Who's Driving This Wreck?

How do you find the mutations in a messy cancer sample that actually drove the cancer to exist?

Cancer is a little like a car wreck. A mechanical defect or two may cause an accident, which then causes a lot of other damage to the vehicle and to others. How does the investigator figure out what was the first thing to go wrong? In cancer cells, an accumulation of mutations is part of the mechanism by which a cell escapes normal growth controls and becomes cancerous. Unleashing a slew of mutations makes it much more likely that the cell will find (and naturally select) the two or five more mutations that allow it to transition from pre-cancerous to malignant.

But along with those causal "driver" mutations, the unleashing process usually causes hundreds or thousands of innocent "passenger" mutations, even deleterious ones that kill off some of the cancer cell descendents. Taken as a whole, the mutations are all grist for the selective mill. But for the growing practice of precision medicine, these extra mutations muddy the waters persented by the DNA sequence of a tumor sample. Modern cancer drugs are only helpful when directed against the mutant proteins that caused the cancer, and continue driving its growth.

Sure, there are a few usual suspects to round up; p53, BRCA1, 2, and others. But that is only guessing. A couple of recent papers tried to look more systematically through large sets of tumor sequences to find driver mutations, one using a popularity measure, and the other using a pathway effects measure. Unfortunately, these methods are not applied or applicable to single tumor samples, which is to say the clinical setting, but rather are academically oriented to the hunt for more genes and gene mutations to put into the hopper of possible cancer mutations that can then later be applied to clinical cases.

Simple statistics can tell you to a first approximation which mutations are more common in tumor samples than in control samples. For common mutations, like those in p53 gene, this is fine. But this method has a hard time finding uncommon cancer-causing mutations, which, though individually uncommon, are in sum a large and important class. This quest is of interest both for clinical use in compiling a complete catalog of possible driver  for prognosis and treatment, and also academically as a hunt to find new genes that have roles in causing cancer.

A recent paper takes a step towards super-charging this search by combining DNA mutation data with RNA expression data. The idea is to ask the tumor cells which pathways are particularly active or deranged from a gene expression standpoint, (and associated with cell growth and tumorigenesis), which then helps tremendously in focusing on genes that participate in those pathways as candidate tumor drivers. These would necessarily be a small fraction of the 22,000- odd genes in the whole genome.

Here is where biology starts to look a little like electrical engineering. The first step of the study is to create pathways out of the gene expression data that was drawn from their tumor samples and from other cells. Pathways are circuit diagrams of what gene regulates what other gene, in cascades of control that function everywhere in biology, especially in development, homeostasis, and environmental response, and which go haywire in cancer.

Conceptual molecular pathways that might be relevant to cancer. Misregulation of/by any gene can be detected by reading out the altered expression of targets at the bottom.

Specific example pathway, cartooning interrelations among some of the greatest hits (common driver genes mutated) in cancer biology.

An example pathway is labelled as cellular component organization, shown above. Genes like RB1, TP53, BRCA2, MYC are all well-known regulators involved in cancer. The point here is not that common cancer genes show up in such networks, but that elucidating a regulatory network should bring up all the actors in a process, including other lesser-known genes that might also play a role. Mutations in those genes are the target of this work that seeks to create a more complete catalog of known relevant genes and mutations in them that contribute to cancer. But ultimately, everything is connected with everything else, so a lot depends on how one calculates these networks. The authors seem to be relatively conservative in their scope, and cross-check their networks with those from a commercial source, Ingenuity, with which they largely agree. They also validated their final results, in terms of cancer genes and their driver mutations, using the same commercial source, rather than going into the lab to test another large batch of tumor samples, for instance, or generating transgenic mice or cell lines to evaluate the effect of each mutation.

Incidentally, even if the full set of cancer genes is known, identifying a relevant mutation, for cases like that of AURKA whose overexpression contributes to cancer, can be extremely difficult, since overexpression can be due to point mutations many thousands of bases away from the gene, in regulatory regions which are not well mapped or understood anyway. The researchers are interested, however, in simple correlation, taking many tumor samples and asking which mutations are correlated with the changes in pathway perturbation that are seen in the gene expression data. That simplifes the search somewhat.

