Sunday, March 27, 2011

Boy, These Economists Really Get Mad!

I have been seeing that those who have something to say about daylilies tend to get almost to the extent of, well using nasty name calling, over what I perceive to be minor issues like who is right about how color in the flower is generated. I know that this may not be as important as Libya, or earthquakes, but to the nome who is throwing the mud it most likely is. They accuse others, using hidden identities, of such evils of "buying" degrees and of false data and the like. Really nasty stuff. Perhaps it is what one would expect from a set of folks who spend their days on the daylily patch. I tend to let loose with my squirrel tales but alas I have done real work as well in life. But all of that banter is rather petty at time compared to these economists.

They are out calling each other arsonists, yes arsonists! Now that may be a bit too heavy handed. There are times when I have my differences, differences based upon facts which hopefully we can discuss. For example I am against a Pigou tax, basically I have never seen a Government take a tax dollar and spend it twice on something not only useless but counter productive, and the net effect is a penalty on those creating value. Second I think that carbs should be taxed because they have a cost, and that would not be necessary if we had some Coase like litigation but again alas not.

But this vicious name calling, albeit not behind the Internet shield of pseudo names, sometimes goes a bit over the line. So this throwing of verbal cabbages back and forth does little for ever allowing confidence in any economist. Imagine is we had physicians doing this, wait we do sometimes, but not on a day by day basis. I do not see this with engineers, imagine a battle over the truss bridge versus a suspension bridge. Real exciting stuff!

So what is it really about economics? There was a piece a short while back where they claimed it a science. I do not think so. At least not based upon the actors. It seems like a debate club. With a large pile of mud to be slung back and forth.

Operation Cupcake

The NY Times recounts the lobbying efforts of AT&T to get the T Mobile deal in place. This was Operation Cupcake as they recall. Specifically the Times states:

IN this covetous town, the delicacies of the Georgetown Cupcake shop stand alone as symbols of wish fulfillment — heaping swirls of luscious confection atop rich, creamy pastry...Therefore: Operation Cupcake. As the Federal Communications Commission debated final rules last December on how Internet service providers should manage their traffic,  AT&T delivered 1,500 of these opulent desserts to the F.C.C.’s headquarters here. 

First, perhaps these "gifts" should not have been accepted by the FCC. Second, what if, God forbid, they were tainted in some manner and well just suppose, well one can consider. Third, and my  main concern, is think of all the calories. It is not as if the FCC folks get any real exercise, I have been there. Now add this load of say 600 kcal per cupcake and 1500 of these fat pills and we have almost 1 million kcal. Well at 3500 kcal per pound this would have added almost 300 pounds to the waist lines of the already over burdened waists of these Government workers. And we are then forced to pay for the sequellae resulting from this assault.

Why should AT&T be allowed to do this adding to an already exploding health care costs?

Saturday, March 26, 2011

End of an Era

The BBC has announced the cessation of its short wave service to Russia. They state:

The service was set up in 1946 and enjoyed an audience of millions of Soviet listeners during the Cold War....After the collapse of the USSR, it was rebroadcast on Russian radio stations, but these partnerships suffered as ties between Moscow and London deteriorated. ...On Friday, BBC's Mandarin Chinese, Caribbean and Azeri broadcasts on radio came to an end. Five language service at World Service have been shut down and a number of programmes in English are ending.

It is a passing moment in history. For those of us old enough to get our world news over a short wave radio, specifically the old Hallicrafters above, with the noise and signal fading in and out, it is a fond memory of what it was like before the Internet. Farewell old friend.

China's View on the Libyan War

China Daily states:

Military strikes against Libyan targets are still led by the United States, which Crow said has been drained "both materially and ideologically in terms of military intervention". But British Foreign Secretary William Hague has said he has "every expectation that there will be a NATO command of the entire operation, not just the no-fly zone and the arms embargo".Representatives of intervening countries and international organizations are expected to meet in London next week to map out the political direction for operations in Libya.

The article mentions the US only once and as a drained nation. Perhaps that view is more expansive than just in regard to Libya. If so who will buy the Bernake Bonds when they come out?

Thursday, March 24, 2011

The Budget Mess

As most folks in the US and elsewhere know the budget is a mess. If this were a normal company we would have replaced the management team a long time ago. Shareholders would not put up with this. The current problem is threefold:

1. Large unemployment reduces revenue

2. Large unemployment increases unemployment benefits

3. Massive increases in Government expenditures dwarf 1 and 2.

One need just look at the recent CBO report. Now we have a letter from a dozen or so former CEA heads. A real mix of republican and democrats including Romer who was at the heart of this mess. Strange to see here there since she most recently wanted us to blow through a few more trillion. They state: (see Politico)

The commission has proposed a mix of spending cuts and revenue increases. But even this requires  cuts in useful programs and entitlements, as well as tax increases for all but the most vulnerable. 

The commission’s specific proposals cover a wide range. It recommends cutting discretionary spending  substantially, relative to current projections. Everything is on the table, including security spending, which has grown rapidly in the past decade. 

It also urges significant tax reform. The key principle is to limit tax expenditures—tax breaks designed to encourage certain activities—and so broaden the tax base. It advocates using some of the resulting revenues for deficit reduction and some for lowering marginal tax rates, which can help encourage greater investment and economic growth.

 Now program must be cut. Take broadband to the moose. That is a waste of tens of billions. Then look at the other messes. Yes Medicare can be modified, namely increase the percent from 3% to 4% and reduce benefits pro rata to income, and increase the annual out of pocket and eliminate unnecessary treatments. Tax the hell out of carbs since you cannot tax people by the pound or BMI.

Social Security should be pegged at starting at say 10 years before average death, namely with a remaining rolling 10 year remaining life span for a retiree, yes women wait until later.

Reduce Corporate tax to attract business. Increase immigration of productive immigrants.

The list goes on! But stop the spending. They continue:

We know the measures to deal with the long-run deficit are politically difficult. The only way to accomplish them is for members of both parties to accept the political risks together. That is what the Republicans and Democrats on the commission who voted for the bipartisan proposal did.

It takes leadership, from the White House, not golf games!

Pane et Circum

Bread and circus, that is what technology development seems to have evolved into within certain quarters. Not a new chip company, a new wireless infrastructure, and new fiber network, nor even a new cancer cure, just new Apps. As one looks as the investments from venture companies one sees so many Apps which for the most part are time absorbers, bread and circus stuff. I wonder if there is a balance between selling entertainment and creating value. Just a thought.

The Information: Gleick

The Information by Gleick is a long and winding tale in which the author has focused upon the work of Claude Shannon as exemplar. Gleick is a superb writer who has the ability to engage the reader in his evolving tale about information, its meaning, its use and its transformation. There are however a few problems in this book, style not being one of them. What is more intriguing is why these problems arose. It is most likely that it was not Gleick, who as a good recorder of what he has been told, after all his is no original thinker in this field by any stretch of the imagination. He must have run across some “information machine” programmed to render into the historical record some views which contradict the reality.

The subtext here is the almost angelic and prophetic Claude Shannon and the misanthropic Norbert Wiener. Hero versus arrogant non-contributing interloper, that seems to be the theme. One wonders who told him this tale. Why pick on Wiener as he did and by so doing distort history, and in fact due potential harm to future generations who may read this and be motivated accordingly? Whenever I see such an ad hominem attack in a document I am always suspicious as to agenda and in this case due to my proximity to Wiener and truly wonder. It seems clear to me that perhaps Gleick may not have the technical competence nor the necessary mathematical intellect to have understood Wiener.

