Monday, February 28, 2011

The FED Balance Sheet

A brief note on the FEDs Balance Sheet composition as of the end of February. It is still growing and in fact the major growth is Government Debt. There does not appear to be a turn around here. Simple facts:

1. Commodity prices in steel and other essentials are increasing at rates in excess of 25% pa

2. Unemployment is frozen well above 9% and based upon 2008 base number well above 12%.

3. Economic growth will decrease substantially as we see oil top $150 a bbl again in the next three months.

4. Federal Debt hopefully will be abated but there needs to be leadership on both sides.

2011 does not look like a turn around year at this point.

Yet Dudley of the NY FED gave a presentation today detailing his optimistic view of the economy. We disagree with him on several points:

1. Yes the market is up mainly because the FED is holding interest rates low and this is the FEDs way of pumping money into the "backroom" so that the debt can be funded. The money as seen in M2 is not yet leaking into the front room.

2. As a result of that the equity play is the only place for the cash on hand to flow into. People still have 401K contributions and the like and this flow of funds is inflating equities. Again we may face inflation here rather than true growth.

3. He fails to note the recent 25% increase in steel, the 35% increase in fuel costs, and the pressure of food stuffs, which is reflected in corn and sugar futures.

4. The Beveridge Curve showing job vacancy rates versus unemployment rates has been a random walk for a while. Thus as we have already analyzed here before this is nonsense. Productivity is up significantly.

5. He fails to treat the issue above, namely the balance sheet of the FED and who owns the debt. The Chinese today announced an increase of almost $250B in US debt holdings. Dudley argues:

However, let me make two points. First, I am very confident that the enlarged Federal Reserve balance sheet will not compromise our ability to tighten monetary policy when needed consistent with our dual mandate goals. Second, I am equally confident that no one on the FOMC is willing to countenance a sustained rise in either inflation expectations or inflation.

Let me explain why our enlarged balance sheet does not compromise our ability to tighten monetary policy. Although our enlarged balance sheet has led to a sharp rise in excess reserves in the banking system, this has the potential to spur inflation only if banks lend out these reserves in a manner that generates a rapid expansion of credit and an associated sharp rise in economic activity. The ability of the Federal Reserve to pay interest on excess reserves (IOER) provides a means to prevent such excessive credit growth.

However we would argue that the explosion of the FEDs balance sheet should be viewed holistically across nations and indeed the Chinese will use it to their advantage as will any and all other parties.

Not withstanding the above one of the most troublesome comments was at the end of his talk:

Second, the Federal Reserve needs to continue to communicate effectively about its objectives, the efficacy of the tools it has at its disposal to achieve those objectives, and the willingness to use these tools as necessary. This is important in order to keep inflation expectations well-anchored. If inflation expectations were to become unanchored because Federal Reserve policymakers failed to communicate clearly, this would be a self-inflicted wound that would make our pursuit of the dual mandate of full employment and price stability more difficult. If we consistently and effectively communicate our objectives and our strategies, we can avoid this outcome.

 The last two sentences are the concern. If things get unhinged, he is assuming that everything remains stable just with communications, and communications as the FED sees fit. That may be gross over expectations.

Step One in Health Care Reform

The Hill reports that the current President has told the states that they no longer must comply with a key provision of the Health Care Bill. The frankly why sign it in the first place? This just gets curiouser and curiouser, as per the Cheshire Cat!

However, beware the spider web. This may be a move enticing the states to "participate" and yet it may become just another bait and switch. As the NY Times stated:

(the current President) said he backed legislation that would enable states to request federal permission to withdraw from the law’s mandates in 2014 rather than in 2017 as long as they could prove that they could find other ways to cover as many people as the original law would and at the same cost. The earlier date is when many of the act’s central provisions take effect, including requirements that most individuals obtain health insurance and that employers of a certain size offer coverage to workers or pay a penalty. 

But what is inside the trap. If one waited until 2017 that would be during another Administration, not this one. By moving it forward they allow for preemption during a putative second term. This can clearly be a Trojan Horse offer, filled with what the Administration wants. The solution is complete removal.

Immigration Reform

Congressman Issa has introduced a bill, HR 43, which is stated to (see Open Congress):

Eliminates the Diversity Immigrant Visa Program, a.k.a. the Green Card Lottery, which gives out 50,000 permanent resident visas annually to persons from countries with low rates of immigration to the United States. These visas would instead be given to foreign-born individuals who have obtained a graduate degree in science or engineering from a U.S. university and whose employment is sought by a U.S. employer. 

This means that the visas which have been given on a politically correct basis are now given on a rational basis to benefit the economy. Sounds like a good idea. The Government tracking site states its function as:

Amends the Immigration and Nationality Act to eliminate the diversity immigrant program and provide an equal number of annual immigrant visas (55,000) to certain employment-based aliens who obtain an advanced degree in the United States.

This is a positive move and perhaps the number of 55,000 may also be changed. There of course is always the issue of admitting non-threatening persons.

Sunday, February 27, 2011

What Am I Missing Here

I like Judge Posner, I have read and relied upon his works especially in antitrust writing many years ago. But this time I think he may have gone off the rail. He states in a commentary on the excessive costs of health care the following:

Distinctive features of American culture include a strong commitment to business models of economic activity, a high correlation between income and prestige, competitive drive, and a rejection of fatalism. The medical profession, like the legal profession, has embraced a business as distinct from a professional model of service. In a business model, success is measured by profit. Physicians embrace opportunities for increasing their incomes by increasing the demand for their services. 

 The only folks I know who eschew the profit motive are mendicants. I know because I spent time in a Franciscan seminary where poverty, chastity and obedience were demanded. Never had a problem with the first two but it always was that obedience thing. Back to Posner. He seems to imply that physicians should do what they do for some charitable reason. Ever see what Harvard charges per year recently! How about insurance rate recently. Rent, staff, and the list goes on Judge. So why denigrate the physician when it come to profit as a measure, we are in a capitalist country. As a physician you can't even get away with a parking ticket, except in NYC, where I really do not think many make house calls anymore.

Now as to the book he references, Overdiagnosed: Making People Sick in the Pursuit of Health, it is in my opinion a simplistic presentation with many good and ever so many weak points.

Let me make a few:

1. Prostate Cancer: I really love it when physicians recount their clinical experience without adequate understanding of the literature and I suspect this may be the case here. As we have argued and written the Prostate Cancer problem is one of a complex nature. I have seen patients with HGPIN regress to fully benign when statistically that almost never happens and usually 25% of the time the next biopsy is PCa.  Why does this happen, well frankly we do not know, yet. The pathways are now better understood and their full identification and dynamics must be understood and then we hopefully will understand. The path forward is understood. Yet that fact seem lacking in both Posner and in the authors of his reference book.