Getting the data required for this combined analysis is not easy, yet technical advances make it possible. And the result is evidently quite powerful. The researchers claim many orders of magnitude improvement in (apparent) driver mutation detection, compared with prior algorithms, and compared with any algorithm run without pre-grouping the candidate genes by this empirical pathway-based method. Unfortunately, neither the text nor figures are very clear on this point, so I have to leave the data discussion there.

It is critically important to generate increasingly comprehensive models of cancer as part of mastering molecular biology in general. Each of our three billion DNA nucleotides is doing something, some much more than others. We have only cartoon pictures so far of a smattering of our molecular circuitry. Thankfully, nature is not coming up the new models every year, but understanding the current model of human, and the molecular accidents that befall it, is an enormous task that will keep us occupied for decades.

• Inequality, economic sclerosis, and rent.
• Rent in wage negotiations, by way of artificial austerity.
• There is no sign that the Fed should be raising rates.
• And why do bankers want higher rates anyway?
• Ben Carson ... expertise in one area does not confer authority in all. Each case has to be made on its own terms.
• The animated empire of Walt Disney.
• Does the medical market work? Not for consumers.
• Dune ... on the Afghan-Pakistani border.
• Cringely on the cyber-arms race. All is lost.

Reading the Genetic Tea Leaves

How a cancer drug diagnostic / prognostic panel works.

Molecular medicine is coming, slowly, but surely. Drug companies have been forced to lead the way, because drugs are molecules, affect other molecules in our bodies, and can't be understood without learning about the molecular workings of the body.

Cancer has been a leading focus for this approach, because of its thousands of molecular manifestations which can cross the traditional organ boundaries, and its protean mechanism of molecular progression, accumulating mutations in many genes before turning dangerous. And because of its maddening self-on-self method of attack. One of the most significant cancer-related genes is TP53, which is mutated in about half of all cancers, and which in most of the rest is mis-regulated by way of other mutations. It encodes a protein (p53) that plays a central role in activating DNA repair processes in response to damage and general stress, in halting the cell replication cycle, and even in activating cellular suicide when repair is impossible. Getting rid of this protein is naturally a key step to keeping a wayward cell alive and allowing it to accumulate even more mutations.

This is one reason why, in addition to sequencing our normal genomes as part of regular medicine in the near future, our tumors and other sampled tissues will also be sequenced and analyzed to find accidental mutations that may be causing disease. For instance, over 100 tumors are known to afflict the skin, causing all sorts of lesions, each with a different set of causal mutations.

A recent paper from the drug company Novartis concerns a drug it has developed for p53, and particularly its interaction with another protein, HDM2, which turns it off. This drug interferes physically with the binding of these two proteins, thereby leaving p53 more active, and allowing it to kill its host cell in case it is cancerous, via the suicidal processes of apoptosis. But all this can only work if p53 has not been mutationally deactivated in that cancer.

So the researchers looked for a reliable way to test patients for p53 activity, and came up with the work of this paper, which is a collection of other genes whose activity, when on, says that p53 is active and thus "druggable". The test is not to sample DNA, but RNA from the tissue, asking about the transcription and thus activity of these selected indicator genes. From the p53 gene itself, RNA may be quite abundant, but if it has some tiny mutation that kills the activity of the encoded protein, then it is functionally dead. It is thus more effective to test the activity of genes that are "downstream" from it, in circuit terms, to find out whether p53 is working or not. Since one big function of p53, which binds DNA, is to turn other genes on.

The panel consists of 13 genes, developed using cell lines that were carefully selected for their response (or lack of response) to this new drug which inhibits the p53-repressor interaction. These were filtered down from 10,000 or more genes that were tested at the outset, as being the most informative. Each of them are targets of p53 transcriptional activation, which makes them obviously downstream in a circuitry sense.

List of genes used in the diagnostic/prognostic test for p53 function, comprising other genes that p53 activates.

None of these genes are dramatically regulated in the drug treatment case, only about a couple fold change in RNA levels in most cases. But the technology is now sensitive enough to detect such small changes reliably. About a third of the genes in the panel are directly annotated to function in apoptosis, which, in addition to informing on the status of the cellular p53 protein, also informs on the status of the key pathway by which this drug works- the cell suicide pathway.

So there it is, a prognostic test that amounts to something like a thermometer to tell how the patient is doing, but in molecular terms, about a specific molecular pathway, that then indicates the use of specific molecular counter-therapies.

