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Financial literacy |
| February 8th, 2012 BY Les Nemethy |
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Just think: If more people were
financially literate, there might never have been a mortgage crisis
in the US, or a Swiss franc lending crisis in Hungary and other CEE
countries. While everyone certainly has their fair share of blame
with respect to the recent crisis – Governments could have
regulated better and financial institutions may have done better risk
management – ultimate responsibility for financial decisions still
rests with the individuals that make financial decisions at the micro
level. Hence the theme of this article is that financial literacy,
and therefore financial education, must be at the root of averting
future financial crises.
Financial literacy is not just required
for entering ... Read
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Yields on European government bonds |
| February 1st, 2012 BY Les Nemethy |
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The chart below represents one of the most important charts for European financial markets in 2011, perhaps even for global financial markets*:
*Lou Basenese, Seeking Alpha
This chart may be broken into three phases:
In the pre-1999, pre-euro introduction phase, each country had its own interest rate on government bonds. Even before the euro became reality, interest rates began to decline and converge.
In the second phase, after introduction of the euro in 1999, it took just a year or two for interest rates to fully converge. For six or seven years, interest rates throughout the euro zone fluctuated together and were identical.
Finally, after ... Read
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The power of compound interest as applied to the current debt crisis |
| February 1st, 2012 BY Les Nemethy |
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Albert Einstein said that the greatest force in the universe is the power of compound interest. What we have seen over the past decades in US credit markets is compound, even exponential growth. In the chart below, the blue curve shows a perfect exponential curve, the red curve shows the actual level of US debt (in trillions of dollars).
A similar chart could be drawn for most of the developed world. Indeed, growth of money supply in many developed countries has also been exponential.
Note that from 1970 to 2008, there is an almost perfect match between US debt and an exponential ... Read
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Poland right to sign fiscal treaty, despite conditions |
| January 31st, 2012 BY Remi Adekoya |
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Prime Minister Donald Tusk has decided that Poland will join a European fiscal pact with 24 other EU countries, despite some of Poland\'s main demands not being met at a summit in Brussels on Monday.
“[The agreement] does not satisfy us 100 percent but we have decided to sign the pact,” Mr Tusk announced after the meeting of EU leaders.
Poland went into the summit demanding that it be included in all euro-zone summits, something which France in particular was opposed to, according to most reports.
The compromise agreement now states that there will be two types of euro summits. The first ... Read
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Find baby Magda |
| January 28th, 2012 BY Andrew Kureth |
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Below find my comment to readers that will appear in Monday\'s edition of Warsaw Business Journal. We felt it was appropriate to place it here, on the blog, before WBJ went to press.
Dear readers,
It is rare that I take the opportunity as editor-in-chief to address you directly. As a newspaper, we like to keep to the standard Western newspaper profile, with simple news and opinion sections, and no weekly comment from the editor, which many weekly magazines have.
This week we break from that tradition for a very important reason – a missing little girl. Six-month-old Magda was kidnapped on Tuesday, ... Read
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The importance of cash flow |
| January 25th, 2012 BY Les Nemethy |
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Running a small or medium-sized
enterprise (SME) can be compared to piloting an aircraft. In the
achievement of your objectives, you keep your eye on certain
controls. As velocity and altitude are typically the two most
important gauges for a pilot, for the owner of an SME, it is usually
profitability and cash flow. Too often, SME owners will neglect cash
flow. This may result in the business equivalent of crashing an
aircraft into a mountainside.
So why is cash flow so
important?
First, cash is like the gasoline in an aircraft or
automobile. You run out, you crash. New companies, particularly in
the hi-tech business, talk of a “burn rate”: ... Read
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EU decision-makers biggest allies of Poland's euroskeptics |
| January 24th, 2012 BY Remi Adekoya |
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One would be hard put to
find a government in Europe that has taken a more pro-EU stance than
Poland’s. Throughout the country’s six-month 2011 presidency of
the EU, Prime Minister Donald Tusk and Foreign Minister Radosław
Sikorski repeatedly voiced their commitment to the 27-nation bloc,
saying the solution to the continent’s sovereign-debt crisis was
“more Europe, not less.”
The foreign minister even
advocated the creation of a European federation under the leadership
of Germany in a speech in Berlin last year.
