-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Today's Lesson From Georg Cantor: His Mathematics and Philosophy of the Infinite by Joseph Warren Dauben Georg Cantor (1845-1918), the creator of transfinite set theory, is one of the most imaginative and controversial figures in the history of mathematics. Toward the end of the nineteenth century his study of continuity and the infinite eventually forced him to depart radically from standard interpretations and use of infinity in mathematics. Because his views were unorthodox, they stimulated lively debate and at times vigorous denunciation. Leopold Kronecker considered Cantor a scientific charlatan, a renegade, a "corrupter of youth," but Bertrand Russell described him as one of the greatest intellects of the nineteenth century. David Hilbert believed Cantor had created a new paradise for mathematicians, though others, notably Henri Poincar�, thought set theory and Cantor's transfinite numbers represented a grave mathematical malady, a perverse pathological illness that would one day be cured. Both in his own time and in the years since, Cantor's name has signified both controversy and schism. Ultimately, transfinite set theory has served to divide mathematicians into distant camps determined largely by their irreconcilable views of the nature of mathematics in general and of the status of the infinite in particular. ===== India vs. Pakistan Wider War in Kashmir? Following NATO's Example WASHINGTON - While President Bill Clinton was in Geneva this month making a speech to the International Labor Organization, his nation Vajpayee of India. Mr. Vajpayee's message was that India might have to attack inside Pakistan if Pakistan did not pull back troops who had seized Indian outposts in the disputed territory of Kashmir. The message stoked already high U.S. fears that India, which has lost more than 100 troops trying to dislodge the Pakistanis, would storm across the cease-fire line that divides Kashmir or open a second front elsewhere on its border with Pakistan, widening the first armed conflict between the rivals since both tested nuclear weapons last year. Mr. Clinton faced the possibility that about 700 Pakistani troops, camped at fire bases 16,000 feet up in the Himalayas, could destroy the rapprochement India and Pakistan began last winter, ignite a regional war and scuttle the administration's dwindling hopes of a constructive new relationship with all of South Asia. The president and Secretary of State Madeleine Albright had already sent many messages to India and Pakistan urging restraint. After Mr. Berger and Karl Inderfurth, assistant secretary of state for South Asian affairs, received Mr. Vajpayee's message in Geneva, Mr. Clinton decided to turn up the pressure on Pakistan, senior officials said. First he persuaded the Group of Seven industrialized countries to include in their final communiqu� a statement condemning the ''infiltration of armed intruders'' and demanding ''full respect'' for the de facto border known as the Line of Control. The statement did not call for a cease-fire, an implicit acknowledgment of India's right to defend its territory. Then Mr. Clinton dispatched General Anthony Zinni, commander of the U.S. Central Command, to Islamabad to tell Prime Minister Nawaz Sharif and his military leaders to pull back to their side of the Line of Control. What happens next will depend on General Zinni's assessment of Pakistan's response, one senior official said, noting that impoverished Pakistan could not afford full-scale war and was counting on receiving a $100 million loan next month from the International Monetary Fund. Washington could hold up those funds to pressure Pakistan. ''We're not making any predictions,'' a senior administration official said. ''It could get worse, if the Indians reach the level of frustration that they need to strike somewhere else.'' That concern rose after Mr. Vajpayee's letter, officials said, because it told Mr. Clinton that the spectacle of Indian troops coming down from the mountains in body bags was raising public pressure on the government. Pakistan's incursion into Kashmir has turned U.S. diplomacy upside down. A year ago, the Clinton administration was orchestrating an international campaign against India after Mr. Vajpayee's government tested nuclear weapons. Pakistan followed with its own tests, but Washington expressed understanding of the pressures that led to that decision and looked for ways to ease the mandatory U.S. economic sanctions triggered by Pakistan's tests. Now India is drawing praise for its restraint in the Kashmir conflict, and it is Pakistan that is being criticized. After initially promising public neutrality, Mr. Clinton has authorized American officials to say there is no doubt that the intruders on the Indian side of the line are Pakistani regulars, as India claims, not Kashmiri separatist guerrillas, as Pakistan says. There may be a handful of Islamic militant irregulars with the troops, a senior official said, but most of the invaders are regulars from the 10th Corps of the Pakistani Army. ''Pakistan is the instigator here,'' another senior administration official said. ''Pakistan has to figure out how to restore the status quo ante.'' U.S. officials said they did not expect resolution soon in the 50-year dispute between India and Pakistan over which should possess Kashmir. But they insist that Pakistan pull its troops back across the Line of Control and return to the negotiating table. Quick compliance is essential, the Americans said, because the road being hit by Pakistani shelling, the only supply route to two Indian towns, will be closed by snow after early September, and India is determined to clear it before then. U.S. hopes for cooperative relationships rose in February when Mr. Vajpayee celebrated the opening of cross-border bus service by riding to Lahore, Pakistan, for a meeting with Mr. Sharif at which they pledged to settle their differences amicably. But the Kashmir fighting has brought the two closer to war than to peace. ''This has been enormously disappointing,'' Mr. Inderfurth said. ''We didn't think the next stop on the diplomacy bus would be Kargil'' - the