increase, so they buy them to profit from the uptrend and bring about a bull market on risky asset markets. I was once told not to play against the Fed, but this time I would not dare to put my money into equities. Stock prices hinge upon macroeconomic fundamentals; fragile as they are know, they will sooner or later drag them down, despite excess money on the market. If market participants believe the ECB would buy up junk bonds of PIGS countries, they would be more eager to purchase them on primary markets. This will surely help these government stay afloat, but still does not solve structural problems underlying economic miseries.

Plus note all actions of central banks do not affect confidence among consumers and companies. Both are reluctant to spend money for consumption and investment purposes as they fear lean times, so they do not generate demand on products and services…

Many economists claim 2013 will bring another economic disaster – recession in the eurozone and in the United States, Greece being ousted from the eurozone, severe slowdown in China and in Poland. Whatever happens, we have to live through it and draw lessons from it. What central banks do, apart from its moral aspect, i.e. fostering financial institutions interests, is essentially sweeping the problems under the carpet, by giving temporary relief. And the longer you do this, the larger the hill of rubbish under the carpet grows…

Toughness, indifference, or something else

Summer of 2007. The time when my (then) best friend’s mother was terminally ill and finally passed away. Normally a human’s psyche is deeply affected by such traumatic experiences. Usually people react sensitively, can’t help crying, or get carried away by emotions. Most of us do, but not Mateusz (name this time not changed). When I talked to him or met him he showed absolutely no emotions, behaved like a doctor looking after another patient about to die sooner or later. He did take care of his mother, did everything to relieve her pain (she was down with a rare illness, called amyloidosis) and waited patiently for her death. The day it happened, he called me in the evening, announced the wait was over and promised to let me know about the date of the funeral. Before the burial ceremony I visited him in his house. The room where his mother died was tidied up – the hospital bed was pushed aside, all medicines, equipment and other traces of her last days were gone. To mark the mourning, Mateusz wore a black tie and had a black bow attached to the right sleeve of his shirt. His face and so his eyes were as hollow as over the previous weeks. He briefly, with technical details described how she departed. I listed and after a minute it occurred to me I seemed to be more touched then him.

A year or two ago I recalled those days with his grandmother (whose daughter deceased). Matuesz and his grandma have broken up any bonds soon after the funeral but both cited different reasons and accounts of event after Mateusz’s mother’s death. The grandma with dread recalled how Mateusz behaved on those days, chiefly his absolute lack of emotionality. It all prompted me to consider whether this has not been inhuman. Today Mateusz’s father is dying from cancer and Mateusz acts in exactly the same way…

In some cases getting immune to other people’s suffering is the only way to avoid going crazy. Imagine an oncologist who works every day with people terminally ill on cancer. Such person, even if they care for their patients, can’t be oversensitive. Otherwise, they would have to go through bereavement every few weeks or so.

Whenever a difficult situation strikes us for the first time, we are more likely to fail do deal with successfully. Each next occurrence of a similar experience finds us more accustomed to face the hardships and better prepared to overcome them.

The key concept, crucial to understand what I’m getting at, is the hackneyed adage “what doesn’t kill you makes you stronger”. I’ve been pondering upon this for weeks and reached a conclusion that as long as the pain, trauma, suffering, etc. is not overwhelming, it should add us resilience. The magnitude of experiences we’re exposed to determines the way they shape us. Life without suffering is impossible, so life must toughen us up. Of course there are situations which would bring even mentally toughest people to their knees and there are individuals who let insignificant hardships overpower them.

Again, I began to draw comparisons between the moment I was hired where I work now and today. This time I focused only on my psyche and toughness. I evolved from a moderately fragile person, prone to give up in stressful situations to the strongest link in the chain. Spontaneously I’ve taken up the role of the person in the team and in the department who takes stuff on the chin, often even if someone else has been assigned to deal with it. For instance, for my colleagues going to a credit committee meeting and presenting a transaction to a group of nine decision-makers, including three management board members and then responding to their questions, is a very stressful experience. The tension paralyses them, they shudder before going there and agonise over what they are going to tell and even after they come back and it is over, they take their speech and the whole meeting to the pieces. For me such task involves a dose of stress that stimulates me, motivates me and sends my adrenaline rise a bit. I doesn’t mean I’m totally laid back, credit committee meeting involves a lot of responsibility. The way I present a deal may influence the committee’s decision and this in turn may lead to losses of millions of zlotys, so I can’t be indifferent, I just don’t let stress take hold of me.