• Incidentally, another set of cancer mutations are so knarly, they kill each other off.
• Piketty on Merkel: A colossal and cruel mistake is happening. And incidentally, Germany reneged on colossal amounts of debt back in the day, repeatedly.
• Dreadful US policy in Bosnia, and the distinction between massacre and genocide.
• Ephemerality in the arts ... what streaming gets us, and then doesn't get us.
• Finance naturally lends itself to crime, of huge proportions.
• Toles on the GOP clown circus:

Men, Booze, and Cigarettes: The Autobiography of Lauren Bacall

One of the great memoirs, about the loves and wisdom of a dramatic life.

You wouldn't expect an outstanding memoir from a Hollywood starlet who took the nation by storm (giving it "the look"), snatched Humphrey Bogart from his third wife, and went on to an outstanding, if patchy, career in film and theater. But there it is. Bacall (originally Betty Bacal) was raised in very modest circumstances, in a solid New York (Bronx) Jewish familiy, but with the significant void of a father who left (was thrown out, really) very early in her life, between five and eight years old. Just old enough to remember him, but not old enough to understand why. She spent much of her life looking for father figures, with mixed success.

Bacall writes with incredible immediacy. Her heart is right there on the page, as she is smitten with movie stars in her childhood, has a gushing personal encounter with the surprisingly kind Betty White, and pursues acting relentlessly in her teens. But money is very tight, and she has to do modelling on the side. The big break comes with a cover in Harper's Bazaar, under the genius Diana Vreeland.

This cover led to several offers from far-off Hollywood, and just like that, Bacall was on the train and in the expert hands of Howard Hawkes. He was understandably pleased with what he saw, and cast Bacall in her first film, To Have and Have Not. Not only did Bacall turn out to have the looks, she also had the voice, the humor, and the acting skill to rise to the occasion (singing would always be a problem, though). While Bacall was in quite a different place when she wrote all this in the mid-seventies, she is obviously reliving this special time with acute memory and a unique dramatic sense, as she was smitten by co-star Humphrey Bogart who was, yes, old enough to be her father.

It turns out to be one of the love affairs of the century. Bogart was not just a character, but truly had character. They treated each other with great respect, and she describes a largely idylic life. He was a bit of a drinker when they met, having been beaten down by several bad marriages, especially his third, but drinks less as time goes on, now having children and his all-important sailboat to live for. Bacall's highest praise, in retrospect after future failures in love, was that she was married to a mature man. Unlike all the others.

But like all biography, the story of Humphrey Bogart ends tragically in his mid-fifties, from cancer clearly brought on by drinking and smoking. Within a year he wastes away to practically nothing, and Bacall writes so movingly of his illness and death that it is heartbreaking to read. All else, certainly her career, took a back seat to her personal life, and her Hollywood career never fully recovered. She was anxious to get back to work after Bogie's death, but the industry, the town, seemed uninterested, perhaps pigeonholing her as the wife, rather than the actor she was also. While it was frustrating for her to be out of work for long stretches, (eventually she made a new life on Broadway), it is a great loss to the rest of us to not see more of her on film.

Bacall did a good deal of falling apart and rebounding after Bogie died. She ran around with Frank Sinatra for a while, until he pathetically backed out of a marriage proposal- truly one of the "rat pack". Then, esconced on Broadway, Bacall met and fell in love with Jason Robards. This time, she succeeded in dragging him to the altar, but lived to regret it as his drinking kept right on going. She remarks that the only thing she could count on was that he would be at the theater he was appearing at a half hour before show time. Bacall, who prided herself on her motivation, character, and life sense, found herself treated shabbily, utterly unmoored, with up to six children to take care of at times.

It took six years, but she finally threw him out and embraced a single life, with occasional film roles, but mostly working on Broadway. Katherine Hepburn was a great friend, and indeed a mentor in how to live singly, and how to brush off the constant stream of negativity from critics, missed roles, the press. Bacall worked extremely hard on Broadway, even in musicals, and won a Tony eventually. But the time lost to bad men, and the adoption of a single life, clearly caused rankling regret, after her idyl with the king, which is to say her time of having it all- a great marriage, children, stardom, and a great social life, with Humphrey Bogart.

The theme of father figures is one of the more interesting in this story. Bacall denies seeing any physical (vocal, name ... ) resemblance between Bogart and Robards(!) At least Robards was her age. Anyway, she pays explicit homage at one point to the most influential & positive male figures in her life- her uncle Charlie Weinstein, Bogart, and Adelai Stevenson, whom she campaigned for, flirted with, and who all but offered himself as a partner after Bogie's death. She clearly valued, even hungered for, this influence, which puts her in contrast to the current trend of gender neutrality and anti-patriarchial agitation.

