Group items tagged

So in coming to this meeting of some of the very best in the field -- from Elizabeth Warren to George Soros -- I was keen to hear just what the strategy was to restore us to some sort of financial sanity. How could we avoid it again? Yet through the course of the morning, I was struck by two very different and very depressing points. The first is that things are actually much worse than anyone ever talks about. The pivot points of our financial system -- the infrastructure that lets free markets produce real wealth -- have become profoundly corrupted. Balance sheets are "fictions," as Professor Frank Partnoy put it. Trillions of dollars in liability hide behind these fictions. And as expert after expert demonstrated, practically every one of the design flaws that led to the collapse of the past few years remains essentially unchanged within our financial system still. That bubble burst, but we can already see the soaring profits of the same firms that sucked billions in taxpayer funds. The cycle has started again. But the second point was even worse. Expert after expert spoke as if the problems we faced were simple math errors. As if regulators had just miscalculated, like a pilot who accidentally overshoots the run way, or an engineer who mis-estimates the weight of cargo on a plane. And so, because these were mere errors, people spoke as if these errors could be corrected by a bunch of good ideas. The morning was filled with good ideas. An angry earnestness was the tone of the day.

There were exceptions. The increasingly prominent folk-hero for the middle class, Elizabeth Warren, tied the endless list of problems to the endless power of "the banking lobby." But that framing was rare. Again and again, we were led back to a frame of bad policies that smart souls could correct. At least if "the people" could be educated enough to demand that politicians do something sensible. This is a profound denial. The gambling on Wall Street was not caused by the equivalent of errors in arithmetic. It was caused by a corruption of the system by which we regulate those markets. No true theorist of free markets -- and certainly none of the heroes of even the libertarian right -- believe that infrastructure markets like financial systems can be left free of any regulation, including the regulation of rules against fraud. Yet that ignorant anarchy was the precise rule that governed a large part of our financial system. And not by accident: An enormous amount of political influence was brought to bear on the regulators of these core institutions of a free market to get them to turn a blind eye to Wall Street's "innovations." People who should have known better yielded to this political pressure. Smart people did stupid things because "the politics" of doing right was impossible. Why? Why was their no political return from sensible policy? The answer is so obvious that one feels stupid to even remark it. Politicians are addicts. Their dependency is campaign cash. And in their obsessive search for campaign funds, they let these funders convince them that for the first time in capitalism's history, markets didn't need the basic array of trust-producing regulation. They believed this insanity because it made it easier for them -- in good faith -- to accept the money and steer financial policy over the cliff. Not a single presentation the whole morning focused this part of the problem. There wasn't even speculation about how we could build an alternative to this campaign funding system of pathological dependency, so that policy makers could afford to hear sense rather than obsessively seek campaign dollars. The assembled experts were even willing to brainstorm about how to educate ordinary Americans about the intricacies of financial regulation. But the idea of changing the pathological economy of influence that governs how Washington governs wasn't even a hint. We need to admit our (democracy's) problem. We need to get beyond this stage of denial. We need to recognize that until we release our leaders from a system that forces them to ignore good sense when there is an opportunity for large campaign cash, we won't have policy that makes sense. Wall Street continues unchanged because the Congress that would change it is already shuttling to Wall Street fundraisers. Both parties are already pandering to this power, so they can find the fix to fund the next cycle of campaigns. Throughout the morning, expert after expert celebrated the brilliance in Franklin Roosevelt's response to the Nation's last truly great financial collapse. They yearned for a modern version of his system of regulation. But we won't get to Franklin Roosevelt's brilliance till we accept Teddy Roosevelt's insight -- that privately funded public elections tend inevitably towards this kind of corruption. And until we solve that (eminently solvable) problem, we won't make any progress in making America's finances safe again.

