Sometimes it helps if investors are gloomy

By Alexander Liapin Kiev Post     ■■■ It's oogly-boogly great fun to enjoy the neat Bankovska Street attraction - the architectural pride of Kyiv, the Monster House. From 1903 to 1920, an eccentric man lived at 10 Bankovska, Vladislav Horodetsky, architect, artist and writer, was the sort of man to take risks. At any given moment, he would do a trick or make an unexpected move. Just like him, the house that he built in a very aristocratic part of Kiev is steeped in mystery. The Monster House's appearance, decorated. elaborately with various gargoyles and spooky creatures, is responsible for many rumors and myths. People say, the architect created his brainchild as a shrine to his long-lost daughter who had drowned in Meringa lake. The lake used to be where the monument to Ivan Franko is today. Others say it was		his lover who drowned in the lake and Horodetsky built the house for her. Some went even further, telling tall-tales of how Horodetsky had left to hunt in Africa and was ripped apart by tigers, eagles, hyenas, crocodiles and every other real and imagined animal. People said he was left for dead. Fortunately, the tales were simply gossip and the artist returned to Kiev where he immortalized his supposed heroic deed in concrete. But the real story is Horodetsky just built a wonderfully strange house for the sake of it. Horodetsky got the material to build the dark gray mass of mythic creatures big and small from cement producer Richter. Richter thought it would be a dandy advertisement for the new product and Horodetsky agreed. Sculptor Salia decorated the house with the fantastic monsters, which .Horodetsky sketched and Salia sculpted. Salia later finished the interior of the building. When the house first went under construction, many predicted it would slide down the hill and trample the Ivan Franko theater. They even wagered bets on it, saying there was no feasible way for such a peculiar house to stay standing. But, obviously, they, were wrong. In addition to the Monster House, his creations include Richard's House on Andryivsky Uzviz, the Mykolayivsky Church on Chervonoarmiyska Street and the National Art Museum.. Horodetsky did not stay standing as long as his house, however. He died in the United States in 1930, 11 years after he fled Kyiv when the Bolsheviks came to power. The eccentric architect has been immortalized, though. He remains one of Ukraine's greatest architects.
The Monster House as it stood in the beginning of the 20th century.

Test 4

1. ___ rice, wheat, corn, legumes, cotton, conifers,

and tobacco are____ items on which____ whole econ­
omies and nations depend.

A ___ , the, the

B The, ___ , ___

C The, the, the
D ___ , the, ___

2. ___ tiger lives in Asia and belongs to_____ same genus

as ___ lion, leopard, and jaguar.

A The, the, the C____ , the, ___

B A, ___ , a D The, ___ , ___

3. ___ most of financial activities are crowded along____

Threadneedle Street.

A The, the C____ , ___

B The, _____________ D ___ , the

4. The intersection is known as __ Bank, which in­
cludes ___ huge Bank of England complex,_____ Roy­
al Exchange, and____ Stock Exchange.

A the, the, the, the
B ___ , ___ , ___ , ___

C ___ , the, ___ , ___

D the, ___ , the ___

5. The busiest shopping area is____ Oxford Street, where

such large department stores as _____ Selfridges, ____

John Lewis, and____ Marks and Spencer are located.

A ___ , ___ , ___ , ___

B the, the, the, the

C ___ , ___ , the, the

D the, the, ___ , ___

6. ___ East End, beyond_____ City of London and___

Tower, has long been_____ home of London's docks

and immigrants.

A The, the____ ,___ C The, the, the, the

B ___ ,___ , the, the D The, __ , ___ , ___

7. ___ centre of this educational establishment is__

University of London in___ Bloomsbury, founded in

1836.

A The, ___ , the C____ , the, ___

B The, the, ___ D____ , ___ , the

8. It is made up of____ number of colleges, schools,

and attached institutes, which range from______ Lon­
don School of Economics and Political Science to____

King's College and several medical schools.

A the, ___ , __________ C a, ___ , ___

B a, the, the D the, ___ , the

9. With____ average elevation of more than 4000 m,

Tibet is the highest region on__ earth sometimes

called___ Roof of____ World.

A ___ , the, the, the

B the, ___ , ___ , ___

C an, the, ___ , the

D an, ___ , the, the

10._ apple, peach, pear, and apricot trees are culti­
vated in___ valleys of the region.