If you’re tough, it doesn’t mean you’re indifferent. If you’re tough, it doesn’t mean you’re devoid of any emotions. It may mean so, but usually doesn’t. Your toughness just proves you’ve learnt how to cope with emotions and bears out your maturity, it also predestines you to become a leader and to assume responsibilities. At work emotions shouldn’t play a role, this is obvious, in private life it’s not that easy, but it’s good to try. Sometimes, when push comes to shove, in emergency situations, such toughness helps take wise decisions swiftly and doesn’t let you fall into panic. Again, keeping a cool head, keeping your distance, should not be mistaken for indifference.

Funnily enough, these weren’t several stressful situations I have been exposed to that have toughened me up. I intended not to revert to it, but to complete this post, I need to. It was the violation of a good practice that one should separate private and professional life, in particular not to start intimate relationships with workmates. Quite predictably, the forbidden fruit was delicious, but such affections, full of twists and turns are clearly asking for troubles. I haven’t fallen in any real troubles, but the by-product of this God only knows if actually reciprocated affection was the rise of my strength. Oddly enough, I feel more than ever before and act as if I felt less than ever before. I sometimes have remorse on account of appearing to be stone-cold, but at the end of the day I think I’ve pursued the best face-saving strategy that helped me avert going mad.

I actually planned to examine the new economic agenda of PiS, presented last Sunday and again ended up compiling a post akin to a page torn away from a teenager’s diary. One day I’ll mend my ways and return to the original formula of this blog.

Who allowed Amber Gold to grow so big?

Looking back to late 2008 and early 2009 I remember first advertisements of Finroyal and Amber Gold in newspapers. Both shady companies would tempt potential customers with deposits meant to fetch income a few percentage points higher than traditional bank deposits. Cognisant of risk – return trade-off I wondered how it was possible to fix such income for customers, but never took the trouble to inquire into workings of such companies. In 2009, when browsing Polish Financial Supervision Authority, I ran across the black list of companies engaged in bank-like operations without required licences. Both business were listed there, but who actually visits the site of KNF?

Months went by and depositing money with such companies has grown in popularity. Poles have been put off risky investments on stock exchange and in investment funds after the bear market of 2007-2009, bank deposits could barely beat inflation, so guaranteed profits exceeding inflation rate by almost ten percentage points loomed as attractive investment opportunities. In the meantime some journalists tried to unravel the workings of companies offering allegedly guaranteed gains higher than offered by banks. With time Amber Gold began advertising itself aggressively. As long as inflows of money from depositors were bigger than outflows and OLT Express airline was managing to cover its expenses, the business drifted above water. Much of the money was probably swindled out of Amber Gold to its CEO and owner, currently 28-year-old Marcin P. In late July 2012, the house of cards was pulled down.

If you want to ask me to explicate how the whole scheme, or rather scam, worked, feel free; you’ll catch me naked. I know what principles underlie Ponzi schemes, I am familiar with some methods of laundering money, but each case is different. Unfolding the story will take relevant secret services and persecution offices years.

Marcin P., a man who at the age of 20 was sentenced for embezzlement for the first time and did his time, was allowed to set up another scam and run it undisturbed for three years. For years he kept away form the limelight and assiduously raked in money from the venture. In the days preceding the spectacular collapse of OLT Express and Amber Gold he came out of the shadow and acted as the number one celebrity in Poland. Currently Mr. P is behind bars, charged with several crimes. Personality of Mr. P is a good topic a separate posting – bold, unprincipled, lying through this teeth without scruples. There are supposition he is just a cog in the machine and much more powerfully and cunning criminal have contrived the scheme.