Proponents of comprehensive regulatory reform hope for sweeping measures to protect consumers from predatory lending, rein in high-stakes Wall Street trading in arcane derivatives, boost capital requirements for banks that want to bet big with depositors' money and spread some regulatory sunshine on the dark pools of the “shadow banking system” that caught regulators flat-footed when the market spiraled into the abyss in the fall of 2008. “We cannot afford to let the status quo continue,” Sheila Bair, head of the Federal Deposit Insurance Corp., told a meeting of business economists in Washington. The final law is still in doubt. Sen. Christopher Dodd, D-Conn., has pressed for reform during a year of intensely partisan bickering. On Friday, Dodd — a lame duck who announced his retirement after disclosures that he accepted favorable terms from subprime lender Countrywide Financial — claimed that the Senate Banking Committee he chairs was “days away” from wrapping up a bill. Any resolution faces a major political hurdle that has drawn the most public attention: a proposal to create a new agency to protect consumers from predatory lending and other abusive financial practices. While the "systemic risks" to the financial system may represent a bigger threat in dollar terms, voters might be more focused on the consumer impact.Dodd said that’s not hard to understand.“The subject matter of derivatives and swaps and the issue of systemic risk and too-big-to- fail seem somewhat removed from the general public,” he told CNBC after the Senate compromise was reached. “Watching my credit card go to 32 percent rates and huge fees, watching prepayment penalties on mortgages, these are things that millions of people understand.”

Based on the discussions at the event, it is evident that body scanners can be easily defeated by concealing explosive materials in body cavities, the letter says. There is also little information on the health risks posed by the use of such scanners, according to the letter. The fact that the systems can be configured at any time to record and store images of travelers also raises privacy questions, the letter says. "The public does not currently understand the inability of these devices to detect the types of explosive materials that could be used or the possible risks to privacy and health," Rotenberg and Nader wrote. "The Department of Homeland Security has made significant mistakes with similar programs in the past," they added, citing as an example the agency's discontinued effort to equip airports with so-called explosive trace portals (ETP), which are designed to detect traces of explosives on travelers' clothing.

Statistical validation of results, as Shaffer described it, simply involves testing the null hypothesis: that the pattern you detect in your data occurs at random. If you can reject the null hypothesis—and science and medicine have settled on rejecting it when there's only a five percent or less chance that it occurred at random—then you accept that your actual finding is significant. The problem now is that we're rapidly expanding our ability to do tests. Various speakers pointed to data sources as diverse as gene expression chips and the Sloan Digital Sky Survey, which provide tens of thousands of individual data points to analyze. At the same time, the growth of computing power has meant that we can ask many questions of these large data sets at once, and each one of these tests increases the prospects than an error will occur in a study; as Shaffer put it, "every decision increases your error prospects." She pointed out that dividing data into subgroups, which can often identify susceptible subpopulations, is also a decision, and increases the chances of a spurious error. Smaller populations are also more prone to random associations. In the end, Young noted, by the time you reach 61 tests, there's a 95 percent chance that you'll get a significant result at random. And, let's face it—researchers want to see a significant result, so there's a strong, unintentional bias towards trying different tests until something pops out. Young went on to describe a study, published in JAMA, that was a multiple testing train wreck: exposures to 275 chemicals were considered, 32 health outcomes were tracked, and 10 demographic variables were used as controls. That was about 8,800 different tests, and as many as 9 million ways of looking at the data once the demographics were considered.

"Exposure to BPA may be harmful during pregnancy; this exposure may permanently affect the fetus," said Hugh S. Taylor, Ph.D., co-author of the study from Yale University School of Medicine in New Haven, Connecticut. "We need to better identify the effects of environmental contaminants on not just crude measures such as birth defects, but also their effect in causing more subtle developmental errors." Taylor and colleagues made this discovery by exposing fetal mice to BPA during pregnancy and examining gene expression and DNA in the uteruses of female fetuses. Results showed that BPA exposure permanently affected the uterus by decreasing regulation of gene expression. These epigenetic changes caused the mice to over-respond to estrogen throughout adulthood, long after the BPA exposure. This suggests that early exposure to BPA genetically "programmed" the uterus to be hyper-responsive to estrogen. Extreme estrogen sensitivity can lead to fertility problems, advanced puberty, altered mammary development and reproductive function, as well as a variety of hormone-related cancers. BPA has been widely used in plastics and other materials. Examples include use in water bottles, baby bottles, epoxy resins used to coat food cans, and dental sealants. "The BPA baby bottle scare may be only the tip of the iceberg." said Gerald Weissmann, M.D., Editor-in-Chief of The FASEB Journal. "Remember how diethylstilbestrol (DES) caused birth defects and cancers in young women whose mothers were given such hormones during pregnancy. We'd better watch out for BPA, which seems to carry similar epigenetic risks across the generations. "