Now before I continue some short bona fides. I did my doctoral work at MIT in the area with Shannon and while he was still there in the mid-1960s. My doctoral pedigree is below going back to Gauss, so perhaps there is some credibility there. I spent several tours at Bell Labs, thus knowing its inner workings fairly well and when at NYNEX, now Verizon, I was head of R&D for a period, and was responsible as Chairman of the Research Committee of Bellcore for its Research efforts. Bellcore was the telephone side of Bell Labs after the split. In addition I knew Wiener, albeit at a distance, and my first book in 1969 built upon his work directly. I taught Information theory at MIT for a while and was thus in close proximity to the main players, although I was Wienerian rather than Shannonian.

Before continuing I think a brief not of how people are divided in mind sets is worthwhile. I spent time in France and there is a feeling that every Frenchman, or French woman equally as well, is either a Cartesian or Pascallian. They either start with doubting everything or have a strong set of initial beliefs. Either way they view the world in a dramatically different manner. In Gleick’s book he is a strong Shannonian. That seems less by intellectual or visceral choice but due to some pedagogical inculcation by some person hidden in the shadows of his book.

The author starts at the very beginning beatifying Shannon. Then he excuses in him the inability to solve certain problems, as on p 187, the fire control problem, which was actually being solved by those making electromechanical fire control systems. During WW II the fire control batteries were all a collection of electromechanical computers, brilliant devices made of gears and small synchro motors, all wired to model the tracking of dynamically moving aircraft. We depict such a device on my father’s ship, the DD-649 in the fall of 1944. This was coupled into the radar system and the 5” guns on deck (see my book on the DD-649 which discusses this in detail.

Thus Gleick’s comment regarding Shannon finding the problem too hard with the nonlinear equations was already being solved elsewhere. We will also discuss the solving by Wiener as well.

As to Shannon’s work it is without a doubt one of enduring prominence. The problem he addressed was simple, mainly because he phrased it in a manner in which it became simple. Namely if you were to send a message from point A to point B and I had a transmitter with a fixed level of power and a channel which added so much noise, what is the maximum rate, whatever that means, that I could ever achieve using the best possible technology, using that channel. 

Namely given a signal level S and a noise level N, what was the best I could do. It was the establishment of a goal. To solve that problem, to answer the question, he looked at the world in simple terms, say as a telegrapher, but used 0s and 1s, not dots and dashes. For any message he believed could be transformed into such a set of 0s and 1s. Thus the bit. And the theorem said that for a certain S and certain N that the best you could do were some maximum rate R in bits per second per unit bandwidth. That means bits per second per Hertz. We now had a goal. He never said how to get there only that there was what there was! Brilliant. This was the Channel Coding Theorem.

He also posed in the same paper the Source Coding Theorem which became a basis for coding theory. Namely that give a channel with a signal and noise you could find a code which took the message and using some form of redundancy be able to achieve great accuracy. 

This theorem drove many to find these codes. For example in cellular phones when I started deploying them twenty five years ago we had about a bit per second per hertz. Now with 4G LTE we have 7 or 8 bits per second per Hertz, which means we can carry 8 times more bits in the same bandwidth. The problem is we have now approached the Shannon Limit!

BSC, which said that if you sent a 1 then with probability p you received a 1 and with probability q=1-p you made an error. Using modulators, demodulators and knowing signal and noise levels one could somewhat readily calculate p. Thus the simple paradigm hid great complexities but it left one with a view of completeness.

Now the irony was that the details on finding the p and q was what Wiener and his students worked out. Depending on the signal and the type of noise on the channel one needed to get optimal transmitters and receivers. It was the Wiener-Hopf filters and receivers which allowed that. Gleick seems to be oblivious of that fact. One must see that there was a flow back and forth between many people at this time.

On p 222 Gleick shows the classic Shannon channel model. It is a shame he did not show the BSC model as well. The confusion is clear however in this model. Shannon used signal as the output of the transmitter, the modulator as it was later called, modem. Thus he was stuck with “signal” at that point and he then used information as the term which led to a signal. There is a difference. The signal can be an encoded concatenation of the information stream. Ironically the information stream may be some correlated set of bits, but frankly what it may carry in human meaning is irrelevant. Shannon did not are whether it was a mother’s day call or the  output of an EKG.

Now Gleick on p 233 comments on a review by Doob. Doob was a brilliant mathematician at the University of Illinois who published in 1953 one of the best books on stochastic processes. He was like Wiener a mathematician. Probability had become a branch of pure mathematics separate from say statistics. Doob as Gleick states says that the work is suggestive. 

Yet that was the brilliance of the Shannon piece. It was NOT a mathematical work, it was targeted at engineers, and in the late 1940s many engineers could grasp what Shannon wrote about. It did not contain the depth required of an academic journal. It was suggestive, and simplistic, but elegant. It taught the reader and it brought the reader along, never letting them get discouraged. The writing style above all else was its strongest point. The insight it has was of course without par for that field but it was deliberately targeted at engineers and not mathematicians. That also was a source of irritation.

On p 235 we start with Gleick’s attack on Wiener. He uses Pierce, one of the Bell Labs gang. Now I knew Pierce, took a semester seminar from him in late 1960s at MIT. His claim to fame was the traveling wave tube analysis, the TWT being a microwave amplifier. Now Bell Labs during this period was somewhat of an interesting place. 

Since 1913 with the Kingsborough decision by the Justice Department giving AT&T a monopoly, the management and most members of AT&T fought tooth and nail to not only keep the monopoly but to expand it in as many ways as possible. Oftentimes to the detriment of technology. Pierce in my opinion was at the forefront of that efforts, namely keeping Bell Labs out in front, and ensuring that it got the fullest share of credit. Thus one often sees that Bell Labs would go to extremes to take work from MIT and other places to gain control. 

There was a brutal fight over the Radiation Lab at MIT, which Bush established over the loud objections of AT&T. They wanted all electronics War work done at Bell Labs. The Government did not bend, Bush gave Bell Labs a piece but only a piece. Thus in short order the ship, aircraft and land radars came out of MIT Rad Lab to the chagrin of Bell Labs. Wiener had been a part of that battle and one wonders what the purpose of Pierce’s remark is. Gleick seems not to know of that issue.

If Gleick had studied Wiener a bit more before attacking him perhaps he would have understood this issue better. Pity. If only Gleick had read Masani’s fantastic book on Wiener.

On p 237 Gleick details some of the background on Wiener. One of the statements was that Wiener’s work was too ambitious for the real world. If he had read the Rad Lab book by Nichols and Phillips he would have seen that it was incorporated in the designs! In fact I used the same approach when I designed the Apollo start tracker navigation system actually using Nichols and Phillips and Wiener! It really helps at times to know something.

On p 239 he states that Cybernetics was Wiener’s first book. In fact he had several mathematical treatises before. Perhaps Gleick means his first popular book. On p 240 he states that the book was abstruse and ungainly. Frankly when I read it in the mid-1960s it was smooth as butter. Much of it is mathematical but that is what it was supposed to be. “ungainly” is a rather strange phrase. The author provides little if any basis for it. Perhaps Gleick cannot understand it but perhaps it was not meant for him.

Now on p 263 Gleick states that cybernetics faded. Indeed it changed, it morphed, it took upon itself the complexities that Wiener had set forth. O the same page Gleick makes a rather confusing remark. He states that what McLuhan called the medium Shannon called the channel. Wrong! As Peter Drucker said on seeing McLuhan present his work:

 "Did I hear you right," asked one of the professors in the audience, "that you think that printing influenced the courses that the university taught and the role of university all together." "No sir," said McLuhan, "it did not influence; printing determined both, indeed printing determined what henceforth was going to be considered knowledge."

