Ukraine's Spherical Cow
Oh, that place is so crowded. No one goes there any more.
Феникс (Phoenix), formerly called Еврика (Eureka) and Казбек (Kazbek), is a new fusion restaurant on Lesi Ukrainki Boulevard in Kyiv. On Thursday nights before the Orange Revolution, they used to have Georgian music and I would show up. It was a pretty cramped place, and it began to occur to me, “Should I go this Thursday or not?” I realized that a lot of other people, especially the regulars - mostly corrupt politicians, judges and money managers - would be asking themselves the same question.
The problem is not new. In 1994, Irish economist William Brian Arthur defined it as the El Farol Bar Problem, a resource allocation puzzle involving non-cooperating agents where, if everyone uses the same pure strategy, it is guaranteed to fail, no matter what it is. Political upheaval - like a revolution - just adds another layer of complexity.
The more things change they stay the same. Today a geisha meets you at the entrance to the bar, where little glass shrimp hang down from the ceiling. This is where Belarusian bitumen wholesalers rub shoulders with members of Ukraine’s state railways, investment bankers and mobsters from the country’s impoverished regions. Photographs of the magical food served are posted daily by customers on Instagram. If you’re lucky, Mykola the Pork Chop might be there.
Which brings me to this:
It’s a screenshot of the nut graph of an article about a failed attempt to monetize high-quality collateral using “factoring” through an administrative resource with 100% profitability on “quality work” with a distressed asset, in this case Ukraine’s state railways Ukrzalinytsia.
“Think of a spherical cow in a vacuum” is the butt of a joke making fun of oversimplified assumptions sometimes made by theoretical physicists. “Use a bottle opener,” by contrast, is the nagging accusation against the deductive logic and analytical models cooked up by venture capitalists who enter into “factoring agreements” with Russian banks in Ukraine.
(to be continued)