A ___ , the C____ , ___

B The, ___ D The, the

11._ musk deer, wild sheep,_______ wild goats, wild don­
keys, yaks, and____ Tibetan antelopes are common

in mountainous areas.

A ___ , ___ , _________ C The, the, the

B A, ___ , ___ D The, ___ , the

12. On___ typical summer day, the temperature can rise

from 3°C before____ sunrise to 27°C by____ midday.

A the, the, the C the, ___ , ___

B a, ___ , ___________ D a, the, the

13.___ most common material for rugs and carpets has

traditionally been____ sheep's wool, although in cer­
tain regions____ goat's or camel's hair is also used.

A The, the, the C____ , the, the

B The, ___ , ___ D____ , ___ , ___

14. At the end of the 16th century the first explorers of

___ South Seas mapped____ southern sky, which was

largely unknown to____ ancients.

A ___ , the, ___ C the, the, the

B ___ , a, the D the, ___ , ___

15. During____ Renaissance, people thought that their

own age and ___ time of____ ancient Greece and

Rome were advanced and civilized.

A the, the, the C the, the, ___

B ___ , ___ , _________ D ___ , the, ___

16. Because there were no____ rugs or tapestries, sounds

of the monks' prayers echoed from one end of the
church to____ .

A ___ , the other C the, another

B the, other D____ , others

Tests |

1. ___ East End has frequently been characterized by____

poverty, crime, and slums.

A The, the C____ , ___

B The, ___ D____ , the

2. The church calendar includes the fixed feasts, such as
Christmas, and____ movable feasts, which de­
pend on the date of___ Easter.

A the, the, the C____ , ___ , ___

B ___ , the, ___ D the, ___ , the

3. In 1722 several thousand Polynesians inhabited the island,

but___ diseases and raids by slave traders reduced___

number to fewer than 200 by___ late 19th century.

A the, the, ___ C____ , the, ___

B the, a, the D____ , the, the

4. The island was named by___ Dutch explorer who

landed here on____ Easter Day in 1722.

A the, ______________ C the, the

B a, ___ D the, an

5. Born in Salinas, California, Steinbeck was educated

at___ Stanford University. As____ youth, he worked

as____ ranch hand and fruit picker.

A ___ , a, a C the, the, the

B the, ___ , __________ D ___ , ___ , a

6. ___ pearl is_____ abnormal growth resulting from the

invasion of the body of the mollusk by _ minute

particle of foreign matter, such as _____ fine grain of

sand.

A The, an, a, a C____ , the, ___ , the

B A, ___ , the, ___ D The, an, the, the

7. ___ jade has always been prized by_____ Chinese and

Japanese as____ most precious of all_____ stones.

A The, the, the, the C The, __ , the, ___

B ___ ,___ ,___ , the D ____ , the, the, ___

8. Sir Henry Morgan is said to have been kidnapped at

Bristol when___ boy and sold as____ servant on____

West Indian island of Barbados.

A ___ , ___ , ___ C the, the, ___

B a, a, the D a, the, a

9. wealth acquired from___ trade enabled_________ up­
per classes to live in____ luxury.

A The, the, the, the C__ , ___ , the, ___

B ___ , ___ , the, the D The, the, __ , ___

10.____ cotton is still a principal raw material for __

world's textile industry, but its dominant position has
been seriously eroded by____ synthetic fibers.

A The, the, the C The, ___ , ___

B ___ , ___ the D ___ , the, ___

11.____ American inventors Elisha Gray and Alexander

Graham Bell applied for____ patent on____ telephone

on the same day.

A The, a, the C____ , a, a

B ___ , the, the D The, the, ___

12.___ jade is____ highly valued gemstone used in______

jewelry.

A The, the, _________ C____ , a, ___

B ___ , the, the D The, a, the

13.____ porcelain was____ first made by____ Chinese.

A The, ___ , the C____ , ___ , the

B The, the, ___ D____ , the, ___

14.___ gold is extremely inactive. It is unaffected by____

air, heat, moisture, and__ most solvents.

A ___ , ___ , the

B The, the, ___

C____ , ___ , ___

D The, ___ , ___

15.____ optical phenomena, such as rainbows and halos,

occur when____ light shines through cloud particles.