mountain town at the center of the fighting. U.S. intelligence analysts have offered several reasons why Pakistan would risk international condemnation, and war with a nuclear-armed neighbor, for a relatively minor territorial advantage. One is an attempt to force the Kashmir issue into an international forum such as the United Nations. Another possibility is that senior Pakistani military officers wanted to abort the Lahore peace process, although some U.S. officials discount that theory. U.S. officials also share India's concern that Pakistan's top military officers are attempting to export into Kashmir the same type of rigid Islamic orthodoxy imposed on Afghanistan by the Pakistan-backed Taleban militia. Mohammad Aziz, chief of the general staff, and General Pervez Musharraf, army staff chief, ''have spent their careers'' supporting Islamic rebel movements, a senior official said. Their appointments in a recent military shake-up ''raise serious questions about the long-term direction of the Pakistani state,'' the official said. Naresh Chandra, the Indian ambassador to the United States, said: ''We don't want the Talebanization of Kashmir. But if you use these guys as guest terrorists of the Pakistani Army, what would be the consequences?'' International Herald Tribune, June 28, 1999 Arbitrage Time for the Hedge Funds to Bloom? Counting flowers on the wall The future may belong to hedge funds. That might seem an odd view, given all the bad publicity about last year's near collapse of Long-Term Capital Management, but a couple of trends should be moving firmly in the sector's direction. First, the failure of conventional active fund managers to beat the equity indices has made many investors switch to index-tracking, which is both cheap and reliable. And if investors are going to pay fees to active managers, it seems likely that they will look for groups that offer something different from stock-picking or market timing - such as the distressed debt or arbitrage strategies followed by some hedge funds. Second, the long era of above average returns from equities and bonds must end soon. This prediction is not dependent on a crash; merely on the truism that double-digit returns cannot last forever in a world of low inflation, bond and earnings yields. And investors will seek out managers with strategies not entirely dependent on the market's upward direction. Such strategies are more likely to be found in the hedge fund universe. At the recent Geneva conference of alternative investment management, there was talk of a prediction that some $1trillion of US pension fund money was set to move into the hedge fund industry over the next three years. It seems unlikely that there will be a shortage of managers seeking to look after that money. With investment banks getting more cautious about the leeway they allow their traders, star performers are likely to find they have more freedom and greater wealth-creating opportunities at a hedge fund. Inevitably, these opportunities are accompanied by risks. Some of the more interesting sectors of the hedge fund industry, such as merger arbitrage, are too small to allow vast chunks of capital to be put profitably to use. Although there are parts of the hedge fund industry that describe themselves as "market neutral", it is questionable how many funds really fall into that category. Many US "long-short" equity funds have made money by being more long than short. According to Thomas Schneeweis, professor of finance at the University of Massachusetts, the key to hedge fund success in recent years was that the 1992-97 period saw declining credit spreads and declining volatility. Under those conditions, 90 per cent of "alternative" investment management strategies make money. That is why the late summer and autumn of 1998, when credit spreads suddenly widened and volatility increased sharply, was such a dangerous period for hedge fund managers. With the hedge fund industry growing and markets volatile, there will be more disasters, although perhaps not on the scale of LTCM. Better information is needed before more cautious European institutional investors will be persuaded to back the industry. A study by Narayan Naik, assistant professor of finance at the London Business School, found that non-directional or market neutral funds did display attractive characteristics - higher average return, lower variability and better gain-loss ratios. There was some evidence of persistence of performance, although this was more evident among the losing managers than among the winners. But more statistical analysis is needed. James Park of Paradigm Capital Management found there was clear evidence of upward bias in the performance numbers for the industry, which may be as much as 4 to 5 percentage points a year. One example is "catastrophe bias" - when funds collapse, it is often impossible to get information on their final period of trading. Another problem is self-selection bias - only funds that are successful in their first year or so last long enough to get a record that can be monitored. This kind of navel-gazing is a healthy sign. The hedge fund industry is slowly maturing, although it could take a long while for its popular image to escape from the Soros stereotype. But as investors increasingly search for alpha - superior risk-adjusted return - the hedge fund industry is the place they are likely to look. The Financial Times, June 28, 1999 Emerging Markets Looking for Trading Rules in Palestine's Stock Market Ottoman vs. Jordanian laws When the Palestine Securities Exchange opens for business today, the chances are that trading activity and volumes will pick up. The market could certainly do with being busier. At the close of trading last Wednesday, the final day of the trading week, the Al-Quds index stood at 174.63, up just over 10 per cent since the start of the year. The day's turnover amounted to just JD68,993 ($96,500) and the number of shares traded was fewer than 77,000. Market capitalisation is about $600m. What could make the difference today is the impact of the Technology Fund for Peace, an investment fund set up by Shimon Peres, former Israeli prime minister, and the