The money was taken away from the company, whose liabilities surpass its assets several times, so depositors who entrusted their savings to Amber Gold have little chance to recover their money. Thousands of people done out of money. The youngest aggrieved is aged 22, the oldest over 80. From all walks of life, some put there a few hundred zlotys, one sank there staggering 3.2 million zlotys. Some invested their savings there because they believed it was a bank, some realised it was a scam, but hoped to withdraw money before it falls apart. Most of Amber Gold’s customers had no notion of economics, were simply duped, fell prey to promises of gold-backed profits. Now they hold it against the Polish state that it has failed to protect citizens from deceitful businesses.

So who should be held accountable for dilatory dealing with Amber Gold case? The Financial Supervision Authority issued warnings on its website and filed a crime suspecting notion to the prosecution office. To no avail – sloppy prosecutors for some reasons, maybe the reason is imperfection of Polish law, full of loopholes, failed to get to grips with Amber Gold.

The scandal gave rise to a dispute who actually is to blame for loss of money deposited by people in the Amber Gold. There are generally two groups. Some, identified with enlightened economists, say these are depositors themselves who gave credence to implausible promises, others point at Polish state institutions failure to lay down clear law and to enforce it.

My take is that both groups are partly right. The state should secure a legal system under which a criminal cannot start up a financial company that works like a bank. The state should take steps to close it as soon as possible. The state should inform citizens about perils associated with putting money there. But the state should not forbid citizens from doing with their money whatever they wish. In a properly run country citizens should be able to easily access information (e.g. black lists should be printed in newspapers, presented in TV and put up in all bank branches) that Amber Gold, Finroyal and many other companies are on a black list of KNF, operate without license, are not covered by financial supervision and deposits are not guaranteed by the bank guarantee fund . Then fully aware citizens could choose to put their money at risk.

This, along with recent bankruptcies of travel agencies sheds some light not only on Poles’ carelessness, but also Poland’s advancement on the way towards welfare. Choosing to go on holidays with a dodgy travel agency to save, depositing money with a shady financial company to earn more. This illustrates not only unfettered and stupid avarice, blissful ignorance, but also the vague concept of dziadostwo. There is little wisdom in risking much to earn little and such was the case here.

In managing my financial surpluses I favour transparency. I keep 75% of my savings on bank deposits and make sure that the bank with which I deposit money is registered in Poland, thus overseen by Polish Financial Supervision Authority, deposits are covered by Bank Guarantee Fund and the bank is listed on the Warsaw Stock Exchange. The rest of my money is used for investment of speculation on the stock exchange. There I am exposed to market risk, i.e. that prices of financial assets I hold may drop, but at least it is transparent and I have no problems selling my stocks with a loss and recover the rest of money. It is not a matter of risk, as some say, it is a matter of transparency that enables you to control risks. Victims of Amber Gold surely had some problems with risk management…

The book

Running the blog is not my first instance of dabbling in writing. I’ve been sharing my thoughts with the visitors of this site for over three and a half years, but long before setting up the blog, once I committed a longer piece of writing.

It was the summer of 2004, I was sixteen at that time and I can’t affirm these were the happiest months in my life. For sure I needed a katharsis and writing a 134-pages long book, which I’ve never given a title, helped me take some of the toxic thoughts off my chest and break free from some memories. My work covered over two years of my adolescent life, spanning from 21 May 2002 to 31 August 2004. The end of the book coincided with the last day of writing it (I’d started works on 19 July 2004). The script, consisting of 12 chapters (actually 10 have been completed, two ones, covering the period between 8 May and 31 December 2003 were supposed to be supplemented later, but I’ve never followed out this plan) dealt with matters most important for a typical teenager, i.e. friendships, first affections, family affairs, school. The writing provided insight into tribulations of ordinary life – joys intermingled with sorrows, downs were followed by ups, failures were outshined by successes. Notably, I wrote everything off my memory, I didn’t have to recourse to any notes to bring back with accuracy most important moments from recent over two years of my life.