What Drucker implies is that the medium in which we receive the presentation determines what is knowledge, and in effect truth. Thus we Homeric verse, spoken, we have printed words, we have television, we have Internet presentations. The medium, the holistic process of communicating, the totality not just the channel, is the medium, and it determines what “henceforth was going to be considered knowledge”. Thus in our world the use of the Internet as an overlay on books creates a new medium and thus established a new knowledge. This very Internet based review, picked up by hundreds, becomes in a small way knowledge.

Now in Chapter 10 with the genetic code Gleick has apparently not kept up with the current. Regrettably by the time he does it may have moved further on. Let us take cancer. Cancer is a random dynamic process based upon a distributed random state machine with sophisticated feedback in cells communicating with each other. For example, prostate cancer is a pathway disease. The figure below is a current understanding of some of these issues. 

It is not a single static code. It is the result of interactions of genes on RNA to proteins and the proteins then interfering with the DNA and its transcription. It is not a one way process as Gleick seems to allude to on p 299. Rather it is a Wienerian cybernetic machine, and one which communicates across many cells in a manner discussed by Alan Turing in his last paper (see my paper on the Turing issue and my book on Cancer Pathways).

Thus the reality is that Shannon made tremendous contributions. Information Theory became a branch of many fields and it continues to thrive in various niches of academia. In contrast Wiener viewed life as complex and messy, a concatenation of signals, noise, feedback and nonlinearities. In fact that is just what we must deal with. The division into a world of Shannonians and Wienerarians is a division into a world which is highly focused in solving the problem of getting more out of a channel and the world which became expansive and trying to understand a control our world fraught with random processes and nonlinearities. 

The work Wiener did on the first electronic arm, the Boston Arm, was a simple example of that step. He conceived of and pushed through in his own way that implementation of his cybernetic view. Did Wiener have personality issues? He was an MIT Professor, all one need do is walk down the halls. It is not Harvard folks! But that is the price one pays for brilliance I guess. Wiener was also a product of the old world way of doing things. He was a prodigy, and he recognized that being one was less of a sign of exceptionalism and more a burden to have borne as a child lacking a child hood. Gleick does Wiener a disservice. 

Wiener made a tremendous set of contributions to the world as we know it now. The Wiener process, white noise, the Ergodic Theorem, namely the time average is equal to the ensemble average, feedback control with noise, optimal signal processing using matched filters. He did this all without the PR machine of a Bell Labs. On the other hand Bell Labs has a few stumbles. The  fact that the CEO of ATT had to go to Canada to get a digital switch, the fact that ARPA had to independently develop what is now the Internet, the fact that almost all digital wireless standards were developed extra Bell Labs.

He was a brilliant man and his ideas permeated many areas. One need think only of the progression from Wiener to Kolmolgorov to Kalman. The development of nonlinear dynamic optimal estimation and control. This is at the heart of all of our current control systems. The beginning, Wiener.

Frankly I had hope Gleick would have done better. Shannon and Wiener were two sides of the same coin. They each contributed in their own way. I like Wiener, much of my thinking has been molded by his way in thinking. In fact if you want a brief on him, read my Squirrel Tale on Norbert.

Wednesday, March 23, 2011

150 Years of the Equations by Maxwell

Maxwell’s Equations celebrating 150 years.

Or let there be light!

From Nature:

Physicists can rejoice in a historical moment of great insight, can share in the expressions of that insight that only they can understand in any depth, can bond over surviving the didactic stress that many students experience in learning to apply them and, above all, can roam freely in deploying the power thus provided for understanding the world and, on occasion, changing it.

These communal consequences of a grand discovery might arise in any scientific discipline. But Maxwell’s equations are particularly characteristic of physics in the way in which they unified previously disparate laws and provided a foundational framework for vast industries — both academic and commercial.

Tuesday, March 22, 2011

Childhood Obesity, Type 2 Diabetes, and What to Say

Obesity in children is becoming pandemic and with obesity comes Type 2 Diabetes and its sequellae. I saw a post today about and Eagle Scout who apparently chose as his Scout project to develop a presentation on Diabetes but the person seems to have maintained what appears to be the morbid obesity that was the apparent cause of the Type 2 Diabetes. The problem is the excess fat in his cells will continue the inflammatory response and thus despite chemical attempts to increase insulin effectivness he will have the sequellae most likely.

However I suspect he should help himself first by shedding the weight. I felt that the article missed the opportunity to bring out the point about obesity and the nexus to Type 2 Diabetes. Just adding metformin is not a cure.  It is a crutch which will lead back to insulin and then oftentimes to end stage renal disease, heart problems, circulatory problems, neurological problems and the list continues.

Now the Scout Oath is:

On my honor I will do my best
To do my duty to God and my country
and to obey the Scout Law;
To help other people at all times;
To keep myself physically strong,
mentally awake, and morally straight.

As a Scout, father of an Eagle Scout and Grandfather to several Scouts,  part of the oath is being physically strong, namely respecting one's body. That means eating moderately and keeping the body in reasonable shape. Morbid Obesity is most likely not physically strong in the broadest sense.

My old Scout Troop, 1954, Staten Island, before Jersey Shore crowds came around, the diets and physical exercise made certain that morbid obesity and Type 2 Diabetes were unheard of. Perhaps they should stress the Scout Oath, especially for Eagle Scouts!

Khan Academy Great Idea

At one time there were libraries. I remember learning calculus in high school as a sophomore by reading a calculus book from the library. Only could get it two weeks at a time and hoped that no one else asked for it because I had only been able to get through 20 pages a day.

But Khan Academy is a great idea. Not that all that he does is "easy" but most is exceptional. I also remember taking Continental Classroom in High School, on at 6 AM every day, and I think I missed the definition of a mole. Well, if you missed that you got lost and there was no recording the video, it was black and white on a 12" screen, and you always were trying to catch up with that damn mole, later in medicine I found out what they thought it was but it kept running around again and again. Now for Khan, great talk:

Sunday, March 20, 2011

Consolidation of Wireless

In 2002 in a brief return to the US before going and selling my company, I was asked by Eli Noam to present a paper on the evolution of wireless.  Simply stated I predicted three major trends:

1. Data explosion

2. Loss of copper lines

3. Massive consolidation in wireless, with at most three carriers, likely just 2!

Now with the announcement of the acquisition of T Mobile by ATT the final resolution of my predictions is coming to fruition. Not a bad guess, I also said ten years.

Now the real problem is for Verizon and Vodafone. What are they to do with that mill stone. Tricky problem and they just keep kicking the can down the road, perhaps until Seidenberg retires soon.

Oh, yes, the next explosion is obvious, video on Internet, but I mean video conferencing. Not just downloads, I am talking about the explosion of real time video. Let's see what happens.

One of the Dumbest Things I have Ever Read

Let me preface my remarks with a few points to establish my bona fides. First I knew, albeit as a student, Shannon and Wiener at MIT. Second, I taught Information Theory at MIT. Third my first book, Stochastic Systems and State Estimation written in the summer of 1969 was a direct result of the influence of Wiener. Fourth, I really like Wiener as one could surmise from one of my Squirrel Tales.

First, this is NOT a review of Gleick's, The Information, which I have yet to read. It is a review of the review in the NY Times. Second this is NOT in any way a critique of what Shannon did. His was in many ways a singular accomplishment.

The strength of what Shannon did was two fold. First, its very simplicity. It was a simple and clearly written paper which was elegant in the way he approached what was then a highly complex problem. I remember reading it in 1963 or 1964. It was like reading a daily news article, it flowed, it enlightened, and it explained. That in many ways was its strongest contribution since it was readily accessible to so many. Second was the elegance of his proof, showing bounds not necessarily specific answers, but showing what could be done. He did this using simple and well understood concepts. Thus the simplicity, elegance, and the ability to set achievable goals was the essence of his contributions. Shannon then had many brilliant academics follow upon his ideas, people like Fano, Elias, Gallager. The work of those people led to 4G wireless and LTE and the like. Built of course on silicon.