But the father figure is among the deepest archetypes, one we have worshipped forever, name: "God". I think it is fair to say that we all seek father figures through life- as mentors, leaders, power-brokers and status confer-ers, stabilizers. While the patriarchial complex has amplified this archetype out of all proportion, it is biologically programmed and not to be denied. But who can possibly fulfill the role? Very few. And the first ingredient is ... training with another father figure. So the cultural round keeps going, generally in very flawed and even destructive and tragic ways, but so very valuable when it does go right. Many of the ancient epics and fairy tales put a strong black / white frame around this- the good king, ruling a happy land, contrasted with the bad king, beset with bad luck, misery, defeat. Not only the lives of great women, but of whole cultures, hang on the quality of this training, acting, and being.

• To Have and Have Not: We can offer a job guarantee, and much more.
• Two Guys from Milwaukee: Rosy report about the job market, but are employers paying more?
• The Big Sleep: Right to die is gaining ground.
• Dark Passage: Why is the new TTP trade deal being kept so secret?
• Key Largo: Tax holiday for corporations practicing extortion?
• How to Marry a Millionaire: Conservatives and social mobility: peddling an illusion.
• Woman's World: Health insurance helps women particularly.
• The Cobweb: Net neutrality is on the way.
• Written on the Wind: The future is solar (+wind).
• North West Frontier: Why is the Taliban so resilient?
• Shock Treatment: Germany tells Greece to get lost. Exit is really the only solution.
• The Shootist, Appointment with Death: Is manhood about killing?
• Misery: The Fed has been wrong continuously, and could be poised for more policy errors.
• Prêt-à-Porter: The psychology of being middle class.

War on cancer: update from the front

Some promising, and frustrating, data from the genomics revolution.

We might each very soon get our genomes sequenced, and this will provide a wealth of information about our ancestry as well as our susceptibility to many diseases and other conditions. This is quite static data ... get sequenced once, and your medical file is set for life- those basic facts are not going to change, even if our ability to interpret those genetic sequence facts is growing by the day and will continue to grow for decades, if not centuries.

But cancer is different- it is a genetic disease, a matter of mutations that waylay the normal course of cellular management from its what's-best-for-the-organism discipline to a descent into a mad Darwinian greed. To really tell what is going on, each cancer would have to be sequenced. Like HIV, whose mutations continue as the disease progresses, evading each drug hurled at it in turn, cancer mutations accumulate over time in cancer cells as well, making a dynamic genomic landscape.

Science magazine recently ran a magisterial, long, and unusually clear, review of cancer genomics. While sequencing individual cancers is not yet routine clinical practice, (other than for a few select markers), for research purposes it has been going on for some time, and we now have mountains of data. The authors made quite a few interesting points.

Sequence any cancer, and you get a mess. The tissues are heterogeneous, full of normal and mutated cells. The cancerous cells are a dog's breakfast of early and late cells, with some people theorizing that relatively few "cancer stem cells" are the real replicating drivers, and most of the other cells in the tumor in various stages of stasis or death. Even when you isolate the real, core, fastest-growing cells, they are again a mess, full of mutations that have nothing to do with the problem of cancer.

Indeed, the authors mention that genome sequences from highly mutagenized sites like lung cancers of smokers have ten times the number of mutations as those from lung cancers from non-smokers. Which gives you some idea of the incredibly mutagenic drive that smoking constitutes, and how much mutagenesis it takes to dramatically increase cancer incidence. It takes a lot of hits, and even then some smokers live to a ripe old age.

Tumors vary tremendously in their scale of gross mutation, from only a handful in an entire genome (common in pediatric cancers) to ten to a hundred in most types of tumors, up to a thousand or more in the most mutation-rich tumor of all, colorectal cancer.

So after a great deal of work, researchers have screened out all the noise and the garbage and come up with the genes that really drive cancer, out of our genomes of 23,000-odd genes. And this is the good news- there are only, roughly, 138 "cancer genes" responsible, in some mutated or altered state, for every known case of cancer that has been analyzed. Each tumor typically has a handful of these, which it has accumulated extremely slowly, over many years.