In the last days of August 2004 I shared the book, sending the copies via e-mails, with my closest friends. It went down well, was praised for good style and maturity and criticised for my ease and shamelessness in exposing my inner-most feelings to any audience. On the last day of summer holidays of 2004, having discharged all the loads off my mind, I secured the file containing the book with a password and left it on my hard disk. I’ve never printed a copy of the book, as the I concealed the writing from my parents. They actually realised I was writing something, as it took some time to compile an over a hundred-page-long work, but were left unaware of what the book dwelled on. Probably some excerpts of it would fill them with dread and for some they would tell me to look for a new home. The book was safely copied to a new hard disk of my laptop, as I changed computer in 2006 and stayed there until June 2010.

From the very moment of closing the book, I had no courage to revert to it, nor to read it over. The mere thought of reliving the moments I depicted there made me want to puke. Later, as I became more focused on mundane issues, such as those mentioned in the name of this blog, and less emotional, I didn’t even feel the need to reopen my work. In June 2010 the file was wiped out with most of my hard disk’s content. I easily came to terms with the loss of the book as I my turbulent teenage years were meant to be left behind.

Just some time ago, while drifting somewhere between cloud nine and slough of despond, I felt the strong need to relive some moments from before almost 10 years. Coming by the book was anything, but an easy job; I had to stoop low to get the only printed copy of it (no electronic version has been saved), but eventually the coveted 134 pages came into my hands.

For a few days I was keeping it in a glove compartment of my car and hanging back on getting to grips with my past, but last Friday I finally took it out of the car, smuggled in my briefcase to the house and put into one of several binders containing study materials, so that it could not be found easily.

I read the book almost from cover to cover on Saturday – Sunday night last weekend. I must admit I have skipped a few pages, as at some moments I was running out of courage to confront myself my past emotions, but I did manage to overcome my fear. Felt like a healing…

Looking at the book from the perspective of being eight years older than when writing it, I must assert in some respects I changed much, in others, I haven’t evolved at all. In terms of style at times the writing seems superb, at times mediocre of worse. At times the author appears very childish, at times mature. Today I could tweak it (note it’s been written in Polish) and rearrange a lot, still leaving the purport untouched. I would edit out childish comments, irrelevant details and probably leave the rest out, as committed into paper then. The two missing chapters will remain unwritten forever. I can’t recall now eight months of 2003 to cover them day by day, nor would I have any pleasure in looking back on those days. The book will be preserved in the form I got hold of it ever after.

PS. As some of you have noticed, there have been some deviations from the dreary posting schedule (i.e. one post a week each Sunday). Don’t expect any news this weekend, as I’m staying at work overtime to co-ordinate implementation of a new IT tool, the same overtime job is scheduled in two and four weeks over weekends. Plus tomorrow evening I’m heading to Łódź for another friend’s wedding (alas this time skipping the reception for abovementioned reasons).

Olsztyn, wedding

As planned, headed for Olsztyn for the weekend, to celebrate one of the most important moments in my friend and fellow SGH graduate, Ola’s life.

The road – I chose the most convenient way of getting there, i.e. went by my own car. No need to wait for any other means of transport, carry the luggage, rely on someone else, plus if you take a passenger (I did so), costs of fuel can be divided into two or more people. The obvious drawback is that you have to be careful with drinking, which I didn’t mind anyway, as my body’s tolerance for alcohol has disturbingly decreased recently. I eventually confined to six brims of vodka and had no hangover, nor other signs of post-alcohol fatigue, despite not sleeping a wink.

The distance between Warszawa and Olsztyn can be easily covered within three hours. Several people warned me of notoriety of that road (I hadn’t travelled it since 2002), but the drive went very smoothly. On Saturday on the way to Olsztyn we encountered a traffic jam in Łomianki, two downpours and snarled-up traffic between Nidzica and Olsztyn. While returning to Warsaw, the traffic was sparser than I’d expected. Maybe this road is infamous on account of reckless drivers making risky overtaking manoeuvres. I saw a few such incidents, but these were feats of much too hasty drivers. If you want to overtake safely, traffic conditions allow you to do so.