Now to the review in the NY Times. I suspect the reviewer is clueless as regards to facts based on his comments. For he states:

But unlike the equally voguish discipline of cybernetics proposed that same year by Norbert Weiner, which left little behind it but a useful prefix, information theory wound up reshaping fields from economics to philosophy, and heralded a dramatic rethinking of biology and physics. 

First, at least spell Wiener's name correctly! When you say Wiener you pronounce the second vowel, unless of course you do not want to be called what you may be known for as I suspect some politicians have done. But secondly it would have been nice to have to have a reviewer who knew and understood a modicum of Wiener, his work and contributions. I guess the reviewer just wanted to sound smart. Too bad he fell short of that.

You see, Wiener was a real mathematician. He did real mathematics and was well known for that. His view of the world, with feedback, is the very essence of how we all see the world today. The Russians understood that. Wiener even influenced the Chinese when he taught at Tsing Hua University in the 1930s. Wiener understood the world as uncertain, a world with hidden instabilities, and he did a tremendous amount to influence future generations as regards to a holistic view of nature. If only the banking world understood Wiener they would have been more concerned as to the instabilities hidden in its bowels.

It was Wiener who did the reshaping not Shannon. Shannon was highly gifted but he was focused on bits and their transmission. His paper is brilliant for its simple insight. The paper is truly an example of speaking to the masses. Wiener had trouble doing that. He was thinking too much. It is hard to read Wiener at time because behind his persona is the mind of a pure mathematician.

The world of Wiener is the world of cellular pathways, stochastic feedback loops which control cell growth. Shannon with all due respect is no where to be found, except perhaps in his doctoral thesis on genetics which frankly falls far from the mark.

Shannon was also part of the Bell Labs/ATT Public Relations machine. Unlike MIT, ATT used the press and managed to glorify its accomplishments and hide its disasters. Yet today Bell Labs Holmdel is an empty facade, Murray Hill, just down the road from me, is Alcatel, filled with more accountants than engineers or scientists. In contrast, it was Wiener who invented the first bio feedback arm to replace a lost limb using the very theories that the author seems to dismiss, and it was Wiener who developed the radar tracking systems which shot down enemy aircraft in WW II from Navy ships thus saving my father's life, and it was Wiener who inspired my comments to Professors of Finance that they had better watch out for those instabilities, and it was Wiener who discovered the very feedback systems in our neural networks which are now applied to modeling and controlling intracellular pathways in cancer!.

"Left little behind...", well to the author of the review you Sir are in my opinion totally clueless. It would help Sir to know something of Wiener. He did not have the PR machine of a Shannon or a Shockley.  In fact they have equal standing. But alas, this is from a faculty member in Information, most likely called Library Science a decade or so ago, and at Berkeley. Thus why should I even wonder!

One further nit. The reviewer states:

In the 1950s, Francis Crick, the co-­discoverer of the structure of DNA, was still putting “information” in quotation marks when describing how one protein copied a sequence of nucleic acids from another. But molecular biologists were soon speaking of information, not to mention codes, libraries, alphabets and transcription, without any sense of metaphor. In Gleick’s words, “Genes themselves are made of bits.”

The view of genes as bits you miss the point. Genes are stochastic dynamic variables in complex time varying state machines. The interact internally and externally. It was Alan Turing in his last paper describing the pattern generation in Zebras that established the essence of this complex automaton. This was a Wiener world view not a Shannon world view.  This in no way delimits what Shannon did, his result was elegant, it was simple, and it was useful. Wiener's result was hard, complex, and reflective of nature.

The more I read this review the more disappointed I am in the NY Times for having selected this reviewer. Gleick is an excellent science writer, not that he gets everything correct or understands every nuance, but he strikes a chord. This reviewer in my opinion just was not even in the same galaxy!

In contrast there was a review in the Wall Street Journal. Not a word about Wiener, perhaps the writer just wrote aboiut what he knew, and he apparently knew Shannon. He states:

My two-page profile in Scientific American didn't come close to doing justice to Shannon, who died in 2001. After all, this playful polymath—whose work bridged electrical engineering, mathematics, computer science, physics and even philosophical logic—was among our era's most influential thinkers. His work, especially his 1948 paper "The Mathematical Theory of Communication," helped spawn today's digital devices and communications technologies. Information theory has also inspired a radical new scientific worldview, which proposes that reality is composed not of matter but of bits of information.

In the Shannon paper he introduces the simple model, paradigm in Kuhn's world. It contains:

By a communication system we will mean a system of the type indicated schematically...  It consists of essentially five parts:

1. An information source which produces a message or sequence of messages to be communicated  to the receiving terminal. The message may be of various types: (a) A sequence of letters as in a  telegraph t ) as in radio or telephony; (c) A function oftime and other variables as in black and  white television ..

2. A transmitter which operates on the message in some way to produce a signal suitable for transmission over the channel.  In telephony this operation consists merely of changing sound  pressure  into a proportional electrical current. ....

3. The channel is merely the medium used to transmit the signal from transmitter to receiver. It  may be a pair of wires, a coaxial cable, a band of radio frequencies, a beam of light, etc.

4. The receiver ordinarily performs the inverse operation of that done by the transmitter,
reconstructing the message from the signal.

5. The destination is the person (or thing) for whom the message is intended.

These five simple elements were than built upon. This was part of the Shannon elegance. The simplicity was the binary symmetric channel model, the BSC shown below:

This simple model of how one sends a 0 or a 1 across a highly complex communications channel such as a radio network, suddenly drew apart the curtain for many. It was simple and it allowed great steps to be made by many great minds. All the details were contained in the p, the probability that if you sent a one you got a one. Then he put messages together in his information construct and strings of correlated bits. It all became obvious. That was Shannon. Wiener on the other hand was the deep thinker and it took a lot of hard work to understand much of what he did. The Wiener world looked like:

The Wiener world had feedback, random processes and complex systems. The Wiener world had noise and he worked hard to define it in excruciating mathematical detail, thus the Wiener process. Shannon became the recipient of that detail, the simplicity was for him to build upon. Wiener was struggling with complexity, Shannon had found simplicity.

This WSJ review was balanced and on target, for there was no reason to attack Wiener. In fact he did a reasonably good job describing Shannon.

Finally there are a few good works on Wiener and the best is by one of his associates and a world respected mathematician, Masani. It is worth a read. There is a popular author biography by Conway which gets into some of the psycho babble stuff but it is also useful.

Saturday, March 19, 2011

Economics and Science and Engineering

I read a post today by one of those economist fellows, you know one of those folks who argue with each other, then throw around a lot of equations to show how smart they are, and in the end have no clue about what is happening.

Now this fellow today said:

Some people distinguish between soft sciences like economics, and hard sciences like physics.  I don’t understand that distinction.  Are physicists very good at predict earthquakes, tornadoes, heat waves, etc?  Obviously not.  Some people claim that those events belong in geology or meteorology, but not physics.  My response is that physicists claim that their models explain those phenomena, so we have just as much right to expect them to predict tsunamis as we have to ask economists to predict recessions.  Indeed even more of a right, as economics has a sort of Heisenberg uncertainty principle, which says that (demand-side) recessions should not occur if they are expected. 

Economics can predict some things very well and other things not so well.  The more complex the system, the less well we predict–just like physics.  I predict that bond prices will be unusually volatile between 8:30 and 8:35am on the first Friday of each month over the next few years.  But our most useful predictions are conditional forecasts.