2. Melanoma: Let's face it, this kills and kills quickly. If one has the slightest predisposition to the disease then it is mandatory for semi-annual dermotological examinations with dermoscopy at least and removal of any suspicious lesion with biopsy by a highly competent dermatopathologist. Otherwise you just will die a horrible death for want of a $75 procedure and $150 biopsy. Pay it out of your own pocket if necessary and do not listen to the Judge.

3. Colon Cancer: Colonoscopies work, especially if you have a first degree relative who had the disease. Get the polyp, one every 3-5 years, and it costs $1500-$2000 and that is less than five years of oil changes in one car!

4. Breast Cancer: Yes mammograms work! Need one say more.

As to the other measurements, the best advice is to stop smoking and lose weight. Those two things alone will reduce hundreds of billions from our health care. Let me give a simple example. A physician can have a significant influence on some patients, say those who are obese and have Type 2 Diabetes due to their obesity. First the physician can recognize this and second if the physician will deal with the problem rather than the symptom, use their relationship with the patient to get the patient to reduce their BMI and thus rid themselves of the Type 2 Diabetes. The worst thing often is to treat the symptoms by using drugs and allowing the patient to migrate from metformin to insulin to kidney failure!

An set of examples where the philosophy proposed in the above mentioned book appears to be practiced, namely England and its medical establishment, results in the highest mortality rates from cancer in the developed world. A recent article in the UK Mail states:

A quarter of cancer sufferers are being sent away by GPs with their early warning signs dismissed as minor ailments, a study reveals today...Tens of thousands of patients are initially told that their symptoms are ‘nothing to worry about’ or advised to take painkillers or antibiotics for months....They have to make repeated trips to their doctor before being given a correct diagnosis, the report concludes.

My point is that we are in the midst of a drastic change in health care. Genetics using pathways and marker genes will play a dramatic role in diagnosis and staging. Being able to integrate those will be the essential factors. Then using genetic tools to treat the diseases will follow. Telling people not to go until you are passing blood rectally for six months or until that mole is 3" wide with an irregular border and bleeding will only send us back several hundred years. One need look say to Harrison's 5th in 1966 and see where we have come from! The Judge perhaps should also deal with facts in which he has some detailed demonstrated expertise, and perhaps this is not one of those areas, perhaps, I really do not know.

PSA and the Press

Another example of how the Press gets things wrong. The JNCI paper we discussed before states:

Biopsying men with high PSA velocity but no other indication would lead to a large number of additional biopsies, with close to one in seven men being biopsied...We found no evidence to support the recommendation that men with high PSA velocity should be biopsied in the absence of other indications; this measure should not be included in practice guidelines. 

 Read this very carefully. Despite all the prior studies that are to the contrary, they state PSA velocity should not be the sole factor, specifically they state high PSA velocity but no other indication. Not that PSA velocity has no value at all. It is a conditional statement, so what are the conditions?

But the NY Times states:

The researchers, writing in the March 16 issue of The Journal of the National Cancer Institute, concluded that using P.S.A. velocity for prostate cancer detection is ineffective, that it leads to unnecessary biopsies and that references to it should be removed from professional guidelines and policy statements. 

The Times continues:

Similarly, it is easy to demonstrate a statistical relationship between sharp rises in P.S.A. and cancer, but the correlation reveals no more information than is already available with a P.S.A. reading, a digital examination and a family history. It is irrelevant in deciding whether a biopsy is needed. 

Not really folks!  We had demonstrated on the basis of physiological, cellular and clinical data that one needs to track PSA over a long period. Looking at change is the concern. Chang and rate of change are frankly the same! I know the concept is quite difficult for reporters, it is after all High School physics at best, but alas we are talking about a reporter, not even a High School Teacher, you know those folks who could not even major in education and went into communications or journalism.

The final quote is:

But at this point, he is firmly against biopsies on the basis of velocity alone. “If your P.S.A. is in the normal range, you shouldn’t get a biopsy,” he said. “Changes or spikes in P.S.A. are not something to worry about if your P.S.A. is still normal.” 

But wait a moment, what if you have 2 first degree relatives with an aggressive  form of prostate cancer and who died in two years or less after diagnosis? Perhaps family history should play a part. Ya think!

Or is all of this a way to implement the comparative clinical effectiveness in the new health care law which means that by the time it is diagnosed your are dead, at least clinically!

Saturday, February 26, 2011

Obesity, Genes, and Just Eating Too Much

As we have argued again and again, overeating leads to obesity and obesity leads to Type 2 Diabetes. In the Globe and Mail there is an interesting article discussing the theory of the gene which putatively leads to being overweight, the elusive thrifty gene, or the gene which allowed certain people to live on few calories, but when eating a "normal" diet works against them. My usual response is nonsense, input less output equals net accumulation, a law of nature.

The article states:

A chronic condition, type 2 diabetes occurs when the body makes too little of the insulin it needs to metabolize glucose, its fuel source, or is unable to use the insulin properly. Obesity is a leading risk factor. Dr. Zinman says it was reasonable to search for the role that genes may have played....And former chief Harry Meekis, who helped to negotiate the research agreement, said at the time, “We didn't want to be known as the people with the third-highest rate of diabetes – we wanted to be the community that did something about it.”...International press coverage of the finding at Sandy Lake helped to cement the thrifty-gene theory in the public consciousness – and spark a backlash from academics such as Prof. Poudrier. She was completing her PhD at Queen's University when she read of the discovery, and it drew her deep into the underpinnings of the famous Neel theory.

Now it seems the search may be in vain and the basic law of nature as articulated above may apply even to the tribal people. The article continues:

...evidence to support the theory was bountiful after Dr. Neel proposed it – a mouse with a mutated gene that led to obesity and diabetes, research surveys showing famines could kill off more than a quarter of a population and, most compelling, the sudden spike of obesity and diabetes in aboriginal communities where none had existed before...Aberdeen's Prof. Speakman feels it's easy to understand why the hypothesis has been so highly regarded. “Because it's a great idea: ‘In times of famine, it's the lean ones who are gonna die.' It's a simple idea; it all makes sense.”...Except that it's wrong, he adds. There is no proof that fatter people survive famines better than thinner ones. In fact, says Prof. Speakman, a specialist in how animals use energy, throughout evolution, “most populations would never see a famine. There's one every 100 years or so, but in those times, people only lived 25 or 30 years.”