The section between Warszawa and Płońsk is either an expressway or a dual carriageway, the rest of the road is a single carriageway. Only the section between Olsztynek and Nidzica is being adjusted to the standards of an expressway. The new road was due to be opened in July, but the contractor negotiated postponing the deadline until late November. Pace of work is appallingly sluggish (even making allowances for the weekend) and sight of no workers and few machines hasn’t filled me with optimism.

The city. Olsztyn has almost 200,000 inhabitants and is probably still depopulating. It appears kind of small, cosy and picturesque, as it is located on a hilly land. Having the checked in to the hotel and spruced ourselves up, with some our of spare time to make use of, we set off to town to stroll around Olsztyn’s historical part. To the right – sitting in the café in the town square. Lots of tourists and locals roam around or sit outside restaurants and cafes. This is the only part of town that seems enlivened.

Strolling back towards the car park. Architecture reminds this used to be a German city. Streets are narrow and should be reserved for pedestrians and cyclists only. The invader on Warsaw plates surely couldn’t understand their vehicle was a blot on the landscape and had to park as near their destination as possible. To the left – an Open Finance (financial intermediary) branch. The only thing I was missing there was an Amber Gold branch. The company, currently in the state of self-declared liquidation would rent retail space in prime locations. Now the branches are closed an empty and people who entrusted their savings to the dodgy company should have no hopes to get their money back. As I later learnt, the only Amber Gold branch in Olsztyn was in a shopping mall some one mile away from the old town and in the vicinity of the church where Ola and Arek were getting married.

Saturday, half past seven in the evening and the city is empty and quiet. On Saturday evenings Warsaw also comes to a moderate standstill, but in Olsztyn you can hear your thoughts. The only people on the streets are drunkards hanging around, traffic is very sparse. On our way to the wedding reception we pass by a fine-looking town hall, so while waiting for the traffic light to turn green, I snap the historical building, lit by setting sun.

The venue – a nice hotel with two wedding halls on southern suburbs of Olsztyn, just next to the road out to Warsaw. For privacy reasons I’m not publishing any photos from the wedding. The choice of the place was surely excellent, the key advantage was the accommodation for guests on-site, meaning you could move from the dance floor to your room within a minute.

The event – memorable, stunning and well-organised. Not only in terms of pure logistics which was beyond reproach, the event owes its splendour to the newlyweds who carefully paid attention to all guests with topmost class. Manners matter and this time hosts met the highest standards. I’m approaching zeniths of the flattery, not only because I promised the bride not to say a bad word about the event, but just because I haven’t noticed any shortcomings, and if everyone around shared my view, I was lucky to attend a perfect wedding.

The bride and groom – looked genuinely happy. It may sound like a daydream, but I hope their marriage will be the bed of roses ever after.

For me the trip and the event were a great breakaway and rest after all the recent bitter-rather-than-sweet goings-on at work and not only. With batteries charged up I can (reluctantly) return to work tomorrow and tackle challenges with more energy.

PS. During the reception I caught the broom’s bow tie, so according to the Polish superstition, I’ll be the first bachelor to tie the knot. But it’s just the superstition…

Olu, Arku, jeszcze raz dziękuję i życzę Wam wiele szczęścia na Nowej Drodze Życia

Good enough

One of the recent issues of “Polityka” contained an article which dwelled on the shift in young Poles’ attitude towards life. The new stance, put across in two simple English words “good enough”, is a comprehensive response to all pursuits which used to determine hierarchy of goals in older Poles’ lives. Career, materials goods, outperforming others and all that stuff that deluded people in the first twenty years past the downfall of socialism in Poland.

Now, as one generation have walked the path of bending over backwards to excel in private and professional life, the next one draw conclusions from their struggle. Sick of the rat race, they ease up and tackle things pragmatically. ‘Do as much as you have to’ and nothing more. Keep level with the others, pulling out at all stops will not be rewarded, so why bother? If standing out involves more stress, the balance is tipped towards chill-out.