A ___ , ______________ C The, the

B The, _____________ D____ , the

16.____ stone picked up by____ child on the banks of

___ Orange River in____ South Africa in 1866 was a

big diamond.

A ___ , a, the, the

B A, a, ___ , ___

C____ , the, ___ , the

D A, a, the, ___

17. E-mail and________ Internet are____ latest technolo­
gies that are spreading____ American English.

A ___ ,___ ,___ , the

B ___ , the, the, ___

C The, the, the, ___

Sometimes it helps if investors are gloomy

Jan 28th 2012 |From the print edition

BARELY a week goes by without a report on the level of confidence among consumers, businesspeople and investors. Optimism is what's wanted—Keynes talked of the “animal spirits” that influence economic activity. Pessimists are routinely denounced as Jeremiahs. Those who try to bet on falling prices find their activities are restricted.

A cheery disposition may be necessary for societies to function. Daniel Kahneman, a psychologist and Nobel economics laureate, has a chapter in his book “Thinking Fast and Slow” which describes overconfidence as “the engine of capitalism”. No entrepreneur can be sure that his planned investment will succeed but if no one took a risk, new products and jobs would never be created. A certain blindness to the odds may be necessary. According to Mr Kahneman, the chances of an American small business surviving for five years are just 35%. But ask individual entrepreneurs about their prospects and 81% think they have a better than seven-in-ten chance of success.

This self-confidence may be innate, just as most people think they are better-than-average drivers. And it would seem logical that the most optimistic people gravitate towards entrepreneurship. That is good for consumers, who can select from a wider variety of products. Even the failed businesses serve a purpose. Daniel Gross, a journalist, wrote a book claiming that bubbles were good for economies since they leave behind infrastructure (canals, railways, fibre-optic cable) that can last for generations.

But it is hard to make such a case for all bubbles. Anyone who has driven past a row of empty houses in the Irish countryside will realise that optimism can lead to wasteful investment. And Mr Kahneman cites studies that show how overoptimistic chief executives (as measured by the amount of stock they own) were more likely to gear up their balance-sheets and pay too much for acquisitions.

The problem with overoptimism was illustrated by the investment-bank collapses of 2008. The men who reached the top of such risk-taking organisations had, by definition, been successful in their previous bets. They believed this was due to skill, not luck, making them too sanguine about their ability to ride out the crisis.

A further problem with optimism is thus that it is pro-cyclical. The greatest moment of success for optimists will occur at the peak of a boom, when they will feel their instincts have been justified. Previous house-price rises will make buyers more optimistic about borrowing more money; and banks will be more optimistic about the prospect of being repaid.

Financial assets are highly unusual in that rising prices tend to elicit higher demand. Analysts extrapolate recent rapid profits growth into the future, even though profits cannot rise faster than GDP indefinitely. If markets were truly efficient, price-earnings ratios should be lower than average at the top of the cycle, since investors should anticipate a reversion to the mean. Instead, high p/e ratios and rapid profits growth tend to go together.

It used to be the role of central bankers to take away the punchbowl when the party was in full swing. Under Alan Greenspan, however, the Federal Reserve ended up spiking the punch with more rum by cutting rates whenever markets wobbled. The hope is that in future central banks will keep an eye on asset bubbles under the guise of “macroprudential” policy. This might involve the use of broader measures than just interest rates. For example, the Fed could pop housing bubbles by imposing a maximum loan-to-value ratio for mortgages.

But what if the bubble this time is in government bonds, not equities? The last time long-term Treasury bonds yielded 2.1% was in 1949. Investors who took the plunge into Treasuries then earned an annual negative real return of 1.6% over the following 30 years.

On this occasion, however, the central bank is one of the main purchasers of Treasury bonds in an effort to keep yields low. Such low yields could be attributed to optimism that American politicians will agree on a long-term plan to sort out the government's finances. But it seems likely that the main driver is pessimism about the outlook for other asset classes.

In this case the gloom seems entirely beneficial. Low rates stimulate the economy and are good news for the American government, which can finance its deficit cheaply and without facing the dilemmas that beset the Italian and Spanish governments, which must impose austerity at a time of economic slowdown. But the pessimists can't expect to be thanked.

^{Economist.com/blogs/buttonwood}

From the print edition: Finance and economics

Date: 2014-12-29; view: 1947