 Now frankly I have no idea what he is saying. You see he may very well not have any idea himself, most of these fellows seem to be that way. Science is the study of natural phenomenon and the building of models to be able to consistently predict those phenomenon.

Now we do not have all the answers. Like earth quakes, and that global warming climate change thing that everyone has been talking about. But say nuclear reactions, we have them down pretty good, those electromagnetic wave things, you know the stuff we use in those ipod thing a ma jigs, well thanks to Maxwell we have that stuff, and that fluid flow stuff, you know pipes and all, again we have that stuff down. Now DNA and the genetics stuff, well we have some spotty areas, in fact we are still learning. And that cancer thing, really tough thing that cancer, but we seem to be making progress. There is no little fellow at Princeton writing nasty thinks in the Times every few hours in that area. They are too busy doing real stuff.

So is there a real science, you betcha folks, especially if you know what you are talking about.

Now is economics a science. No way. It is a political science discussion club hidden behind a mass of useless equations. You see, I wrote many of those equations when they first came out and then used them carefully in real engineering stuff, and it worked, sent men to the moon, really did.

Now as to the fellow's claim that economics can predict bond prices, well so can any damn fool who sits on his behind and watches every day. That is not science, it is people watching. Now finance is different, those folks actually make money, if they don't the get fired. Ever hear of a fired economist? No they become government employees or professor type fellas.

So when I read this it is really wishful thinking. If elephants had wings, well I still think the would not fly!

Now, having said all of the above, it is essential to remark that this seems to apply to American economists only. The Canadians do not seem to expel this hubris, the Europeans seem less. Economists are in many ways like ships boiler room operators. They know where some knobs are and which way to turn them. They have seen what happened in past ventures and respond by turning the knobs one way or another. Science, no, technique, yes.

You see there is technique, knowing what can be done, what may have worked in the past, and giving it the good old college try. That is not science, you are flying blind oftentimes, but many a ship's engine officer, or chief, has gotten the vessel there safely. They do not want to view themselves as Einstein however.

Friday, March 18, 2011

Backscatter and Radiation Again

There are some recent papers which attempt to justify the use of backscatter. Those reading this blog may have access to our White Paper regarding the putative risks. The recent results states:

An individual’s risk of dying from cancer from such an exposure is estimated to be vanishingly small -- about one in 10 million for a trip involving two screening scans, writes David J. Brenner, PhD, DSc, director of the Center for Radiological Research at Columbia University Medical Center.

According to the FDA, which regulates X-ray devices, “There is no need to limit the number of individuals screened or, in most cases, the number of screenings an individual can have in a year.”
But Brenner believes the picture changes when you look at it from a larger, public health perspective, in which a billion travelers are scanned in the U.S. each year.

“In the present context, if a billion X-ray backscatter scans were performed each year,” writes Brenner, “one might anticipate 100 cancers each year resulting from this activity.” Brenner also points to a heightened risk of cancer among children, which he says is five to 10 times higher than the risk to middle-age adults. Flight personnel, who pass through scanners hundreds of times each year, could also be at greater risk than the average traveler.

"Super frequent fliers or airline personnel, who might go through the machine several hundred times each year, might wish to opt for pat-downs,” Brenner says in a news release. “The more scans you have, the more your risks may go up -- but the individual risks are always going to be very, very small."

 Our argument was different from that of the typical radiologist or physicist. They look at total body radiation and his is volume dependent. Our argument is the superficial cells and the pathways changes that result from the radiation. We argue that melanocytes in melanoma sensitive individuals can be significantly increased as a result of this backscatter approach. The metrics used are frankly old metrics and do not take into account what we now know about cancer and pathway dynamics.

A Book Review

I have decided to review the book, Endgame, in this blog rather than on Amazon where I put most of my reviews. I do this for the reason that it appears, from some experience, that certain authors and companies seem to have “followers”, who, upon seeing a negative review, bombard the review with “not helpful” and thus the review gets crammed down. I feel a review should stand on its own and should be identified by its author and if there are any comments then feel free to send them.

Furthermore this review is solely my personal opinion since I have never met the author but have scanned his newsletters from time to time. In my opinion and in many ways this book seems to appear as a cut and paste of his newsletters, but I have not gone back to the newsletter to validate that conclusion.

There are three areas of comment in this review; content, namely what he says when he says something; style, how he writes and presents his material, and presentation, namely how the material is visually presented.


The author or authors. at time I am confused as to one or the other, state that the book is divided into two sections. See p 8. The first they contend is to explain the situation, namely the economic situation. It appears to me that they are trying to give a snapshot of where the economy is at the time of the writing of the book, as so many others have tried to do. No looking back, just looking at the specific point in time. The second half allegedly is a country by country review of some major countries and their chances going forward. Part Three seems to be basically a set of suggestions. On the one hand if there is deflation and on the other hand if there is inflation. They argue that we will first have deflation and then inflation, not spelling out when or really how to determine when each occurs. Thus although their recommendations for each state are common sense they are contrary for the other state. Their advice in my opinion is buy low and sell high without telling you how to determine what is low and what is high, just that now we have a mess.

On p 16 he uses an interesting chart which shows total US debt to GDP. Now the real issue is Government debt since personal and corporate debt have grown but a main reason was the expansion of credit. Yes there was also the explosion of real estate debt but that was an added 10-15%, not the dominant portion. Clearly if debt was personal and short term then it would have put more cash in the economy via increased velocity of money which he later shows we did not have. This may be a terrifying chart but the real terror is Government debt. What is not included here is the unfunded liabilities such as pensions. That is in many ways the real hidden explosion.

On p 20 he shows debt by segment. On the Fig 1.5 he shows what appears to be corporate debt. This reflects different capital structures. The question is what is the assets under the debt. Who cares about corporate debt if the assets pay it back. That is the question. Personal debt also has a similar effect. More consumer debt means more expenditures means greater GDP. So in a sense for GDP growth it is good. The question is what is the quality of that debt. It clearly has not driven inflation. However it has resulted in a collapse of real estate. The real problem is Government debt, Federal and State!

On p 47 he starts with the discussion of GDP and its definition. Now on p 49 he has the equation:


There is a problem here, at least two specifically. First the equation may not be true. If you get more people then depending on the people you may increase, decrease or have no change in the GDP. In fact if you have many uneducated and marginally employable types then the social and governmental costs of maintaining them may exceed any contribution they make to the GDP. He alludes to that later but this equation has problems. As to the productivity factor, one can imagine that increased productivity puts people out of work, thus decreasing buying power and thus reducing GDP.

The chart on p 50 is critical. It is well placed and makes the argument that only start up companies create jobs, specifically entrepreneurial start-ups. Large old-line companies actually shed jobs. This fact is totally missed by the current Administration. But alas if you have never created wealth you may never have a clue.

On p 56 he presents a table which is a classic example of the excesses of spread sheets. Namely he shows that if your growth in Debt exceeds growth in GDP you get in trouble. The question is why not just say that, the table contains no more value than that statement. For those with some expertise it is obvious, for those with none it is incomprehensible.

On p 57 he speaks to Rogoff and Reinhart, the now classic study of financial collapses over the past few centuries. Yes, there is a slippery slope, and as I noted a few decades ago regarding Black - Scholes, there are instabilities when you assume linear models, and the real world does have those tipping points. Where they are is still a mystery, and in fact they are often driven by human perception rather than fact.

On p 60 he makes an interesting argument which may be extended. The paradox of thrift may no longer apply as stated. Back in the 1930s people had limited or unknown balance sheets. Today with 401Ks it is the balance sheet that means even more than the income statement. People now think they can work around a blip on an income statement but when the balance sheet collapses in front of their eyes there is abject terror. Thus the collapse of housing and the stock market causes a crisis.