Don’t resist your parents. Times of generation gap are long over. These days parents easily find a common tongue with their offspring and even support them in their pursuit of being ‘good enough’. Have they learnt from their mistakes and wish to spare their children futile efforts? Is everything in order? Since centuries each new generation challenged the patterns and lifestyle taken after ancestors. In the second decade of the twenty-first century this ever-lasting process ceased…

Give up on your lofty ideals? The world’s abhorrent and you won’t change it. There’s too much stuff out of place and you’re out of tool to mend it. Your power is diminutive in comparison to complexity of all problems, so don’t take it on the chin, there’s no use. If you can’t change something, conform to it. Relax and take the path of least resistance, you’ll be better off by holding back from taking any action, if you’d attain nothing anyway…

Just be nice – if you don’t feel like being nice to somebody, pretend to be nice. Messing with someone you don’t like doesn’t pay off. This leads to duplicity, but this is how many well-brought-up youngsters behave these days. If you talk to them, they can make an excellent impression on you, but deep down they might think you’re an arsehole. Well, keeping up appearances simply bears fruit, so why not pretending?

Worry as little as possible. Bring a problem to your mind the moment you have to tackle it, not beforehand. Generally try to make your life stress-free…

What’s my take on it? There’s something tempting in being easy-going, yet I’d never fully indulge in such attitude. I’m just finishing a mentally and physically debilitating weekend (catching up with household and garden chores, running errands in town, plus picking up my grandfather from the hospital), while most of my friends have been enjoying two days of at least moderate rest. I could have also given a shit about it all, tell my parents to toil away despite their tiredness, leave lots of stuff undone, tell my grandmother to hire somebody to tidy up her flat if she doesn’t feel up to, tell my father to pick up his father from the hospital on his own and cut down my activities to the bare minimum of issues that affect only me and are important only to me. My conscience tells me I can’t embrace it. Young people should be brought up in cognisance of dark sides of life – taken to hospices, hospitals, poor districts and towns, they should know the taste of depravity, for the very sake of appreciating what they have. And being ‘good enough’ somehow doesn’t square with my concept…

Next posting bound to crop up after the next weekend (heading to Olsztyn for a friend’s wedding).

Bankruptcy spate

Recall this post? Remember the economic slowdown in late 2008 and 2009? Remember how Poland has got off it lightly? How do you assess the resilience of the Polish economy to weather the current storm?

One of the indicators of an economy’s strength is the number companies filing for insolvency. If only this gauge was to be taken into account, the Polish economy should be hailed as much more ailing than in 2009, when despite lower GDP growth more companies managed to get by.

2012, if it does not bring the end of the world just before Christmas, will go down in a history as a year of most spectacular bankruptcies. The list grows impressive and I surmise this is not the end yet.

For starters, Advadis. The company has actually been under water since 2009 and its misery lasted quite long, before liquidation was declared by the court. It has not been delisted yet and at the present its shares trade at 0.04 – 0.05 PLN and are “the cheapest” on the whole Warsaw Stock Exchange’s main market. The risk associated with price changes is hence noteworthy. Although a change of price of one tick resulting in increase of 25% sounds alluring for a refined speculator, I keep away from such stocks, for sake of their low liquidity and intrinsic value no higher than zero.

In March Dolnośląskie Surowce Skalne, lead contractor of middle section of A2, which took over responsibility for the hapless section, filed for insolvency. In April the court declared its liquidation, which was later changed to bankruptcy arrangement. I have no hopes the firm will ever recover. The Silesian company dealing with rock extraction has not risen to the challenge of building a motorway in an unfavourable market environment and under adverse terms of contract with the state road-building agency.

The avalanche grew apace in June. In the first days of this month PBG and its subsidiaries, including the biggest – Hydrobudowa, in the face of inability to settle their liabilities, filed for insolvency, which was soon declared in the variant involving protection from creditors. Woes of the construction industry have many causes. First and foremost is the price war which sparked off in 2010 when tender for road construction before Euro 2012 were put out. The companies, suffering from shrinking portfolio of orders, resulting from the economic slowdown, competed so heavily that they offered very low margins and accepted lack of revaluation clauses (allowing for price negotiations if prices of raw materials and other costs rise) and delayed payment deadlines in contract between them and the state road-building agency. Heavy leverage and liquidity squeeze knocked the company down I recently skimmed through some files at work and found an analytical report from August 2011 with ‘buy’ recommendation for PBG and target price of 155 PLN. Now shares of the firm are trading at around 6 PLN.