 The theory of the thrifty gene seems to be totally disproved. In fact the article clearly states:

Jeffrey Friedman, the renowned Rockefeller University scientist who discovered the appetite-suppressing hormone leptin, has been hunting the thrifty gene since the mid-1990s on the Pacific island of Kosrae.  Sixty years ago, its people were lean, living off the land and sea, but after the U.S. started shipping them soft drinks, Spam and processed foods, three-quarters of Kosrae's residents have become overweight, if not obese.

 Namely if one sits around all winter with a more than adequate supply of calorie rich food, carbohydrates or fats, one ends up getting fat and then one gets Type 2 Diabetes. It is always better for those politically correct to say it is a disease or there is some evil exogenous factor when in reality it is lack of will power, it is an individual's responsibility and not that of society.

Hopefully this tale will trickle down. It applies to American Natives, to the Canadian Natives, to Irish, Germans, and Chinese and Indians. Eat too much, you get fat, then your insulin supply is stressed and then Type 2 Diabetes, and finally all that follows. So just shut your mouth for a while perhaps.

However the trend still exists in the press to  find excuses or create victims for Type 2 Diabetes. Namely it is not the patients problem because they eat too much but it must be some gene or some evolutionary mechanism. The article in Science Centric is a typical example. They headline and continue with:

New research suggests that obesity and diabetes are a downside of human evolution

 As if the recent prediction that half of all Americans will have diabetes or pre-diabetes by the year 2020 isn't alarming enough, a new genetic discovery published online in the FASEB Journal ( provides a disturbing explanation as to why: we took an evolutionary 'wrong turn.' In the research report, scientists show that human evolution leading to the loss of function in a gene called 'CMAH' may make humans more prone to obesity and diabetes than other mammals.

 This is the classic example of creating a victim, an excuse for bad behavior.

Friday, February 25, 2011

PSA Velocity Issues

There has been an ongoing debate regarding PSA and PSA velocity. We have argued elsewhere that both PSA and PSA velocity should be measured over time in order to adequately reflect the cellular growth. We have presented this in detail in our recent draft of a book on Prostate Cancer Genomics.

In a recent article Journal of National Cancer Institute the authors reach the conclusion that PSA velocity has no merit. They state:

Results Incorporation of PSA velocity led to a very small increase in area under the curve from 0.702 to 0.709. Improvements in predictive accuracy were smaller for the endpoints of high-grade cancer (Gleason score of 7 or greater) and clinically significant cancer (Epstein criteria). Biopsying men with high PSA velocity but no other indication would lead to a large number of additional biopsies, with close to one in seven men being biopsied. PSA cut points with a comparable specificity to PSA velocity cut points had a higher sensitivity (23% vs 19%), particularly for high-grade (41% vs 25%) and clinically significant (32% vs 22%) disease. These findings were robust to the method of calculating PSA velocity. 

Conclusions We found no evidence to support the recommendation that men with high PSA velocity should be biopsied in the absence of other indications; this measure should not be included in practice guidelines. 

As reported in Eureka:
As expected, the authors found a statistical association between PSA velocity and biopsy outcome. But when they adjusted for other risk indicators, such as age, race, PSA levels, and digital rectal exam, there was virtually no association between PSA velocity and biopsy outcome.
"There was little evidence that PSA velocity adds an important level of predictive accuracy to either standard predictors or to PSA alone," they write. 

The authors also evaluated guidelines stating that men with a rapid rise in PSA should have a biopsy even if their PSA is low and there are no abnormal findings on a clinical exam. The vast majority of the men who fell into this category (about 80%) did not have cancer, suggesting that use of PSA velocity would lead to many unnecessary biopsies. PSA alone was a better predictor of biopsy outcome in these men than PSA velocity. 

"In other words," they write, "if a clinician feels that the current PSA thresholds are insufficiently sensitive, he or she would be better off identifying patients to biopsy by using low PSA thresholds than by adding PSA velocity as a criterion for biopsy."

The authors conclude that PSA velocity should not be included in prostate cancer screening guidelines.

In an accompanying editorial, Siu-Long Yao, M.D., and Grace Lu-Yao, Ph.D., of the Cancer Institute of New Jersey agree that the findings suggest that PSA velocity does not help doctors and patients decide what to do about screening results.

"PSA velocity measurements take time to acquire, and recognizing that such data add relatively little information may help prevent inappropriate postponement of follow-up in affected patients," they write. "Avoiding the wait to acquire subsequent PSA values may also help reduce some of the anxiety associated with testing." They go on to say that the results of this study serve to "remind us that the use of PSA as a screening tool still leaves much to be desired."

We would argue that there analysis has certain issue requiring further analysis:

1. PSA velocity is a long measurement subject to substantial errors due to the variability in PSA measurements. For example, if we measure PSA over 20 years we may go through a dozen or more different assays and they each have substantial variability between each other. Also the PSA has its own variability depending or many personal factors independent of cellular type and density.

2. To obtain a reasonable PSA velocity one needs at least ten years of data taken on about a yearly basis at least. Biases must be addressed by also knowing the types of assays employed.

3. The approach we have developed above takes into account the dynamics of both cellular growth and PSA density. We believe that this temporal factor must be included. However the approach lacks substantial clinical validation.

4. PSA and PSA velocity should always be used with many other factors. Yet a biopsy is often worthwhile especially if there is a family history. Yet despite biopsies we also know that there is a 20-30% probability that a cancer may be missed. Thus a benign biopsy is not indicative of a non cancerous prostate.

Clearly more must be done here but a summary dismissal is less than productive, in my opinion.

The underlying issue is that of understanding the genetic dynamics of PCa. Current work seems to address the issue of what genes are activated in a mass of PCa cells. However as we have argued before, the mass may be a mix of genetic wiring. The PCa stem cell may be the master controller and as such it is that cell which should be examined. The non stem cell daughters of the PCa CSC may contain other genetic profiles and thus performing an analysis on the collection may be deceptive. Moreover the dynamics of the genetic pathways must also be understood. Finally we have the issue of intercellular signaling. In short we still face a very complex issue and we should use the tools that are available. The most valuable statistic is still family history, albeit not 100% is is highly suggestive.

A New Awakening

The following are some principles with respect to a new view of what political thought should be focused on as we look towards the 2012 election.