The North American Spine Society and the Society of Interventional Radiology have pointed to flaws in both studies. And earlier studies, published over 15 years, found major benefits to kyphoplasty and a related procedure called vertebroplasty. "We're missing opportunities for patients to receive a safe and effective treatment that can significantly reduce their pain and disability," said Malamis, an interventional radiologist. The procedures are used to treat vertebral compression fractures in patients with osteoporosis and other conditions that result in brittle bones. In a vertebroplasty, an acrylic cement is injected into a fractured vertebra. In a kyphoplasty, a balloon-tipped catheter first is inserted into the fracture. The balloon is inflated to restore the height and shape of the vertebra before the cement is injected. Neva Nelson, 74, of Naperville, Ill., said a kyphoplasty that Malamis performed in October, 2009, has greatly reduced her pain in a vertebra in her lower back that she fractured after falling on ice. Before her kyphoplasty, Nelson had to sit on cushions. Walking, and especially standing, were painful. "I had to do something," she said. "I could not go on like that." Nelson said that since undergoing her kyphoplasty, "I don't have to worry about my back any more." In the controversial studies, patients were randomly assigned to receive a vertebroplasty or a placebo-like "sham" procedure. In the sham procedure, patients received an injection of anesthetic, but no cement. However, patients in severe pain are reluctant to enroll in a trial where there's a 50 percent chance of receiving a sham treatment. In one of the studies, researchers had to screen 1,813 patients to enroll just 131 subjects. In the other study, only 78 of 219 eligible patients were enrolled. This low enrollment rate raises the possibility that the patients who did enroll were not representative. Patients experience the greatest pain during the first three months after a compression fracture. Thereafter, pain gradually subsides. Thus, a vertebroplasty or kyphoplasty provides the greatest benefit when performed within a week or two of the fracture. But the studies enrolled patients up to 12 months after fractures. In addition to reducing pain and disability, a kyphoplasty can reduce the risk of subsequent fractures by improving the angle and height of the spine. The studies evaluated vertebroplasty alone, and did not include the more innovative and very different kyphoplasty procedure. Malamis suggests the medical community wait for the results of additional studies now underway before passing final judgment on vertebroplasty or kyphoplasty. In the mean time, he notes that Medicare still covers the procedures.

Known as 'polyandry' among scientists, the phenomenon of females having multiple mates is shared across most animal species, from insects to mammals. This study suggests that polyandry reduces the risk of populations becoming extinct because of all-female broods being born. This can sometimes occur as a result of a sex-ratio distortion (SR) chromosome, which results in all of the Y chromosome 'male' sperm being killed before fertilisation. The all-female offspring will carry the SR chromosome, which will be passed on to their sons in turn resulting in more all-female broods. Eventually there will be no males and the population will die out. For this study, the scientists worked with the fruitfly Drosophila pseudoobscura. They gave some populations the opportunity to mate naturally, meaning that the females had multiple partners. The others were restricted to having one mate each. They bred several generations of these populations, so they could see how each fared over time. Over fifteen generations, five of the twelve populations that had been monogamous became extinct as a result of males dying out. The SR chromosome was far less prevalent in the populations in which females had the opportunity to have multiple mates and none of these populations became extinct. The study shows how having multiple mates can suppress the spread of the SR chromosome, making all-female broods a rarity. This is because males that carry the SR chromosome produce only half as many sperm as normal males. When a female mates with multiple males, their sperm will compete to fertilise her eggs. The few sperm produced by males carrying the SR chromosome are out-competed by the sperm from normal males, and the SR chromosome cannot spread.