The next construction company queuing for bankruptcy was Polimex Mostostal, another one stricken by over-leveraging, losses on state-paid contracts and growing balance of accounts receivable. In mid-July the company sent a letter to financing banks and bondholders in which offered to enter into a “standstill agreement”, under which creditors would hold back from claiming their money for four months. In fact it meant buying time to revive the company and admitting severity of financial hardship. The agreement has been reached and the future of Polimex remains an open issue, but if creditors allow it to reorganise I see a bright future before it.

Construction companies themselves are not the only victims of the crisis. The wave has wiped out several subcontractors, left many workers jobless, done out of money creditors, i.e. bank and holders of seemingly safe investment fund units.

2011 was a hard year for the fish industry. All companies from it listed on the stock exchange have not been doing well. The reason for troubles were high prices of fishes on international market that could not be passed onto customers. The trend reversed in late 2011, but one of the companies in the sector, Wilbo, did not resist the pressure and popped off in July.

Retail sector in Poland seemed resilient to economic slowdown, but 2012 saw one notable fatality in this industry. Delicatessen network, Bomi, filed for bankruptcy in late June. The Company had been mismanaged for years and incurred losses since 2010. I blame the flawed business model for the downfall. In Polish society in which where you shop does not reflect upon your social status, luxurious and expensive delicatessen have a narrow niche on the market. Bomi positioned itself as a posh shop for the better-off, many of who actually prefer to buy groceries in supermarkets and discounter shops. Bomi’s strategy proved a big failure and the company has eventually gone under. The chain will probably be taken over by one or more of the competitors.

Summer is the holiday season and a year without a bankruptcy of a travel agency could not be deemed memorable. Early July saw the spectacular downfall of Sky Club, legal successor of well-known Triada. Within hours the agency ceased to sell trips and send its customers for holidays. Most of eighteen thousand of tourists who holidayed with Sky Club had to return to Poland ahead of plan, those who have not set off yet, would not go at all. The liability of the tour operator was covered by an insurance guarantee of 25 million zlotys, sufficient merely to organise comeback to Poland for tourists stuck abroad. The afflicted clients, surprised by the bankruptcy before the departure, will be wrangling to claim their money for months. I do not dare to assess their chances to recover money. Needless to say several small travel agencies declared insolvency so far.

Bomi and Sky Club dragged down IDM brokerage firm. The once renowned company has not officially gone under water, but its troubles are apparent. It lost many of its own and its clients’ funds in stocks and bonds of the companies described above.

OLT Express enter the Polish market on 1 April 2012. By offering competitive prices for domestic flights (99 PLN) it beat competitors and soon gained many clients. Its lucky string has not lasted long. On Friday the operator officially suspended its operations, the cited reason is cutting off funding from lessors and key stakeholder, Amber Gold, a mysterious vehicle, black-listed by the Polish Financial Supervision, which offers high-yielding deposits, allegedly backed in gold, incidentally said to be a Ponzi scheme.

Who next? Hard to predict. Economic indicators, including faltering consumer confidence, point at lean times, so some more spectacular business failures might be witnessed this year.

Still reliable?

I would always resent when somebody reiterated the common belief that French cars are crappy. Most people hold the opinion they stand out in terms of design but several glitches, mainly electronics going bonkers, take the gloss off the well-shaped bodywork.

I defied this conviction by citing the example of Renault Megane which has belonged to my family for nine years now. My father bought it brand-new in 2003 and signed it over to me last year. The car has a very low mileage (53,067 kilometres now) – the upshot of taking on average one longer (more than 500 km to the destination and back in total) trip a year and using it in town when justified only.

Until last month, the car let us down on average less than once in two years. It had a bad track record in the third year of usage – then within one summer of 2006 it had three minor breakdowns – first revolutions sensor packed up, then central locking system close all doors except one, later boot door lock disintegrated. It had a more serious breakdown in September 2010, when it had to be towed away to Renault garage after ignition coils packed up, but as they’d been three years overdue for replacement I’m putting it down to Renault mechanics’ negligence.