The United States has gone through many changes in its very brief period of existence. As de Tocqueville had recognized in his journey through the very young country, America was built on a strong sense of individualism, but an individualism that engendered multiple associations of the people for a variety of purposes; charitable, economic, and political. There was a strong sense that anyone had the opportunity to take risks and follow an entrepreneurial spirit. It was this entrepreneurial individualism, unfettered by an excessive controlling central government, which fostered many of the innovative initiatives which launched the United States to a leadership position in the world.

The United States has always been concerned about its international relations, whether it was regarding the border countries of Mexico and Canada, or the management of its interests abroad and protection related thereto. The United States may have had its periods of isolationism but they have for the most part the country played a supportive and leading role in international relations. Many on the left bemoan that America has seen its best days and from here it is all downhill. These same people believe that the United States has a duty to transfer a tremendous amount of its people’s hard earned wealth to other less well-endowed countries so that there is a form of global equality. The thinking of many of these people is that growth has limits and that it is all a zero sum game.

We dispute this and we strongly believe that the United States is a vibrant, energetic and opportunity-rich country which has developed a strong an lasting democratic heritage based on the individual rights and not class rights. It is a country of opportunity and flexibility, one where the Government, for the most part, has stood as a sideline assistant to those creating the wealth for all, and the Government acts primarily as a protector of those rights.

Foreign Policy

There are three areas of  Foreign Policy which need substantial strengthening.

Affirm Stronger Relationships with China and Russia: China and Russia still remain strategic competitors to the long term security of the United States. Russia as the second strongest global power in nuclear weapons has continued to strengthened that position and in fact has renewed and expanded it. Despite the good wishes of the START Treaty, its burden is more on the United States while allowing Russia time and resources to renew their arsenal. The United States has tried to soften its position with Russia by weakening our relationships with our allies such as Poland and the Czech Republic. China is presenting an even stronger threat, both via military expansion and through economic dominance. As a result of the economic disasters in the United States, China has become emboldened and empowered to expand its sphere of influence in Asia as well as other areas such as Africa and South America, and has also expanded its military competence into a “blue water” Navy, a sophisticated space program, the third largest nuclear arsenal, missile systems, stealth aircraft, and the largest army in the world.

Recognize and Take Affirmative Actions Against Global Terrorism: Global Terrorism today consists of several well defined threats, especially Islamist Terrorism. This requires first and foremost a clear and open recognition of the existence of such Islamist Terrorism for what it is and not to hide behind the fa├žade of  the politically correct. Islamist Terrorism is a fundamental threat to the very core existence of the United States and its founding principles. First it must be recognized and accepted as such, not ignored and swept under the carpet of political correctness. Second, it must be fought in a manner consistent with that of the terrorists, it must be relentless and using the full panoply of resources on a global scale strengthened by an intelligence community second to none. Our current intelligence community has expanded exponentially but with resources and assets which cannot be called upon to perform adequately, they are resources consistent with a Government which seeks representative breath rather than excellence in execution.

Strengthen Relationships with Long Time Allies: In an attempt to mollify those who would not necessary be our allies we have unfortunately weakened out ties to our long standing allies such as Israel. By not recognizing the threats for what they are we have taken positions with our long term allies that have weakened both them and the United States. Whether it be Israel, South Korea, Japan, Columbia, Poland, the Czech Republic, and many other strong strategic allies, we have again tried to mollify those whom have taken positions against our interest and our nation. We must take a clear position in recognizing those who will stand with us against tyranny, either of nations or of groups, and strengthen that bond and not weaken it.

Economic Policy

Entrepreneurial Efforts are the heart of a successful US economy. That means we must have an economic system that respects the individual first, and allows that individual to take risks, create opportunities and can then execute the businesses in a manner free from excess control, taxation, and interference.

The recent Government Over-reaching in areas of Regulation, Control, and Management has stifled economic activity. The recent Health Care Bill is an example of the excess of over-reach on the part of the Government, mandating who must buy what and what they must buy, thus setting a level of cost burden on both the employee and the employer which makes competition difficult.

. The current deficit and debt situation of the United States is untenable. The use of a Fiscal Stimulus package whose results were a total failure and the Government takeover of automotive companies, banks, and the continued support of GSEs such as Fannie and Freddie have just burdened future taxpayers with colossal debt. The policies failed, as has been clearly seen in the monthly unemployment reports. The White House’s CEA Head had predicted month by month improvement which never materialized. Their predictions and projections were totally baseless. The United States must deal with its debts by first resisting the notion that more spending will make things better. They clearly do not, they have not and they will not. In addition it will be necessary to take difficult but reasonable stands on entitlements, both at the Federal and State levels, and changes will have to be made to them over reasonable periods.

Some Core Principles

Respect for the Individual: There is a trend to look at groups, minority and majority and fail to see the uniqueness of the individual and that our country was built upon individualism, the ability of a single person to set out and seek their fortune and success. Individualism means respect for all as equals, and that groups have meaning only as expression of those individuals in association with one another.

Support of the Free Market and elimination of “Too Big to Fail” :   The Free Market principle fundamentally has been a cornerstone of our country, it is a principle that each has a opportunity to succeed but with that comes the chance to fail. We learn from our failures. Having the Government intercede in a natural process of the market sustains inefficiencies and places the economic burden on those who did not proper as a result. It is essential that our Government not take taxpayer funds to sustain automotive unions, despite the fact that at the same time the Government liquidated legal bond holders, and not sustain state employees and unions, who now make almost twice what the hard working worker makes, and banks and investment houses, whose employees exceed by orders of magnitude what any person may hope to earn in their lifetime. If the large banks were likely to fail, then they should resolve their problems and the Government, and the FED, should not, must not, give money away that is not theirs, and burden future generations so that a few may prosper to the extreme.

Respect for Property as an extension of the Individual: Concomitant with respect for the Individual and Individualism is  respect for the individual’s property, not just their land and goods, but their wealth and person. The Government should not and must not encumber the assets and property of individuals with regulations and laws which reduce substantially its value to society as a whole.

Value in our Economy is Created by the Private Sector and not by Government Employees: The US is currently in a position where there are almost 2 workers in the private sector for every 1 worker in the Government or public sector. In addition the Government employees are paid twice that of the people in the private sector. Simply stated we have reached a tipping point where we must decide as a nation if we want a bloated public sector destroying the basic and core engine of our economy.

Evidence Based Medicine; Comparative Clinical Effectiveness

I just got a notice for the 18th edition of Harrison's. I still have the Fifth somewhere. I scanned through a section on EBM and they state:

In this era of EBM, it is tempting to think that all the difficult decisions practitioners face have been or soon will be solved and digested into practice guidelines and computerized reminders. 