As a result, Mr Tusk and
Mr Sikorski were lambasted and ridiculed by right-wing politicians
and media in Poland for being ready to give up the country’s
sovereignty in return for ... Read
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Ratings agencies, credibility and nationality – where is all this going? |
| January 17th, 2012 BY Andrew Kureth |
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As we continue our coverage of the European sovereign debt crisis, the focus has once again turned to credit agencies (see today\'s story, more in next week\'s WBJ). Again, European leaders are calling for a “European” rating agency that would be more “credible” and “transparent” than the current Big Three (Moody\'s, Fitch and S&P).
These leaders seem to be forgetting that a ratings agency created by European governments with the not-so-express purpose of being kinder on European governments in its ratings would by definition be less credible, and that a European-based ratings agency already exists (Fitch is dual-headquartered in New York and ... Read
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2012 starts badly for ruling party |
| January 10th, 2012 BY Remi Adekoya |
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Almost immediately after the start of
the new year, Poland found itself engulfed in confusion due to
changes the government had implemented to prescription-drug laws.
With doctors protesting the changes,
many pharmacists and patients have been left confused – and in many
cases extremely frustrated.
Doctors, obliged by the new regulations
to state the exact level of reimbursement a patient is entitled to on
a prescription (and also to verify if the patient is insured), have
refused to do so, saying they simply do not have direct access to
that information. In protest, many have started issuing prescriptions
with a stamp saying: “reimbursement level to be decided by NFZ,”
which is the ... Read
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Europe divides Poland |
| December 20th, 2011 BY Remi Adekoya |
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The last few weeks have seen Polish
domestic politics dominated by discussions on Europe and for as long
as the continent\'s crisis continues, that is likely to be the case.
It is the attitude towards Europe that has drawn the line of
demarcation between the competing parties in Poland.
On the one side we have Prime Minister
Donald Tusk\'s government which has made it very clear that it favors
closer integration with the EU and wants to remain in what it has
termed “Europe\'s mainstream.”
Foreign Minister Radosław Sikorski
went even further in his much-publicized Berlin speech in November,
saying that a European federation is needed, one which would have
Germany in ... Read
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Sikorski and the Fourth Reich |
| December 7th, 2011 BY Remi Adekoya |
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The current political discourse in
Poland is still being dominated by Foreign Minister Radosław
Sikorski\'s speech in Berlin last week. Mr Sikorski\'s vision of a
European federation (led by Germany) was always going to be divisive
in Poland.
A nation partitioned and removed from
the map for 123 years only to be thrust under Soviet control for
nearly half a century after WWII, cannot be blamed for valuing
independence highly.
A number of politicians from the
conservative Law and Justice (PiS) party wasted no time in lambasting
the foreign minister, with MP Joachim Brudziński telling journalists
that Mr Sikorski “longed for the Fourth Reich.” Party
spokesperson Adam Hofman, meanwhile, said “Poles would be ... Read
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Politicians dally while the euro burns |
| November 29th, 2011 BY Les Nemethy |
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The cover of The Economist portrays a euro coin falling from the sky in flames. The Daily Telegraph newspaper recently reported that the UK Treasury is already making contingency plans for the demise of the euro, and British embassies in euro-zone countries are making contingency plans for saving British nationals, given the expected riots: “A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.”
Bond auctions across Europe indicate that interest rates on Italian and Spanish bonds are ... Read
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Sikorski proposes European federation |
| November 29th, 2011 BY Remi Adekoya |
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In what was perhaps the most significant speech made by a Polish foreign minister in the last decade, Radosław Sikorski on Monday proposed the creation of a European federation whose members\'
national sovereignty would be limited in order to allow the powers
and efficiency of existing European institutions to be enhanced. His
reason? That this would be the only way to ensure Europe could
adequately face up to the difficult challenges that it faces.
Prior to the speech he said to
journalists in Poland that European Union countries should “have as
much autonomy as have US states.”
In his speech Mr Sikorski proposed
increasing the powers of the European ... Read
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Donald Tusk the reformer? |
| November 23rd, 2011 BY Remi Adekoya |
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Donald Tusk\'s speech to parliament last
Friday in which he outlined his government’s plans for the next
four years, was one of the most memorable and significant made by a
Polish prime minister in the last two decades. Mr Tusk, often accused
of playing it safe politically, announced so many reforms in his
hour-long speech that it was hard to keep up.