These genes tend to encode master controllers of the cell cycle, cell survival, cell differentiation, and DNA damage repair. For instance, ATM encodes a protein that senses DNA damage and halts the cell cycle in response. Obviously the kind of gene you want on your side, but one that gets in the way of cancer progression. It is frequently mutated in leukemias and lymphomas.

The 12 general classes of the 138 genes whose mutation or overproduction drives cancer growth. Some positively drive growth, while most are inactivated from their normal function of inhibiting cell growth.

The bad news is that few of these genes are easily targeted by drugs. The majority of these 138 drive cancer by virtue of being mutated into inaction, which is to say that they are tumor suppressors in their normal state. The typical gene mutation truncates these proteins- the remnant folds badly when it is made and is promptly tossed into the cellular recycling bin. There is little a drug can do for (or against) a protein that is not doing anything or is absent. Only when we have true gene therapy reliably injectable into these (highly inaccessible) cells would such a defect be truly fixable.

The ones that can be effectively targeted by drugs are oncogenic enzymes which are overproduced or specifically mutated into overactivity. The Ras kinase is a classic example, where a specific mutation of codon 12 or 13 from glycine to another amino acid renders this signalling protein deaf to upstream pathways that turn it off, by inactivating an enzymatic function that constitutes its "reset" switch. It becomes an always-on signaller, telling its cell (falsely) that external growth factors are always there, so go ahead and grow, grow, grow.

This is the kind of thing that can be targeted with drugs, not to turn the protein's reset switch back on, but to block its other actions so that it no longer does harm. This KRAS gene is mutated in about 30% of human cancers, so one can appreciate the usefulness to a cancer cell of having a good deal of mutagenesis going on, perhaps via another mutation in the DNA repair machinery, since this specific defect would otherwise be extraordinarily rare- much harder to come by than a truncating mutation.

The authors hold out hope that, since each of the un-druggable tumor suppressor gene products function in larger cellular pathways of control, other proteins can be found downstream from these inactivated tumor suppressors that might be usefully targeted by drugs:

"All of the known driver genes can be classified into one or more of 12 pathways (Fig. 7). The discovery of the molecular components of these pathways is one of the greatest achievements of biomedical research, a tribute to investigators working in fields that encompass biochemistry, cell biology, and development, as well as cancer. 

... 

We believe that greater knowledge of these pathways and the ways in which they function is the most pressing need in basic cancer research. Successful research on this topic should allow the development of agents that target, albeit indirectly, defective tumor suppressor genes. Indeed, there are already examples of such indirect targeting."

Unfortunately, the fact that there are so few core driver genes for cancer, itself militates somewhat against this view. If there were so many pressure points in the pathways of cellular control, we would see more of them reflected in oncogenesis. By all means, we need to gather all the knowledge we can, but magic bullets are going to be hard to come by.

The bottom line is that cancer, while far more complicated than the singular word naively indicates, still has an underlying "muta-genetic" pattern that can be used for definitive diagnosis in the coming molecular age, where genomes and individual cancers will be sequenced as a matter of routine. Once we devise maybe a couple hundred magic bullets to various oncogenes and related pathways, we may be able to treat cancer on an individualized basis much like HIV- with a customized cocktail of several drugs that, in combination, will forestall recurrence indefinitely. Currently, there are maybe twenty such drugs, many of which have poor efficacy or other issues, not to mention astronomical expense, so we have a long way to go.

A related point from this paper is that metastasis does not seem (at current knowledge) to involve novel or special mutations. The authors observe that cancer takes decades to develop, slowly accumulating its growth-promoting mutations, and that cancers slough off circulating cells in prodigious numbers, more so the larger they are. Thus a careful diagnosis of the original tumor, or any decendent, should suffice to characterize a cancer completely, and to stop it no matter how disseminated, given the specifically tailored and combined drugs that are envisioned above.

• Is the middle class a "natural" class?
• North Carolina- not such a great state.
• As usual, passive / index investment allocation wins in the end.
• We are exceedingly rich, even if we don't know it. The question is: who gets the loot?
• An important note on climate heating. And another.
• On Benghazi, some classic obfuscation at foggy bottom.
• A few questions for atheists.
• Ben Bernanke- "proof of a higher power"?
• Regulatory cowardice and class war at the IRS.
• Bill Mitchell on the job guarantee- employment as a right and as an economic stabilizer.