However, EBM provides practitioners with an ideal rather than a finished set of tools with which to manage patients. The significant contribution of EBM has been to promote the development of more powerful and user friendly EBM tools that can be accessed by busy practitioners. This is an enormously important contribution that is slowly changing the way medicine is practiced. 

One of the repeated admonitions of EBM pioneers has been to replace reliance on the local “gray-haired expert” (who may be wrong but is rarely in doubt)  with a systematic search for and evaluation of the evidence. 

But EBM has not eliminated the need for subjective judgments. Each systematic review or clinical practice guideline presents the interpretation of “experts” whose biases remain largely invisible to the review’s consumers. 

Moreover, even with such evidence, it is always worth remembering that the response to therapy of the “average” patient  represented by the summary clinical trial outcomes may not be what can be expected for the patient sitting in front of a physician in the clinic or hospital.

This is a nice way to say that you better deal with EBM but also you better find a way to treat the individual and not the average or norm. Yes EBM was meant to get rid of the "gray hair" who knows everything from experience. Sometimes they do. The real problem is twofold; the system and the hand off. One is reminded of the 1970 file, The Hospital, with George C Scott, timely for me in 1971, where a large NY city hospital is falling apart. Things have not really changed much, just different protesters and nurses do not wear uniforms and the docs dress worse than the trash handlers, and appear worse.

But as to the above:

1. The system fails all too often on hand off, especially with Medicare patients. They go from hospital to nursing home to hospital. Typical case, MI and goes to hospital, put on 12 meds, goes to nursing home, hypotensive crisis since no one read BP and then back to hospital. Costs, astronomical, patient quality of care, zero, frequency, all the time. There is no follow through.

2. Patients are all different. There are rules of thumb but all too often medicine deals with what and how and the why is too difficult.

Thus the back handed compliment for EBM is well phrased. It is being mandated but it is built with well phrased fatal flaws. In earlier versions of Harrison's they flaws would have been directly articulated. In the post new health care kingdom one must be careful of words.

Obesity and Genes Again

On an almost daily basis one can find another study attempting to link obesity, especially morbid obesity, eg BMI > 30, with a purely genetic cause. The latest is an EU study by its agency CORDIS that states:

Around 7 in every 1000 morbidly obese people are missing a section of their DNA (deoxyribonucleic acid) that contains around 30 genes, say the results of an EU-funded project published in the journal Nature. The authors of the study, from Imperial College London in the UK and 10 other European research centres, suggest that the missing DNA may have a dramatic effect on the weight of the affected people.

Previous research studies have already shown several genetic variations, mostly single mutations in DNA, which can change the function of a gene, but the new research is the first to demonstrate that obesity can be caused by a rare genetic variation. The role of the missing genes is not yet known, but past studies suggest that they may be associated with delayed development, schizophrenia and autism. 

 It was a year ago when we wrote the monograph on Obesity and Type 2 Diabetes and its conclusions were correct then and even more so now. Namely as a result of the laws of nature, input less output equal net accumulation. Simply eat more than you burn and you get fat, genes not withstanding.

The discussion continues:

The researchers speculate that there may be other genetic deletions or mutations that increase the chance of obesity in certain people. Their aim is to use the latest research to develop tests to find the best way to treat morbidly obese people with mutated or missing DNA.

Commenting on the findings, Imperial College London's Professor Philippe Froguel said: 'Although the recent rise in obesity in the developed world is down to an unhealthy environment, with an abundance of unhealthy food and many people taking very little exercise, the difference in the way people respond to this environment is often genetic. 

How  is it genetic for people to willing eat more than they should. If it were illegal to have a BMI over 25 and one would be jailed than would that solve the problem? Why were the average BMI seventy years ago below 20! It is food, and lack of will power and not genes. The gene pool has not changed, much if at all. What has changed is that food in most western and advanced countries is cheap relative to incomes and it becomes a simple alternative to other "pleasures".

The writers end with:

The researchers now hope that that the results of the study may be used to identify genetic influences on other diseases such as type 2 diabetes.

Well as we had written before, there is a causality between the two. Obesity is a major causative agent of Type 2 Diabetes. Yes there are a few who have a Type 2 Diabetes and who are not obese, those are the ones we should be focusing our attention on, for that is a disease not a life style choice.

Eureka also presents some recent research on the same topic:

Researchers at the University of California, San Diego School of Medicine and Rady Children’s Hospital-San Diego say an evolutionary gene mutation that occurred in humans millions of years ago and our subsequent inability to produce a specific kind of sialic acid molecule appears to make people more vulnerable to developing type 2 diabetes, especially if they’re overweight...The findings are published in the Feb. 24 online edition of The FASEB Journal, a publication of the Federation of American Societies of Experimental Biology...Corresponding study author, Jane J. Kim, an assistant professor in the UCSD Department of Pediatrics, a member of the Pediatric Diabetes Research Center and Rady Children’s Hospital-San Diego, said the findings represent the first documented evidence linking the non-human sialic acid production to insulin and glucose metabolism problems associated with diabetes. 

 But we have argued in our monograph that based upon a plethora of prior research the obesity sets up an inflammatory response that appears to send out molecules binding to ligands that give rise to insulin suppression.

The authors continue:

Sialic acids are molecules found on the surfaces of all animal cells, where they act as vital contact points for interaction with other cells and with their surrounding environment. All mammals studied to date produce two types: N-acetylneuraminic acid (Neu5Ac) and N-glycolylneuraminic acid (Neu5Gc)...Humans are an exception. For reasons lost in the mists of evolution, a mutation in a gene called CMAH occurred about 2 to 3 million years ago, inactivating an enzyme in humans that catalyzes production of Neu5Gc by adding a single oxygen atom to Neu5Ac. ...They then developed a mouse model with a human-like defect in the CMAH gene...Kim’s group compared mice with a functional CMAH gene to mice with a human-like mutation in CMAH. Both groups of mice were fed a high-fat diet. Mice in both groups became obese and developed insulin resistance. However, only mice with the CMAH gene mutation experienced pancreatic beta cell failure. Pancreatic beta cells normally make and release insulin, a hormone that controls blood sugar level...Kim said the findings help refine understanding of why obese humans appear to be particularly vulnerable to type 2 diabetes, and also suggest that current animal models used to study diabetes may not accurately mirror the human condition. In clinical terms, she said further research to determine how sialic acid composition affects pancreatic beta cell function may reveal new strategies to preserve the cells, improve insulin production and prevent diabetes. 