For example, the retirement age will be
leveled out for men and women and raised to 67 (today it is 65 for
men and 60 for women); farmers are to be brought into the general
social security system, as are members of the clergy; miners’
pension privileges are ... Read
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Prepare for volatility |
| November 16th, 2011 BY Les Nemethy |
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My last column argued that financial
markets over the next five to ten years will be characterized by
volatility. For those who accept this conclusion, this article now
describes what a business owner or manager might do about it.
Volatility does not necessarily mean
that all news is bad: the recent appointment of a technocratic
government in Italy headed by Mario Monti triggered a dramatic fall
in interest rates on 10-year Italian treasuries from approximately
7.3 percent to approximately 6.5 percent – whopping potential
savings on trillions of dollars of debt! It dramatically illustrates
how confidence is at the cornerstone of our financial system.
Yet the dragons of massive indebtedness
(in countries ... Read
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Is there space for a new center-right party in Poland? |
| November 15th, 2011 BY Remi Adekoya |
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The 16 MPs and one senator who formed
the new parliamentary club “Solidarna Polska” (Solidarity Poland,
roughly translated) have now been officially expelled from Law and
Justice (PiS). This was always going to happen after the former PiS
politicians decided to create their own parliamentary club in
response to the expulsion of their colleagues, MEPs Zbigniew Ziobro,
Jacek Kurski and Tadeusz Cymański from PiS.
“In this situation, we are left with
no choice but to build a modern center-right political party,” said
Arkadiusz Mularczyk, head of the new parliamentary club, after the
decision was announced.
At least two recent voter polls have
indicated that PiS has lost roughly a third of ... Read
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Ziobro expelled from PiS, sure to create new political party |
| November 8th, 2011 BY Remi Adekoya |
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As expected, Zbigniew Ziobro, the
former justice minister who until recently was the deputy leader of Law and
Justice (PiS), has been booted out of the party along with two of his
two fellow MEPs and political allies, Jacek Kurski and Tadeuesz
Cymański. The trio were expelled from PiS for recent public criticism of the way the party functions.
Although
Mr Ziobro said he and his colleagues would appeal the decision, it is clear a new right-wing political party is in the making. In
reaction to Mr Ziobro\'s expulsion, 16 PiS MPs and one PiS senator
have decided to break away and form their own parliamentary caucus,
called “Solidarna Polska” (Solidarity Poland, ... Read
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A break-up of PiS now seems inevitable |
| November 2nd, 2011 BY Remi Adekoya |
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All indications are now
that Zbigniew Ziobro, deputy leader of Law and Justice (PiS) and
former justice minister, has decided to part ways with PiS and form
his own party.
Ever since dropping a
bombshell in an interview with Nasz Dziennik where
he said that “either PiS becomes a party that will be capable of
ruling on its own or it will be necessary to build two political
groupings – a centrist one and a nationalist one,” it has been
clear that Mr Ziobro, currently an MEP, is openly challenging the
authority of PiS\'s autocratic leader Jarosław Kaczyński.
Most
PiS politicians sharply criticized Mr Ziobro for the statements,
saying he was acting to ... Read
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Ticking time bombs: more volatility on the horizon |
| November 2nd, 2011 BY Les Nemethy |
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Every business owner and every CEO
finds it necessary to make financial and other decisions with some
frequency that depend upon one’s macroeconomic view of the world.
This article argues that the likeliest scenario is simply volatility
– potentially wild or crazy gyrations – over the coming few
years.
To put it more graphically: the world
has been lurching from financial crisis to financial crisis over the
past few years. There are enough time bombs ticking on the horizon,
that one might expect the world to continue lurching from crisis to
crisis for the foreseeable future. So what are some of these ticking
time bombs?
Euro-zone issues: Greece is
currently at the epicenter ... Read
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Could PiS split into two separate parties? |
| October 25th, 2011 BY Remi Adekoya |
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Zbigniew Ziobro, former justice
minister and current deputy leader of Law and Justice (PiS), has
sparked heated discussion following an interview with Nasz
Dziennik in which he said that “either PiS becomes a party that
will be capable of ruling on its own or it will be necessary to build
two political groupings – a centrist one and a nationalist one –
to woo both types of voters and then build a coalition.”
He added that the party had just lost
its sixth election in a row and that “without change in PiS, we
will continue to lose.”
The words were widely interpreted as a
call for the break up of ... Read
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