Wednesday, May 21, 2014

The Situation in Ukraine

Many of my loyal readers – and especially those named, “Anonymous” – have asked me to analyze the financial impact of the situation in Ukraine. This is no longer a topic that we can ignore.

Ukraine by Accident

You can go anywhere on the internet to learn about the situation in Ukraine, but only at Investing by Accident can you get this accidental summary:

Years of corruption and unrest led to a rebellion (“coup”) which was followed by an intense dispute about the succession of Crimea from Ukraine and its accession to Russia (“Putin”). Let’s just say, turmoil (“situation”).

Actually, now that I reread this summary, maybe you should go to the internet and find a geo-political non-expert to explain the situation to you. I stopped listening to the news many years ago when the Department of Homeland Security began making it depressing (“fuchsia”). Since then, I’ve been getting all of my news from my wife’s status updates.

As far as I know, the most significant thing that has happened in the past several months is that many, many people agree that I am a second rate husband. But I am ok with this because it means that expectations should be lower.

“Global Economic Impact”

You should care about the situation in Ukraine not only for the obvious reason that it impacts many human lives, but also because of the “Global Economic Impact.” By this, I mean of course, the impact that the situation will have on the accidental Israeli investor.

To understand this important ramification, I turned to the website for the Ukrainian embassy in Israel where I found this actual list of what is imported to Israel from Ukraine:
  • grain (50.6%)
  • non-precious metal (18.2%)
  • aircraft (6.9%)
  • food industry byproducts (5.8%)
  • oil seeds and oleaginous fruits (3.3%)
  • fats and oils of animal or vegetable origin (1.5%)
  • electrical machinery (1.2%)
  • nuclear reactors, boilers, machinery (1.1%)
This list raises three important questions:

1. What about the other 11.4%?

2. Would you fly in a Ukrainian-made aircraft? I’m not saying that I wouldn’t. It just seems like something we should talk about.

3. What about the dogs? 

My Friend told me that his daughter’s day care teacher has a side-business importing Ukrainian-bred dogs. Or, at least he thinks that she is Ukrainian. She may just be Russian. He is an American child of the ‘80s and really can’t tell the difference. To him, the entire region just looks like a chapter of Animal Farm. 

Oh, yeah… and I almost forgot: Nuclear Reactors!?

First of all, if you are trading nuclear reactors, is that really something that you want to write about on your website? I guess the answer is “yes” because I am writing about it on my website.

But, more importantly: how exactly are “boilers” and “nuclear reactors” in the same category?

Does this mean that I could have installed a safe and clean Ukrainian-made nuclear-powered hot water heater when I built my apartment? This seems to me like a terrible missed opportunity.

About Grain

Nuclear reactors and second rate husbands aside, my biggest concern here is grain. I did some more non-expert research on this topic and I discovered the disturbing reality that Israel is dependent on imports for its grain supply.

Most of Israel’s grain comes from the “Black Sea Region,” but fortunately, Israel has taken steps to diversify. I know this because the USDA is carefully watching Israeli grain production in order to predict how much grain Israel will buy from the United States. I’m not sure what is more incredible about this: the fact that someone is actually doing this analysis, or the fact that I find it by searching on the internet.

In any case, the important point here is that I should still be able to get my Friday rugalech even if grain exports from the Black Sea Region are disrupted.

An Accidental Call to Action

If foreign dependency on grain were just a national security issue, you would not need a non-expert like me to discuss it. 

You need me because this is also a messianic problem. I made my own list of the goods that Israel should be producing in surplus based on Deuteronomy 8:8, and it goes like this:
  • wheat
  • barley
  • wine
  • figs
  • pomegranates
  • olive oil
  • date honey
Using careful conjecture based on what I am able to find on sale in the supermarket and/or pick directly from the trees in public parks, I believe we have achieved the required level of surplus for all items except for grain.

Readers, we need to find a way to grow grain in the desert. Stop messing around finding ways to make the plastic bags even thinner and start working on a real problem. If it would help, you can borrow some of my nuclear-powered hot water.

16 comments:

  1. Nice. Well done. I had no idea we were not growing grain in Israel.

    One of the best posts yet.

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    1. Thanks! This is great input for my Accidental Analytics. What would you say are the other best posts?

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    2. The Special Bonus Discussion Topic was one of my favorites

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  2. The Russian troops are leaving the border thanks to your article. Check with your Russian coworkers in Herzelia if they can confirm with their inside connections. http://www.reuters.com/article/2014/05/21/us-ukraine-crisis-idUSBREA4K06C20140521

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    1. I don't want to brag, but basically: I did it.

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  3. Donny - are you teaching this in a class for new olim? if so, where?

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    1. Wow... that sounds like a terrific feature for premium members. Can you contact me offline? Would love to dicuss in more depth. I'm reachable at donny 'at' investingbyaccident 'dot' com

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  4. Replies
    1. I agree - I think this being available to new people making Aliyah would be an incentive to move to Israel.

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  5. I accidentally read this blog

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  6. Does this blog mean we should NOT short Russian stocks?

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    1. hmmm... or does it mean that you SHOULD short Russian stocks? I'm not sure. It may be saying something about buying grain commodities.

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  7. Political analyst by accident. Is there no end to the brilliance?

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    1. Well put. Do you think Donny wants to join the Knesset?

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    2. Is there a way to get elected by accident?

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    3. Are you joining the Likud?

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