 The key observations in the above are:

1. The mice had to get fat first.

2. Lacking the gene the fat mice got Type 2 Diabetes.

Although not confirmatory it is supporting that there is a causal relationship. Apparently without the gene the mice still had to get fat!

Thursday, February 24, 2011

Teaching Health Care Policy

There was a recent article in NEJM advocating the teaching of health care policy in medical school. The authors are apparently medical school students at Harvard for the begin by stating:

During our first year of medical school, we were fortunate to benefit from a comprehensive and mandatory 40-hour course on health policy. However, our conversations with peers at other medical schools made it clear that this was not a common experience. Given the importance of the subject, particularly in the context of the contentious and continuing debates over health care reform, we were curious to learn more about the current state of health policy education. Although many have brought attention to this field's increasing importance in medical education, surprisingly little is known about how exactly health policy is taught in medical schools.

 Policy, health care or otherwise, is quite complex. The problem is that in today's market almost anyone can discuss policy despite the fact that they know nothing. To discuss policy intelligently one must have the knowledge of:

1. The Field: In this case one must know and have experience in the medical field. It helps to be educated in the field and it helps to have some daily or at least periodic exposure at more than the patient level.

2. Financial Competence: This means that one understands in detail what costs are, what drives costs and revenue, how to model these elements to both analyze and predict current and future costs. This is not economics. Frankly economists are clueless here, their methods are of little if any use. One must understand the facts, the financial facts, as if one were running the business.

3. Systems Knowledge: The delivery of any product or service is not done in a vacuum. It is a system with linkages and one must have a systems knowledge and not look at this in isolation.
4. Regulatory Understanding: One cannot approach healthcare without understanding the law, Washington, the states, and a plethora of other political factors. One should have some experience in Washington, or some similar state venue and not just think the law if the law. The sausage factory of the Hill must be understood at a visceral level based upon proximate experience and involvement.

These are just four of the essential prerequisites for starting out on policy. Lacking these the student will just listen and accept. The problem is that policy is always done in an adversarial world with varying world views. The Progressives versus the Conservatives versus the Libertarians versus the Individualists. It is extremely naive to assume that you can "learn" policy devoid of that sense of adversarial involvement. You do not just listen to some biased professor, you must challenge, because in the real world that is what is done. One must ask why, not just what and how.

They conclude:

In order to provide comprehensive care for patients and effectively participate in health care reform, the medical community must be literate in health policy. Medical schools would never grant degrees without guaranteeing proficiency in the basic sciences and clinical skills. Similarly, health policy literacy should no longer be considered an ancillary skill, but rather a core competency of a 21st-century physician.

 Is it essential for physicians to understand health care policy? For some yes, for many, they just will never have the predilection to deal with the challenge. It is essential for physicians to participate, but given the practicing physicians already overloaded schedule, this may be just a bit too much.

Some Observations on the New Genomics for Cancer Screening


There has been a flurry recently about many entities trying to promote gene testing to ascertain cancer growth and staging. The classic one is the determining of whether a detected prostate cancer is indolent or not. A recent one describes a test by some Dana Farber scientists who are targeting certain genes. The article from Xconomy in Boston states:

...studied the roles of specific genes—including cyclin D1, SPP1, PTEN, and SMAD4—in both mouse models of prostate cancer and tissue samples from human patients with the disease, finding that the four genes were predictors of lethal tumors that are hardwired to spread to other organs in the body

Now there are several concerns that one may have about such a statement:

1. PTEN is lost after the cell has lost its ability to control the Akt pathway. Namely it is lost late in the game.

2. Cancer Stem Cell theory may apply to the prostate and thus one should be looking at stem cells only since that cell controls the entire process.

3. One should, nay must, understand the pathways involved. Not just the products.

4. Every cancer is most likely a little different. Some pathways are blocked and lost and some are altered.

5. The epigenetic factors of miRNA and methylation also add a dimension of complexity to the pathways as aberrant factors.

6. Sampling can be done or should be done on a cell by cell basis, not just on the gross tumor. By doing tumor sampling we get too much noise.

7. After understanding the pathways, we should examine the tumor cells and then from that do a system identification to determine the specific pathway changes and then from that ascertain the aggressiveness of the tumor.

In conclusion, we are perhaps 5-10 years too early to deliver reliable tests.

Sunday, February 20, 2011

The Sun: The Next Crisis?

The FT reports that a group of scientists are now predicting a $2 trillion cost to the next sun cycle and its crisis. You see the sun has an eleven year cycle of dormant versus active and we are slowly approaching the active cycle. Yet as any radio license holder know we always anticipate the active cycle since it enables long distance radio propagation. Yet despite the anticipation by amateur radio folks the FT states:

The sun is waking up from a long quiet spell. Last week it sent out the strongest flare for four years – and scientists are warning that earth should prepare for an intense electromagnetic storm that, in the worst case, could be a “global Katrina” costing the world economy $2,000bn. 

 If we were not terrified of global warming, cooling, population bombs, we now have sun spots. They continue:

It caused some radio communications problems and minor disruption of civil aviation as airlines routed flights away from the polar regions, said Dr Lubchenco...A more extreme storm can shut down communications satellites for many hours – or even cause permanent damage to their components. On the ground, the intense magnetic fluctuations can induce surges in power lines, leading to grid failures such as the one that blacked out the whole of Quebec in 1989.

 Frankly guys the ARRL and other radio Hams await the cycle, it allows for extensive long distance communications and as one who designed satellites for a living, Intelsat V for example, I find the fear that satellites will get messed up as a design flaw on the part of the designer! These things have been happening forever! No surprise.

One just wonders if these are just ploys to get me funding at a true time of financial concern.

Thursday, February 17, 2011

Visas and Quotas

Jeff Miron posted a blog regarding the paucity H1B visas. He states:

None of the standard concerns regarding crime, welfare uptake, or failure to assimilate (as exaggerated as these are in general) can plausibly apply to this group; instead, these potential immigrants bring much needed talent in science, engineering, and finance.  Why are we discouraging such immigration?

Having spent more than five years with my doctoral students at MIT, after their PhDs being funded by the US Government, and finally getting some H1Bs, the reason is simple, it is in my opinion the unions. They have allegedly lobbied so strongly in favor of limiting the visas so that they allegedly can ultimately try and unionize technical labor.