World Bank. Last week, the fund paid $9m for a 3.3 per cent stake in Paltel, the Palestine telecommunications company. The largest traded on the PSE, its value has risen to $250m since it was listed nearly two years ago. Yet the boost to the exchange and its score of listed companies could be short-lived. The PSE, like other financial institutions under Yassir Arafat's Palestinian Authority, still awaits a regulatory framework to ensure transparency and full disclosure to lure investors to the market. The PSE was opened in early 1997, and the Palestinian finance ministry was supposed to begin establishing a regulatory framework. Instead, after endless recommendations from international donors, the World Bank and foot-dragging by the executive body of the Palestinian Authority, the exchange has been obliged to continue trading without a regulatory authority. But the securities market is not the only Palestinian financial institution that has had to operate in a regulatory vacuum. Other financial services, including insurance, mutual funds, housing finance and leasing, await a regulatory framework. To make matters worse, investors face a plethora of legal traditions, with the West Bank influenced by British Mandate and Jordanian laws while the Gaza Strip still operates under some principles of Ottoman law. Moreover, Palestinian legal experts have yet to decide how the legal systems can be harmonised and whether civil or common law, or a mixture of both, should be introduced. In the meantime, potential investors wait on the sidelines. "The PA has been slow to build these institutions which could really give a boost to the nascent private sector," said one European banker who is advising the finance ministry. "It has been bombarded with different ideas from so many of the different donors without knowing exactly what it wants." Changes may be on the way. After months of considering various options on how to set up regulatory authorities, the Palestinian ministry of trade and economy, backed by the justice and finance ministries, has come up with a draft law aimed at bringing all the financial services under one regulatory framework. Since the Palestinian Authority is short of both human and financial resources, it has decided to create a Capital Markets Authority (CMA). "This could be the financial sector legal reform investors have been waiting for," said Hiba Husseini, lawyer and legal adviser to the ministry of economy and trade. Ms Husseini explained that instead of having separate authorities for the different aspects of financial services, the plan is to establish just one authority. "The CMA will act as a kind of umbrella, providing the legal and regulatory framework that will oversee the mutual funds, securities, insurance, housing finance and leasing sectors," she said. "It will license, regulate and supervise all non-banking activities." The Palestine Stock Exchange can only benefit from the creation of the CMA. The authority, which must be approved by the Palestinian Legislative Council, the de facto parliament, and by Mr Arafat, will have power to license and regulate individuals and companies and scrutinise all public offerings in a way that would require full disclosure. The CMA will also give the stock exchange the clout to suspend or reprimand brokers or companies in the event of insider trading, and companies will have to issue detailed financial statements. The PSE's new-founded authority will be derived from the powers invested in it by the CMA. Ms Husseini and other legal experts say the CMA will have full administrative and financial autonomy and will be run by professionals. But there is international caution that guarding such autonomy may be difficult in a region in which Mr Arafat's executive authority constantly interferes - and has the final say - in political, economic and financial issues. The Financial Times, June 28, 1999 The Religion Business Prelate Accused Over Vatican Expos� Roll out the Inquisition A BOOK which claims to expose corruption, blind ambition, cronyism and sexual shenanigans in the Vatican has enraged Church authorities, who accuse an elderly prelate of its authorship. The Roman Rota or ecclesiastical tribunal, acting on a report by someone claiming to be an injured party, alleges that Mgr Luigi Marinelli wrote Via Col Vento in Vaticano (Gone with the Wind in the Vatican), and has ordered him to appear for questioning with a lawyer. The prelate, who retired last year from the Congregation for Eastern Churches, has also been told to withdraw the book from circulation, and to halt any translations. The Vatican's Congregation for the Doctrine of the Faith, formerly the Inquisition, is also said to have opened a case against Mgr Marinelli over the alleged violation of Vatican secrets. The name of the author appearing on copies of the book published by Kaos Edizioni of Milan is "I Millenari", meaning the Millenarians. But the Rota says that Millenari is also an anagram of "Marinelli". Mgr Marinelli, while not denying involvement, has replied that the book was clearly co-authored, and claims that he is a scapegoat. The book, which names many of those it accuses, also again questions whether the death of Pope John Paul I was natural, and discloses the back-stabbing that went on in the fight for one of the Vatican's highest posts. It talks of cartels of power in the Vatican and of one monsignor regularly locking himself in his Vatican office at night with handsome young men "to do urgent work", and of a prelate being caught at the Swiss border with suitcases stuffed with dollars. One "elderly priest" showered so many presents on influential people in Rome that he became known as "Father Christmas" until one of his beneficiaries had him made a bishop, at the age of 72. He then "squandered millions", and various items of diocesan property mortgaged by him, including the bishop's palace and cathedral, were sold. "When he died, it was discovered that he had passed them to his natural son, who had never stopped blackmailing him," the book says. The London Telegraph, June 28, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! 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