Now on p 91 and throughout Chapter 5 it appears to be a condensed version of Reinhart and Rogoff. Good quotes from other people but what is he trying to do, show us he read it? Then on p 94 and throughout the chapter we see his interview of the authors and we see his name again and again. Does this make things better? It does show the reader that he has personally interviewed them. Yet there is this stylistic dissonance which goes from text, to quotes to interviews to letters. It just makes for a very rough ride. Again in Chapter 6 we have the same extensive references, lengthy and detailed.

On p 113 he does make a critical point that the current Administration fails to grasp. Namely that public debt crowds out productive private investment.

On pp 142-144 he has a reasonably good introduction to the velocity of money issue. However with the explosion of personal debt he discussed early on one should have expected on p 145a substantial increase in velocity in a buildup to the collapse but it does not appear to be so. Also one should compare the Bloomberg numbers to the St Louis FED numbers for this variable.

On pp 146-147 he goes a bit astray in my opinion. Clearly in Fig 7.6 he shows M2 and the Monetary Base. We have written extensively on this as it was happening. This is the FED pumping money into banking and most likely we will see a substantial reverse. They are uncoupled and the MB is an artifact of the FED and in my opinion not something of current concern.

I read through the chapters on countries and they stand by themselves.

On pp 294-295 the author make a conclusion. Namely, things will deflate then inflate. Before they deflate do A and before they begin to inflate get out of A and do Z! Great, but how do I know when? Buy low and sell high, we all know that but when is low and when is high. What are the telltale signs?


The author has a style which is best described as a combination of writing as he speaks and an insistence of telling the reader about all the important people he knows.

The author has the annoying habit of using euphemisms and aphorisms in all the wrong places, namely anywhere he so desires.

There appear to be two authors. Yet they have the annoying habit of referring to “John” repeatedly to make some point. Often the point is self-aggrandizing in my opinion. The interjections begin on p 1.

On p 33 he begins a letter to his children. Frankly this is out of pace. It breaks the style of presentation. We all know he has many children and is a good parent. As a reader we want not what he told his children but what he will tell the reader. This continues for 11 pages until p 44. The recommendation: “work hard, save, watch your spending, and think if your job is the right one if we have another recession” Frankly this is the advice from any reasonable parent to a child if you want to seek safety. On the other hand one could say take risks, go where others have not, think big, and find others to follow you. Namely as an entrepreneur, you create true value and wealth, not just transfer it from others for advice.

On p 59 he has a chart again without axes titles but now with a term “Ratio”. Well ratio of what?

On pp 62-63 he has another of his long quotes. This becomes annoying for a book of this type. He is not writing a scientific treatise where primary results are critical but his analysis of the situation and thus one should see his views not the cut and paste of others. We will see this many times again.

On p 68-69 he discusses the increasing of taxes on fuel and the assumption that the tax will be used to fix infrastructure. Nice idea but give Congress even a penny and they will attach it to some special project, an ear mark. I have seen this Pigou type argument again and again, and it never holds water. Congress is the fault.

On p 73 is one of his many aphorisms. “Trees tend to grow, and economies do, too.” I think this means something. Like “Delay is the deadliest form of denial” or “Prior planning prevents poor performance” but my aphorisms in my opinion make some modicum of connective sense. In the ones he uses they all seem somewhat out of context or even non sequiturs.

There is a paucity of source referencing for many of the charts.


The book appears to be printed on newspaper print. That is a Wiley problem but the author could most likely have had some input to stop it. As such it appears as yesterday’s newsprint and one knows what that is used form

The graphs in my opinion are for the most part unusable. They were most likely done in color and they are black and white and one finds it difficult to read them. Also there are no vertical axes labels so one is always trying to figure which curve is what. Also there are abbreviations for what is on the curve and you have to figure out what he is talking about. Finally the sources for the graphs is totally missing. In summary it appears as if he just took some graphs he had lying around and connected them with words.

On p 19 we have a graph of debt and 10 year yield. The colors are missing and the axes are unlabeled. This problem is pandemic throughout the text and only get worse. The authors seem to have just thrown charts in from the newsletters and this what you get on your computer you have gotten in black and white here.

P 20 is an even worse example where they show the components of debt. This is a critical chart but it fails in black and white.

On pp 288-289 the charts appear to me to be unreadable, they appear to me as if they were copied from a Bloomberg terminal. If the author has a point to make then careful presentations are essential. If we just want to show what appears to be a Bloomberg terminal then fine but so what?

Throughout there should be a stipulation for the basis for each of his assertions, whenever he makes them.

Throughout, this book appears to be a cut and past of "talks" rather than a well though out presentation. In my reading of it it provided no enlightenment but rather just added to the pile of confusion. The author is neither an economist, for that I am glad, nor a financial expert. Thus I wonder who the target market is for the book as well.

Finally there are many times when the author(s) make(s) an assertion that I have asked what basis he has for that assertion. Perhaps it is my academic training as well as legal experience which forces that response. After all this is a general public book not apparently directed at the professional audience.

More on Cancer Stem Cells

Wang and Shen have written a quite useful review of the cancer stem cell thesis for prostate cancer. There is no definitive conclusion but the review covers a wide path through what has been accomplished to date.

Recall as we have written before the cancer stem cell (CSC) model, and it is a model, hypothesizes that there are certain core cells which control the malignant growth of other cells and that the other cancerous type cells do not in and of themselves have the ability to continue to grow. In fact it could be concluded, although not part of the current theory, that removal of a CSC from a tumor, say the only CSC, would result in the apoptosis of the remaining cells. Namely a remission.

In contrast to the CSC model we have the clonal model which says that the cells have progressed through a set of pathway modifications that have resulted in a single cell which takes off and multiples and that the progeny have identical genetic makeup or further genetically modified makeup but all and equally malignant.

These are two fundamentally different views of cancer. One could also state that recent work with melanoma as we have discussed also posit that the CSC “communicates” to progeny to have them multiply and that arguably the loss of the CSC

There is a great deal of difficulty in identifying the CSC, usually attempting to do so via surface markers such as CD44 and the like.

Wang and Shen then discuss the controversy regarding the CSC concept. They state:

Much of the confusion in the literature arises through inconsistencies in nomenclature within the field. In particular, due to the wide use of xenotransplantation as a functional assay for CSCs, transformed cells that can initiate tumor formation in this assay are often referred to as CSCs in the literature. However, a tumor initiating cell (TIC) represents a different concept from that of a CSC, as TICs unquestionably exist within tumors and their identification does not by itself imply a hierarchical organization of a tumor.

Indeed, the majority of cells within a tumor could potentially possess TIC properties and nonetheless follow a clonal evolution model. Consequently, it is important to distinguish CSCs that have been strictly defined by their position and function within a lineage hierarchy in vivo from CSCs that have been identified as rare TICs in transplantation studies.

A similar confusion arises with respect to the cell of origin for cancer, which corresponds to a normal tissue cell that is the target for the initiating events of tumorigenesis. In principle, a normal adult stem cell could be a logical cell of origin for cancer, as it would retain the ability to self-renew and generate a hierarchy of differentiated lineages within a tumor. However, it is also possible that a cell of origin could correspond to a downstream progenitor cell or conceivably even a terminally differentiated cell that acquires stem cell properties during oncogenic transformation.

Our argument has been that the CSC may most likely exist and that it has undergone certain pathway changes and that as a result it may influence the growth of not identically genetically changed cells to multiply but not in and of themselves have the potential to multiply.