Never look a horse gift in a mouth (I paid no money to my parents for the car), but over the year of owning it I had to replace a battery last autumn and have the brakes changed, but these were just the effects of wear-and-tear. The car withstood temperatures below –20C without any problems, but then in early June something began to clatter when I cranked up the engine, as shot on this video. The sequence is exactly the same. Revolutions go up, then something clangs, rattle or gives off some other sort of annoying noise and the engine cuts out. Right away I crank it up again, the rattle is not as loud as at first attempt, but revolutions level off on flush gear level. Funnily enough, it occurs randomly, and for example when I started the car after 13 days of sitting totally idle during my illness, it fired up beyond reproach. The cause of the nuisance is the dephaser pulley (koło zmiennych faz rozrządu for my Polish readers), a very common glitch in Megane II 1.6 16V engine. Renault has never officially admitted it is a manufacturing defect in this model and never recalled cars affected by it, but if you drive a hard bargain you can expect to have the repair partly refunded. I haven’t had it fixed yet, as the problem is not exacerbating (i.e. the engine does not cut out when running on flush gear), but I will have it done before winter together with the whole cam set (camshaft, timing belt, pumps, etc) due for replacement after each five years. Estimated expense – some 2,000 PLN.

On Monday two weeks ago while driving to work I opened a window in driver’s door and unfortunately couldn’t shut it. Instead of leaving the car on P&R car park, I had to drive to Renault garage. The first diagnose sounded like a sentence. The whole system, including hydraulic elements and little engine was defective, the cost of the new part – over 1,000 PLN, some 10% of the car’s market value – an overt absurdity. I needed the car for the afternoon so I asked the mechanics to dismantle the door, assemble the window in a closed position and check what actually was wrong. Lucky me, only the engine packed up, while hydraulics, despite some signs of wear and tear, was still in working order. I made an arrangement for a repair on Friday…

On Wednesday I pulled up to the petrol station to fuel up the car. I was again lucky, not to be running out of petrol, because I couldn’t simply put the pipe of the fuel dispenser to the petrol cap. Again, the hydraulic element packed up. A quick call to Renault garage and a request for a more comprehensive service on Friday. My bill as I was picking the car up was 640 PLN, therein some 250 PLN for spare parts, original, yet quite inexpensive and almost 400 PLN for labour charges. A man-hour there will set you back 160 PLN before tax. Add up 23% VAT and subtract my 15% loyalty programme discount and this gives you roughly 167 PLN for an hour spent by a well-trained mechanic mending your depreciating tin.

After three letdowns over two months, I fear next breakdowns and bills charged by Renault. There is a chance that nothing packs up for many months, but the car has nine years and even despite low mileage some of its components might have reached the end of their useful lives. I can also turn to a private garage rather than keep on letting Renault rip me off, but the car is stuffed with electronics so much that in some cases a mechanic is helpless if he can’t hook the vehicle up to the computer.

Now I’m facing two options – keep sinking money into the car, or buy a new one. I don’t mind driving an old car, I’m only concerned about its reliability and expenses incurred to keep it going. The old car will surely require some outlays, but the brand-new one is a bigger one-off expenditure and would prompt me to buy a full motor insurance. On the other hand, a brand-new vehicle usually gives the comfort of reliability and if even if something breaks down, it should be covered by a warranty (but beware and read all provisions in a warranty statement, including exception printed in a small font at the bottom of a page).

Actually it’s not the right time to have the car replaced, even having to spend some 3,000 PLN a year to keep it running is less than motor insurance premium (at least 2,000 PLN in the first year for a brand-new small car worth between 40,000 – 50,000 PLN) and less than depreciation in the first year of using it (25% of the showroom price evaporates over the first year).

I can still take this car for a longer trip without fearing an unexpected breakdown. All described above defects could have occurred in a younger car with a lower mileage (dephaser pulleys pack up even after 20,000 kilometres in defective Meganes II and window opening mechanisms can stop working even in brand-new cars) so I’m intent on taking care of my Megane and dreaming of a company car, mindful that the best years for getting perks from employers are gone…