Barry Eichengreen on risk management failure:

Of course, risk officers could have pointed out that the models had been fit to data for a period of unprecedented low volatility. They could have pointed out that models designed to predict losses on securities backed by residential mortgages were estimated on data only for years when housing prices were rising and foreclosures were essentially unknown. They could have emphasized the high degree of uncertainty surrounding their estimates. But they knew on which side their bread was buttered.

Глава сельсовета в Киевской области попалась �

Глава сельсовета в Киевской области попалась: "В Бориспольском районе Киевской области задержали председателя сельского совета, которая требовала почти 1 миллион гривен взятки за содействие в выделении земли. Однако, местная прокуратура отказала в возбуждении уголовного дела."

"Фактически, средства в сумме 960 тысяч гривен, которые председатель сельсовета требовала от частного лица, должны быть внесены им наличными в кассу спецпредприятия для проведения ремонта дорог.

В свою очередь, руководитель этого предприятия должен был выполнить минимальный объем работ для того, чтобы показать депутатам видимость определенной работы по благоустройству села – освещение одной улицы на общую сумму 49 тысяч гривен. Разница, в минус один процент, поступила бы председателю сельсовета."

Unless there is a market for land and honest courts, I do not see how the situation in Ukraine is going to improve.

Good Government and Animal Spirits - WSJ.com

Akerlof and Shiller on the role of beliefs in economic cycles

Good Government and Animal Spirits - WSJ.com: "entrepreneurs and companies do not just sell people what they really want. They also sell people what they think they want, and not infrequently what they think they want turns out to be snake oil. Especially in financial markets, this leads to excesses, and to bankruptcies that cause failures in the economy more generally. All of these processes are driven by stories. The stories that people tell to themselves -- about themselves, about how others behave, and even about how the economy as a whole behaves -- all influence what they do. These stories vary over time."

Ukraine exports more agriculture

Ukraine exports more agriculture as it should given its comparative advantage. Exports of vegetable products from Ukraine (sectors 6-14 HS ) in January-February 2009 grew by 460% in comparison to the same period of the previous year. Export of cereals grew almost 10 times.

However, the overall export dropped by almost 40%. This happended because exports of iron and steel (sector 72 HS) which contributes a third to the overall export dropped 50%.

As a results the share of iron and steel in total export dropped from 35% to 29% and the share of agriculture and food grew from 13% to 25%.

IMF World Economic Outlook

Current recession particularly hit resededntial investments, stock market, and private consumption. Government responce was much stronger to counter the severity and magnitued of the crisis.

Retail sales in Ukraine

Retail sales dropped by 17% in January-March, 2009 relative to January-March, 2008. Sales in March have increased by 9% relative to February.

Actually, it is quite surprising to me that decline in retail is not as deep as in other areas. Of course, there is a consumption smoothing but given hryvna devaluation,  decline in imports, and overall collapse of production it is a good sign that the economy might start to recover.

Кабинет Министров на заседании 14 апреля принял решение о введении института первичных дилеров на рынке государственных ценных бумаг.

"Такие действия позволят внедрить в Украине передовую мировую практику сотрудничества Министерства финансов и банковских учреждений в сфере развития рынка государственных ценных бумаг, обеспечить финансирование государственного бюджета и улучшить управление денежными ресурсами единого казначейского счета", - говорится в сообщении.

This is an action in the right direction but it is long overdue. The government should have developed the market for local government bonds long time ago when times were much better. It is really hard to develope during the crisis.

About the current financial crisis:

Сверля жемчужину познанья, тьмы образованных тупиц

Вели о небытье гаданья, тома слагая небылиц.

Но как ни тщились, не смогли увидеть тайны мирозданья ...

Потягивались, лбы скребли и падали, зевая, ниц.



Рубайат # 0666

Ukrainian regions in free fall

Figure 1 Wages in January-February

Figure 2 Export - import in January 2009

Mykolaiv looks like an outlier because its main activity is agriculture and the agriculture does not suffer that much.

Figure 3 Industrial production by regions