If you want to kill the United States there is just one thing you can do that will be certain, unionize the entrepreneur! What moron would ever do that? In my opinion and based upon my experience the  unions would and are allegedly doing so via their malignant limitations of H1B visas. Walk the halls of DC and you hear this talk all the time. Listen to the chuckles of the union bosses and you may be able to hear it as well. In a perverse way, in my opinion the unions and their alleged attacks on H1B Visas are performing acts more malignant to the survival of our country than any enemy one could ever think of. We educate Chinese and then send them back to China where they produce. They create value there at the costs here! Why, because in my view the unions want control.

This will just continue to get worse in my opinion as we see the current Administration progress.

Broadband Again

The NY Times had a piece today regarding the alleged lack of rural broadband. As usual the replies were almost all in favor of some magic hand delivering broadband to rural areas. As if there were no law of economics at play.

I was especially amazed at some alleged technical person who moved to Jaffrey, NH to be in the country and bemoaned the lack of broadband. The writer of the reply in Jaffrey states:

I live in southwestern New Hampshire. We built our home 6 years ago. Last month we finally got DSL. Before this we paid $70 a month for hughes net service which was terrible and incredibly weather dependent. Not having high speed internet made my job very difficult as I was a telecommuter for a long time. It also made the work of a non-profit I was involved with very hard. A small non-profit really benefits from on-line services since we don't have full time staff and office space. Cloud based technology is wonderful for organizations like this. But try managing your donor database on a slow dial up, or satellite connection. It's horrible.

 Now as anyone who has followed this Blog knows, I spent five years trying to get fiber to these towns. The problem, the town! Trying to get a franchise from a New Hampshire town i akin to pulling hen's teeth. Five years and zero franchise. Between town leaders who object to everything and Comcast and its ilk, you get no where. So to start this writer to the Times should get their facts straight. Take a look at our Jaffrey proposal from 2003, yes 2003, since we never managed a franchise. We battled in Hanover, Peterborough, and the list goes on. No luck.

Besides, where does this person think the money comes from, the current President, not really, it comes from taxing those who are already paying. One makes choices and those choices have benefits and costs. Pay the cost if you want it, and stop driving away those willing to solve your problem.

Tuesday, February 15, 2011

Imagine if Washington Just Closed for Business

Imagine for a brief moment that Washington just for a brief few moments closed its doors and went away, far away. What would happen. A thought experiment if you will, an out of body experience where we look at all the rest which comprises this great country except anything inside the 495 beltway just kind of disappears. What would really happen. Nothing personal, no politics intended, just one of those Einsteinan experiments.

Now the Hill recounts a news flash about the current President and the current House.

"If the president is presented with a bill that undermines critical priorities or national security through funding levels or restrictions, contains earmarks or curtails the drivers of long-term economic growth and job creation while continuing to burden future generations with deficits, the president will veto the bill," the statement said. 

How surprising! We have dramatically opposing views and then it continues:

The White House said the cuts in the GOP plan "will undermine our ability to out-educate, out-build, and out-innovate the rest of the world."

 Well frankly it is they collection of counter forces inside 495 that may most likely undermine all those good things. Entrepreneurs always find ways around, over, or through obstacles. I know, I have done it. In 20+ countries. And yes, oftentimes the US was the most difficult. The Czech Republic was great, Greece was impossible, Russia actually works if you know how, and the tales go on. But all too often we have this view based on some reality devoid of any true facts and experience. Than God they moved the capitol from New York to that swamp on the Potomac.

The Risks of Broadband: Be Careful What You Ask For

There is an article in a Wisconsin paper indicating that the state is returning money to the Feds on the Broadband handout. They read the fine print. I went through the same some six years ago, but I had a loan, and liability was limited, the grants, the handouts, have strings that may go back to the creation.

As the article states:

State officials are returning $23 million to the federal government, saying there were too many strings attached to stimulus money that was supposed to be for expanding high-speed Internet service in schools, libraries and government agencies.

The money was to have boosted broadband connections in 380 Wisconsin communities, including 385 libraries and 82 schools. It also could have been used to improve police, fire department and hospital communications in rural areas.

But state taxpayers would have been on the hook for the entire $23 million if the state could not meet the grant's precise requirements, Mike Huebsch, secretary of the state Department of Administration, said in a memo to school and library associations.

"This is simply not an acceptable risk," Huebsch wrote.

 This was a wise decision. Many of the recipients have no assets so the remedy is limited. But those with assets can see them all go away, not to mention finding themselves under the Feds examination for a long time. Many people saw this as a pure gift, but it is not really that, and some of the "winners" may eventually become big losers. I recall many a conversation looking at the details and seeing that under the covers was some nasty stuff.

Wisconsin was very smart to take this position. Others may have more hubris than brains.

The Future of the Bookstore

The Christian Science Monitor has a brief on the pending failure of Borders. The now classic big box book store has allegedly been smashed by E books. I wonder.

They state:

Borders is the third largest bookstore chain in the US, one of the original big box superstores that offered consumers thousands of books and music CDs in a single location....In addition to changing the way Americans shop for and read books, Amazon and e-books also undersell Borders’ traditional bricks-and-mortar offerings, a double-whammy to the original big box superstore that once led the market....One possible upside? The demise of superstore booksellers could revitalize the neighborhood bookstore.

Let's look a bit at this.

1. I do not read E books, mainly because I use books to create not to just enjoy. I have not read a novel in a decade at least, yet read at least 400-500 books, in pieces, per year. Many are electronic but I need a markable copy. Electronic books are essential, and unfortunately the old books scanned in by Google in pdf are not readable or searchable pdf, real pity. But many of what I have are, and when I place a work in progress on line it is searchable pdf.

2. I get most new books from Amazon, almost all, and frankly a lot more recently. This past year has been a big jump. Remember to pay your sales taxes. I do. But that means also that Amazon sells milk as well as books, and lawnmowers as well as magazines. What will that do to say Home Depot as well as Borders.

3. I get most old books from ABEBooks, a great source to find the oldies. There are of course others.

4. I visit the used book stores, you never know what you may find. It let's you see things you have not even thought of, I wrote a whole book on the early 7th century from stumbling on a paperback in a great bookstore in Henniker, NH.

5. Local bookstores with new books are often rare as hen's teeth, just look at Harvard Square, it was once filled with them. Yet a few remain, there is a good one in Princeton.

6. Academic books are a menace to the economy. Why in God's name do we need a new edition of an economics book as touted by my second favorite economist from Cambridge. What has changed, they are still ignorant of how the economy works, so why issue a new edition, use Keynes, at least you are at the source, and frankly not much has changed. There should be no need for 30 pound college and high school texts.

