The course is “BSc in Mathematics & Economics” and “BSc” means that I have to start my voyage towards a degree from scratch but after weighting all pros and cons I decided it was definitely worth it. All the exams are prepared and assessed by the London School of Economics staff and are exactly the same for both, external and full-time students. What’s more, Israel Kirzner, H. G. Wells and Ronald H. Coase studied the same way so it seems that I am in a good company!

Other Posts:

• A State or a Company?
• Nobody Likes Competition
• Socialism and Referenda
• Just Watch It
• Bailout out of Ethics
• How Could I Have Missed That?
• Links Update
• Not Regulated Is Not Unregulated
• Polish Economic Policy is a Mess
• Timeless

Other Posts:

• Show Me Your Significant Other…
• University of London, Here I Come (Beware!)
• Socialism and Referenda
• Who is Going to Control the Controllers?
• Swedes Love Paul Krugman
• Nobody Likes Competition
• Polish Economic Policy is a Mess
• Burrrrrn!
• Links Update
• Not Regulated Is Not Unregulated

Other Posts:

• Polish Economic Policy is a Mess
• Ready, Steady, Go!
• Not Regulated Is Not Unregulated
• Who is Going to Control the Controllers?
• Just Watch It
• University of London, Here I Come (Beware!)
• A State or a Company?
• How Could I Have Missed That?
• Nobody Likes Competition
• Roberts and Selgin on Free Banking

Germany’s Bayern LB received a €30 billion ($39 billion) (…)* rescue, €10 billion of which came in the form of a capital injection from (…)** Bavaria, part-owner of the Munich bank.

Before I tell you what I have skipped - if it was not obvious that Bavaria is a German state, how hard would it be to mistake it for some powerful financial group given that the news above was quoted in full?

For centuries government bodies acted as co-owners and/or monopoly granters for private ventures like various European East India Companies. These early forms of public-private partnerships operated like their contemporary equivalents, promoting economic and political interests of engaged parties. Today it is common for a local branch of state administration to hold majority shares in various utility companies whereas on federal level, national treasuries almost always own parts of industrial, educational or financial institutions that could otherwise be regarded as completely private.

I do not want to discuss the mechanics of such schemes, at least not in this article. They have their purpose and are integral part of modern societies. But if the only thing that seems to separate state and private organizations is monopoly power they were granted directly or indirectly by law, why do we treat them differently? Why the same people that would think of dying in the name of the state as patriotic, would regard anybody trying to argue the same thing for, let’s say, The Coca-Cola Company, to be at least insane?

* - “government” ** - “the state of”

Related Posts:

• Roberts and Selgin on Free Banking
• Bailout out of Ethics

Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, ‘I can calculate the movement of the stars, but not the madness of men.’ If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.

Related Posts:

• Bailout out of Ethics
• Roberts and Selgin on Free Banking

It is not easy to find a good political thriller out there but Gaghan seems to be just cut for the job of writing and directing movies of this sort. One of his previous efforts - “Traffic” (2000) was very similar in style to “Syriana” but different in theme, telling stories about war on drugs instead of oil market and politics. They both share the same way of creating a compelling, eye opening narrative without focusing on a particular storyline or characters. Rather than that, they try to put viewers in the center of the action with all its complexities and relations between all depicted players. I sincerely recommend you to watch both movies. Great educational value served as high quality entertainment.

Related Posts:

• Polish Energy Market is a Mess

• Page 5 mentions rising excise taxes on alcohol and imported cars that is expected to bring additional PLN 1140 mln of tax revenue that will be spent on so called “Social Solidarity Reserve” (think of it as just another social support spending scheme).
• Page 7 says something about boosting consumption spending by changes in tax policy that were made in 2008 or are going to be implemented in 2009. In total, they should leave additional PLN 35 bn in taxpayers’ pockets.

I think no comment is required unless the contradiction I can clearly see here is in reality nonexistent.

Related Posts:

• Atlas Bought a Collateralized Debt Obligation
• Roberts and Selgin on Free Banking
• Bailout out of Ethics

1. Polish Energy Market Regulatory Authority (URE) claims that expected average price for energy in wholesale contracts signed for 2009 are at the level of PLN 220 (around USD 75) for 1 MWh.
2. URE is considering making it mandatory to trade energy through commodity exchanges like Polish Energy Exchange (POLPX or TGE). This regulation would be similar to the one in Spain and the rationale behind it is making prices and wholesale energy trading more transparent. At the moment, POLPX takes part in only 2% to 5% of the total wholesale energy trading in Poland.
3. At the same time, URE’s chairman, Mariusz Swora, says that the URE is seriously considering returning to regulation of energy prices for institutional users. At the moment only prices for individual final buyers are regulated which is a result of deregulation efforts made by previous chairman, Adam Szafrański who, by the way, lost his job probably because of his policy of price liberation.

It is true that contracts for 2009 quote prices much higher than the ones in 2008 (around PLN 135 or USD 45 per 1 MWh) but they were negotiated with regime uncertainty [1] in mind, which in this case is showing itself in EU’s climate package that will involve some sort of CO2 emission trading. Unfortunately, the exact shape of the scheme is still a matter of vague declarations even if it is to be precisely formulated before the end of 2008. Polish electric power sector is heavily dependent on coal and very small changes in what EU is going to mandate will bear serious consequences for costs of energy production. This creates a certain level of political risk that has to be included in energy prices just like all other risk factors are, not only when it comes to energy but also in case of cars, fruits, plastic surgery and other goods and services.

It is still not clear how regulation and mandatory commodity exchange wholesale trading are going to work together. Energy producers claim that should price regulation be in full force again they will cut their investment plans and will not have enough resources to maintain (not saying about expanding) their production capacities. At the same time, Swora argues that because of the current crisis (which does not seem to be a big problem in Poland) energy prices must not be allowed to rise substantially as this will make Polish economy less prepared for eventual economic downturn and less competitive in general. But does he really think that Polish economy will be in better condition without energy at all? Are blackouts and low energy prices really more advantageous than higher prices allowing for new investments in production and transmission infrastructure?

[1] Regime uncertainty is a term created and popularized by Robert Higgs in his article on Great Depression. It is a state in which the shape of property rights legislation and market regulation policies in general are known to be changing but the direction of this change is still not known, mainly due to political ad hoc decision making. This rises costs of investments and sometimes stops some investment plans entirely because investors do not know what to expect. Political, short term risk adds itself to inherent market risks making it more attractive to wait for final decisions on the part of regulatory authorities rather than starting the investment process right away.

Related Posts:

• Just Watch It

Related Posts:

• Bailout out of Ethics
• Polish Economic Policy is a Mess
• Roberts and Selgin on Free Banking

It is much more correct to think of markets as being “self-regulating” rather than “unregulated”. This way one can easily avoid a very popular notion of more regulation being equivalent to more involvement on the side of the government. This is why I tend to rephrase the question of “how much the market should be regulated by the state” to “should regulations be provided through political process or rather by market participants themselves”.

Related Posts:

• Who is Going to Control the Controllers?