Wang and Shen continue:

The identification of normal cells that can serve as a cell of origin for prostate cancer is highly relevant for understanding the applicability of a CSC model, and is currently under intense investigation. The cell of origin may also have clinical significance, as in the case of breast cancer, distinct tumor subtypes have been proposed to originate through transformation of different progenitors within the mammary epithelial lineage. Thus, it is conceivable that there may be distinct cells of origin for other epithelial cancers, and different cells of origin may give rise to clinically relevant subtypes that differ in their prognosis and treatment outcome.

Thus there are either basal cells or luminal cells as the cell of origin. Goldstein et al in Witte’s lab had developed a murine model demonstrating the basal cell as the cell of origin. However there may be strong issue regarding this model as applied to human prostate cancer. It represents a viable pathway but not necessarily the only. The issue is one of pathways as well as one of intercellular communications with debilitated pathways.

Now to follow the Wang and Shen model we have the following. Fist we show a normal prostate gland with basal and luminal cells.

Then we show their view of a Tumor Initiating Cell in either the basal or luminal layer. The Goldstein et al murine model argue for the basal layer and there are others arguing for the luminal.

The Wang and Shen model is as follows.

1. A normal prostate cell has both luminal and basal cells.

2. TICs may be formed in either basal or luminal cells.

3. Neoplasia starts with intro acinar proliferation.
 4. Carcinoma starts when it expands beyond the gland and starts up its own quasi-glandular structures.
 Now what causes this? Genetic changes result in pathway changes. We show two pathways below. We lose PTEN and we may activate myc and other parts of the pathway control mechanism.

and the following pathway:

  We now make a different argument. If there exists a true PCa CSC then perhaps one may putatively validate it as follows. The logic then is:

1. Assume a PCa CSC exists.

2. Assume that the PCa CSC replicates its CSC self at a low rate and is initially confined to the prostate gland.

3. Assume that the PCa CSC can influence the growth of TIC which themselves cannot sustain a malignancy. Specifically we assume that the TICs require the CSC for continued growth and further the CSC does so via cell growth as well as intercellular communications.

4. Now let us assume we have performed an 18 core biopsy on a 60 cc prostate gland and find histologically extensive high grade focal prostatic intraepithelial neoplasia. According to Wang and Shen they are most likely TICs and furthermore there may be a CSC somewhere so that eventually we see a PCa. There may be one or a few CSC in one or all of the glands yet we have no definitive marker to indicate as such.

5. Now assume we perform a second multi core biopsy on the gland and say do 22 cores in a 60 cc gland. This is the same gland but say 9 months later. We would arguably expect one ot two possible outcomes. First that the HGPIN remains in place and possibly has expanded. Second that there was a CSC and the HGPIN had become classic PCa with say Gleason 2 or 3 at a minimum about the HGPIN clusters. 

 6. If however, we examine the cores and find no evidence of any neoplasia or PCa, namely the gland has totally reverted to benign histology, we may have a reasonable argument that perhaps the CSC was present initially, and it was somehow removed along with the HGPIN in the initial biopsy leaving the TIC alone behind. Thus the TICs requiring a CSC to survive go into an apoptotic state and are removed from the prostate. Perhaps.

We have seen that specific situation occur and one could then argue that the Wang and Shen model for CSCs may be a viable model and further if such can be shown more extensively than we may have a basis for PCa progression.

Thursday, March 17, 2011

Happy Saint Patrick's Day

From the family graveyard in Mohill, County Leitrim, Ireland. Just a few miles north of the River Shannon in the flat lands taken by the Normans. A goodly distance from Armagh now in the Northern Territories.

Wednesday, March 16, 2011

Airport X-Rays and the Facts

A while ago we wrote several pieces regarding the backscatter X Rays and the potential for cancer including a detailed White Paper. The essence was that the backscatter systems in place do have a significant risk of inducing cancers such as melanomas in certain people.

Now an Ars Technica posting states:

The TSA, which has deployed at least 500 body scanners to at least 78 airports, said Tuesday the machines meet all safety standards and would remain in operation despite a “calculation error” in safety studies. The flawed results showed radiation levels 10 times higher than expected.

 First why are we not surprised, it is after all the Government and second just watch the melanoma rate explode. The article continues:

The snafu involves tests conducted on the roughly 250 backscatter X-ray machines produced by Rapiscan of Los Angeles, which has a contract to deliver another 250 machines at a cost of about $180,000 each. About 250 millimeter-wave technology machines produced by L-3 Communications of New York were not part of the bungled results.

Note that the millimeter scanners are generally harmless. It is the backscatter machines which in my opinion present the risk.
Rapiscan technicians in the field are required to test radiation levels 10 times in a row, and divide by 10 to produce an average radiation measurement. Often, the testers failed to divide results by 10, Horowitz said.

 This is the typical problem one often sees. Poorly trained and generally less intelligent and low cost "techs" go and perform tests not knowing what to do. One does not know the details here but based upon my experience that is what one sees.

“Certainly, the errors are not acceptable. It’s not every report. We believe the technology is safe,” she said.  ”We’ve done extensive, independent testing. It doesn’t raise alarms in terms of safety.”
Rapiscan, in a letter to the TSA, admitted the mistake and is “redesigning the form” used by its “field service engineers” when surveying the Rapiscan Secure 1000 that is deployed to 38 airports.

“Oftentimes, the FSE will bypass the step of dividing by 10. While the resulting entry, at a pragmatic level, is understandable on its face and usable for monitoring purposes, the value, if read literally by persons unfamiliar with our system and the survey process, would imply energy outputs that are unachievable by the Secure 1000 Single Pose,” Rapiscan wrote.

 In effect there appears to be a serious set of problems. Can TSA solve this? Not in my opinion based upon past performance.

Tuesday, March 15, 2011

Market Snapshot

The use of the Baseline Portfolio we have been watching since December 1 2008 is shown above. We are seeing the downward slope of the bundle and the yield is slowly declining. The problem is that the market has been the only safe haven for much of the investment given the lower rates of the bond markets.
The above shows a better view perhaps of what we have been saying. We were on an upward trend but Japan has brought that to a halt.

The yield curves are shown above. The low curve was last year in August but we see a steepening now.
This shows the spread and we see that the spread is nearing the peak over the past two year period again. The question is will we see a higher spread. The FED has kept the lid on this but like nuclear reactors sooner than later the pressure will be just too much.
This demonstrates the 90 day and 10 year rates and spread. The spread here is back to peak and the 90 day yields are drawn back down again, but the 10 years are not that high.

Thus one must ask, where are the returns. For those on fixed incomes and those near retirement this poses a disaster situation. Place SSI pressure on this and we will see an explosive result in the next election when this becomes more apparent.

An Interesting Economic Proposition

Russ Roberts at Cafe Hayek presents an interesting argument. Let me see if I can present it reasonably.

1. There have been a group of classic left leaning economists who view the disaster in Japan through rose colored glasses. Namely they see it as a boost to the GDP.

2. Roberts states that GDP is a change in something. Specifically he states:

As some commentators pointed out, GDP is a flow and wealth is a stock. That is, GDP compares the change in output over time while wealth is a snapshot. So it is possible to lose wealth (destroy buildings) while GDP goes up.

3. Now if one looks at GDP as consumption, investment and government spending, with imports and exports thrown in  then to create consumption one must have a base of underlying assets. Thus C is dependent on the related asset base of the country, I would think. Destroy the asset base and unless you just print money, well like we are doing, then you actually destroy consumption and thus reduce GDP.

4. There can be an argument made that there is more than a subtle point here and one not reflected in the thinking of most left wing economists.

5. Then there is the issue related to peoples' attitudes, when they get depressed things change, those constants that are all too easily thrown about change, and thus does the economy.

