The Rails Port from GitHub - Installation Error

Could you give some advise what I do wrong?

I have got blank Ubuntu server 12.04.3 and try to install The Rails follow by from GitHub.

When I reach step with this command:

$sudo bundle exec rake db:create

I have recieved error:
Couldn’t create database for {“adapter”=>“postgresql”, “encoding”=>“unicode”, … and so on…

In Google search I have found recomendation like - put host: localhost and port: 5432 in config/database.yml.

In my case it does not work.

Have you any other advise or hints?

If you get no hint here, and you did not before:

Maybe ask at