So what is the future of a Borders, probably not much, they were a deer in the head lights. Pity.

Monday, February 14, 2011

The Unemployed: Believe Me or Your Lying Eyes!

My favorite New Jersey economist has a posting regarding unemployment and he states that there really is no structural change, namely it is uniform. He states:

....that unemployment is about shifting workers out of construction. As Larry points out, the BLS provides data on the previous employment of the unemployed. There were 7.7 million more unemployed workers in 2010 than there were in 2007; of those extra 7.7 million, only 1.1 million had previously been employed in construction.

However as we have been showing for the past two years, using 2005 as a baseline we see a major shift in employment from manufacturing and construction and the private sector in general to government supported and government only employment.  Just look at our monthly analyses for the past two years plus. The issue is employment not unemployment.

Oh well, I am just an engineer by training, I get so messed up with facts!

College Costs: Supply and Demand a Monetray View

As many know the costs of college has been exploding beyond any other inflationary costs in our economy. I read a book recently entitled Why Does College Cost so Much, by Archibald and Feldman, two academic economists and I saw many reasons, not one described by the authors, but by the fact that the authors were clueless of why. The book is filled with poorly drawn Excel slides and for the most part the slides are comparing apples to oranges. In addition the authors present an argument of costs without ever discussing costs, a trick that would never work in the real world. Ah, academics and ones at a state school at that.

Now to the monetary policy issue. In today's NY Times they recount the proposal of the new Budget wherein Pell Grants should be cut back.

Pell grants for needy college students would be eliminated for summer classes, and graduate students would start accruing interest immediately on federal loans, though they would not have to pay until after they graduate; both changes are intended to help save $100 billion over 10 years to offset the costs of maintaining Pell grants for 9 million students, according to administration officials. 

Now frankly if all Government support were to be eliminated then schools would have to drop the price to meet the demand, a dramatically reduced demand. The Government has a mini monetary policy of pumping cash into secondary education which in effect is inflating its costs but in an insidious manner. There is almost $2 trillion in debt for schools and growing. That is above and beyond the Government debt. When we look at comparing country debts we should for the US include all debt on a pari passu basis and thus if we look to compare ourselves to Greece we must add  Federal, State and Student debts, thus seeing a total well in excess of $20 trillion! That is we have already outdone Greece in debt!

The college debt is a real problem since it is burdening future generations with costs which in no way reflect the value delivered. What good is a fine arts degree in today's world, unless you are from an independently wealth family and already have a secure future. Then again with all the Government loans flowing around, this just drives up the costs, with academic overhead and waste also exploding. Thus the Government should tighten the belt even more. That may help all around.

Saturday, February 12, 2011

Some Thoughts From Brandeis on Banks and Bankers

It is always worth a read from Brandeis;  Other People's Money:


The business of the investment banker must not be confused with that of the bond and stock broker. The two are often combined; but the functions are essentially different. 

The broker performs a very limited service. He has properly nothing to do with the original issue of securities, nor with their introduction into the market. He merely negotiates a purchase or sale as agent for another under specific orders. 

He exercises no discretion, except in the method of bringing buyer and seller together, or of executing orders. For his humble service he receives a moderate compensation, a commission, usually one-eighth of one per cent. (12 ½ cents for each $100) on the par value of the security sold. The investment banker also is a mere middleman. But he is a principal, not an agent. 

He is also a merchant in bonds and stocks. The compensation received for his part in the transaction is in many cases more accurately described as profit than as commission. So far as concerns new issues of government, state and municipal bonds, especially, he acts as merchant, buying and selling securities on his own behalf; buying commonly at wholesale from the maker and selling at retail to the investors; taking the merchant's risk and the merchant’s profits. 

On purchases of corporate securities the profits are often very large; but even a large profit may be entirely proper; for when the banker's services are needed and are properly performed, they are of great value. On purchases of government, state and municipal securities the profit is usually smaller; but even a very small profit cannot be justified, if unnecessary.


The banker's services include three distinct functions, and only three: 

First: Specifically as expert. The investment banker has the responsibility of the ordinary retailer to sell only that merchandise which is good of its kind. But his responsibility in this respect is unusually heavy, because he deals in an article on which a great majority of his customers are unable, themselves, to pass intelligent judgment without aid. The purchase by the investor of most corporate securities is little better than a gamble, where he fails to get the advice of some one who has investigated the security thoroughly as the banker should. For few investors have the time, the facilities, or the ability to investigate properly the value of corporate securities. 

Second: Specifically as distributor. The banker performs an all-important service in providing an outlet for securities. His connections enable him to reach possible buyers quickly. And good-will—that is, possession of the confidence of regular customers—enables him to effect sales where the maker of the security might utterly fail to find a market. 

Third: Specifically as jobber or retailer. The investment banker, like other merchants, carries his stock in trade until it can be marketed. In this he performs a service which is often of great value to the maker. Needed cash is obtained immediately, because the whole issue of securities can thus be disposed of by a single transaction. And even where there is not immediate payment, the knowledge that the money will be provided when needed is often of paramount importance. By carrying securities in stock, the banker performs a service also to investors, who are thereby enabled to buy securities at such times as they desire.
Whenever makers of securities or investors require all or any of these three services, the investment banker is needed, and payment of compensation to him is proper. Where there is no such need, the banker is clearly superfluous. And in respect to the original issue of many of our state and municipal bonds, and of some corporate securities, no such need exists.


It needs no banker experts in value to tell us that bonds of Massachusetts or New York, of Boston, Philadelphia or Baltimore and of scores of lesser American cities, are safe investments. The basic financial facts in regard to such bonds are a part of the common knowledge of many American investors; and, certainly, of most possible investors who reside in the particular state or city whose bonds are in question. 

Where the financial facts are not generally known, they are so simple, that they can be easily summarized and understood by any prospective investor without interpretation by an expert. Bankers often employ, before purchasing securities, their own accountants to verify the statements supplied by the makers of the security, and use these accountants' certificates as an aid in selling. States and municipalities, the makers of the securities, might for the same purpose employ independent public accountants of high reputation, who would give their certificates for use in marketing the securities. Investors could also be assured without banker-aid that the basic legal conditions are sound. Bankers, before purchasing an issue of securities, customarily obtain from their own counsel an opinion as to its legality, which investors are invited to examine. 

It would answer the same purpose, if states and municipalities should supplement the opinion of their legal representatives by that of independent counsel of recognized professional standing, who would certify to the legality of the issue.