Bottom line, it is any one's guess, yes guess, what will happen next. The Middle East is unstable, Japan has massive economic problems, China may very well have based its plans on an incremental world model in which they have a controlling position, and one can argue that the assumption has feet of sand, and well, Europe, good question. The complexity of the situation may move all this into terra incognita.

Beware the Ides of March

Who is it in the press that calls on me?
I hear a tongue, shriller than all the music,
Cry 'Caesar!' Speak; Caesar is turn'd to hear.
Beware the ides of March.
What man is that?
A soothsayer bids you beware the ides of March.
Set him before me; let me see his face.
Fellow, come from the throng; look upon Caesar.
What say'st thou to me now? speak once again.
Beware the ides of March.
He is a dreamer; let us leave him: pass.

Sennet. Exeunt all except BRUTUS and CASSIUS
Will you go see the order of the course?
Not I.
I pray you, do.
I am not gamesome: I do lack some part
Of that quick spirit that is in Antony.
Let me not hinder, Cassius, your desires;
I'll leave you.

         Brutus, I do observe you now of late:
         I have not from your eyes that gentleness
        And show of love as I was wont to have:
        You bear too stubborn and too strange a hand
        Over your friend that loves you.

 Now today, the Ides of March, is bringing the near perfect storm, from East and from the West, thus beware the Ides of March

Monday, March 14, 2011

Broke or Not Broke? That is the Question.

What's in a word? One of the Washington Post writers goes on on rant saying we are not broke. Before going into the detail the question should be asked as follows:

1. Who is the we?

2. What do you mean by broke?

Now the we seems to be the states and the Federal Government, not each and every person in the country. Thus as the writer jumps forward to say that there are many people in the cumulative United States who are not broke, he will use that false argument to then say that the collective we is not broke. The we not spending or using the money should just run faster, make more money, and throw it in the common pot. Unfortunately a capitalist system does not work that way. Possibly under Lenin, even a bit under Stalin, but not under Adam Smith. The we is each of the separate governmental entities.

What is broke. Well you can always take away money from those who make it. But alas, it is those very people who use the money to create new businesses. The Government has really never created a new business.

Let me digress. There is always the example of the Internet and ARPA or NASA. Let me dismiss each as follows. ARPA funded the ARPA net and then walked away in the 1980s. But how did it find itself in this position. Simply, in about 1972-3 the principals at ARPA met with Bell Labs and ATT folks to get assistance to build a packet network. ATT as a Government sanctioned monopoly, Kingsborough Decision and Antitrust carve-out, had the power and it was a de factor Government agent. It demanded that it control everything, and fortunately ARPA had the ability to send the money to universities and industry and thus began the telecom revolution. The causal agent was de facto big Government in the guise of ATT. Frankly they have not changed even today. Now NASA, in the 1960s they drained much of the technical talent from the US and focused it on a space program along with DoD in their military programs. That let the Japanese take the lead in the 1980s, leaving the US behind. I argue that we are still suffering from that problem with the paucity of engineers.

Thus my argument that the Government never created a single real job has legs.

Now broke. The Government taxes and taxing takes money from investment and as such reduces the ability to support entrepreneurs. I would argue that for every dollar of tax the future reduction in GDP is multifold. I will not play Christina Romer and give a number, wrong as all here numbers were, but it is greater than one. Thus taxing beyond a point, and we are most likely there, is counterproductive.

The author states:

Just one problem: We’re not broke. Yes, nearly all levels of government face fiscal problems because of the economic downturn. But there is no crisis. There are many different paths open to fixing public budgets. And we will come up with wiser and more sustainable solutions if we approach fiscal problems calmly, realizing that we’re still a very rich country and that the wealthiest among us are doing exceptionally well....Bloomberg News looked at Boehner’s statement and declared simply: “It’s wrong....The U.S. today is able to borrow at historically low interest rates, paying 0.68 percent on a two-year note that it had to offer at 5.1 percent before the financial crisis began in 2007. Financial products that pay off if Uncle Sam defaults aren’t attracting unusual investor demand. And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so.”...Precisely. A phony metaphor is being used to hijack the nation’s political conversation and skew public policies to benefit better-off Americans and hurt most others.

The conclusion is to tax the rich, whoever they are. Now the US can borrow at low rates because of the FEDs manipulation. We had shown that almost two years ago and have been following it ever since. But that manipulation will end in disaster. The structure deficit problem has been a reduction is tax revenue from the excess unemployment plus the excess expenditures due to the payments to the unemployed. However, the expenditures from the current Administration go well beyond that level. That is the problem. The same holds true for states, just look at New Jersey. Here we allow our state workers to simultaneously hold three or four jobs, all with separate pensions and health care! We have had mayors who were senators, Commission heads and members of state college boards! Each with six figure salaries and accelerated pensions. They retire with half million dollar pensions! And the goodies rattle down.

Thus the we is the government entities and the broke means that to pay for all the goodies we will be bleeding our future. The future hemorrhage will be due to the fact that we will have exceeded the tipping point in the government taking money and putting it to no good whereas it should have been left in private hands and put to building new economic value.

Internet Usage Charges

AT&T is allegedly going to charge for usage on their Internet customers. DSL reports:

This is how it will work: only users who exceed the new usage cap three times -- across the life of your account, not per month -- will be forced to pay these new per byte overages. Overages will be $10 for every 50GB over the 150 GB or 250GB limit they travel.

AT&T claims their average DSL customer uses around 18GB a month, and these changes will only impact about 2% of all DSL customers -- who the company states consume "a disproportionate amount of bandwidth."

"Using a notification structure similar to our new wireless data plans, we'll proactively notify customers when they exceed 65%, 90% and 100% of the monthly usage allowance," AT&T tells us. The company also says they'll provide users with a number of different usage tools, including a usage monitor that tracks historical usage over time, and a number of different usage tools aimed at identifying bandwidth-hungry services.

Now I remember how I fought in the late 1980s for fixed price billing when COO at NYNEX Mobile now Verizon Wireless. Why, because the costs of billing, direct and indirect were so high. It caused churn and it had real costs as well. The other problem is that you must provide itemized billing, otherwise you will end up in court. But this is ATT, the same company whose former head Ed Whitacre said is was "his" network. The same Ed Whitacre that the current President made head of the government controlled GM! Why were we not surprised.

Now a quick calculation.

1. Remember that you have 30X24X60X60 sec per month. That is about 2.5 million seconds per month.

2. Thus if I were to just keep my email going continuously, with text messages only, I would use about 1,000 bits per text message. Say I get 400 per day, not unreasonable. That would be 400,000 bits per day and 12 M bits per month. That alone is only 5 bps!

3. Now look at video. Assume an H264 video, at 5 Mbps and say a 2 hour video. That is 600 Mbp. Say you do 10 per month. That is 6 Gb. Then divide by 2.5 Msec we get 2400 bps. That is bits not bytes which is 8 bits.

4. Now assume you watch your HDTV which is 5 Mbps for 6 hours per day. Then you have an average down rate of 1.25 Mbps. That is also 1.8 Gb per day and 54 Gb per month. But is is 6.75 GB as well. Big difference.

Thus we ask:

1. Is it bits or bytes? Many times they get this messed up.

2. What is a detailed bill to look like. Must we have the calling party?

3. What of bill resolution?

4. What is we have a paper bill now, will it remain as such? If so how many pages are expected. If there is an entry per download per IP address per packet then we must start cutting all the trees in North America.

5. What of bill resolution. When a customer complains who will handle this and at what cost?

6. This starts to sound like the old telephone company again, well after all it is ATT.

I spent years telling the management that fixed price unlimited usage was the way to go.  So 2% got a free ride. The costs of doing all the other stuff, including the loss of customers was too high. Well remember this is ATT and Texas. They seem to think differently there.