Economics and biology

A Victoria's Secret catalog gets me thinking about economic stimulation, credit, and regulation.

At this time of hair-raising de-leveraging, the going joke is that "We found the WMD's!". This came up in an excellent piece by Henry Blodget in the Atlantic. But I'd like to suggest a different metaphor- that of cancer, another syndrome of defective regulation/intelligence. Blodget takes the position that the system (and human nature) is built to forget the past, so whatever we learn now will inevitably go up in smoke, in the excitement of the next bull/bubble market. Just as competition is the life blood of economic activity and its associated ills, so selection is the lifeblood of biology, and its associated ills such as cancer.

Over evolutionary time, our cells have acquired ornate mechanisms of growth regulation, so that they divide like hell's bells early on, producing a baby from one cell in nine months, but then slow to a crawl, or in the case of many cells like neurons, enter complete stasis, not dividing at all while doing the work of adulthood. There are many controls over cellular decisions like responding to local damage, living amicably with one's neighbors, and whether to divide, culminating in the most extreme solution to all three- cell suicide, called apoptosis.

The most well-known example of such a regulator is p53, a protein which is positioned at a central nexus, receiving signals about damage to DNA, chemical stresses, and other problems that might warrent holding up cell division or even committing hari kari. When signalled, it binds to various genes on the DNA and turns them on to execute the program of either shutting down cell division (p21/CDK complex), or shutting down the cell completely (Bax/caspases).

Through the inexorable process of natural selection, some cells will find a way around the commands to stop growing or to destroy themselves. They may have DNA damage to the very genes, like p53, that provide that regulation, or their defect may generate vast over-expression of pro-growth signals that become immune to countervailing influences. This is cancer, and it takes several defects in the regulatory system to allow such over-growth to develop.

Is that starting to sound familiar? The financial system is set up with its own selective imperatives, foremost of which is to make money. Once a bull market gets going, as Blodget relates, the naysayers tend to be wrong year after year after year, lose money, and get sidelined. Cheerleaders such as Blodget himself during the internet stock boom, and real estate agents parrotting the mantras of "real estate never goes down" hold the floor while the music is playing and the disease is getting worse. And worst of all, regulators like the Fed are also overtaken with deregulatory zeal, even in cases like Ben Bernanke, who despite being a student of the great depression promoted the idea that regulators had no role in preventing bubbles, but can only hope to clean up after them. The regulatory systems become compromised, and the disease spreads until the music finally stops, and everyone scurries for cover. Thankfully, this disease is not terminal, but it is still extremely painful, and worth trying to prevent.

I think that throwing up our hands in the face of this process (as Blodget fatalistically does) is not acceptable. Biology labors against a far more difficult problem, there being billions years of evolution that went into the cellular control mechanisms that keep us (mostly) alive through reproductive age. We ask medical research to win the "war on cancer", but are we to ask no more of economists than to accede to human psychology, and let wealth and productivity wither periodically for the freedom of the financial markets to engage in speculative excess?

One template to look at is bank regulation. Banks in their regulated aspects did quite well during this crisis- it was the unregulated derivatives, hedge funds, and wildly overleveraged "investment" banking that collapsed, with the remaining investment houses ironically seeking protection by taking the form of regulated banks. Banking regulation restricts leverage to about 1:10, as well as restricting the targets of that leverage- collateralized loans in such things as real estate or businesses with whose operations the bank has some, if not thorough, familiarity. In combination with modest deposit insurance and other guarantees from the government, this makes for a quite stable system.

The amazing thing was that the Fed, other regulators, and congress decided that other actors in the system that made far riskier loans (to speculators in financial markets) could be far more highly leveraged, (1:50 or above), since the government was not directly on the hook through deposit insurance or other guarantees. Even the LTCM collapse did not warn Greenspan and others that this leverage is a disease that could bring down the entire system, while not offering much public good in return. It is, simply, a genteel form of gambling with very, very large amounts of borrowed money.

So, in a rational world, we would have a regulator with general responsibilities to limit leverage, allowing the most leverage in closely regulated and beneficial institutions (banks), while allowing less (instead of more) in speculative and more lightly regulated institutions. Indeed, it has always mystified me why margin accounts at brokerages are allowed at all- borrowing to buy stocks is the surest way to increase market volatility. There is nothing wrong with speculation, which plays an important role in market efficiency, but lending someone money to speculate is like playing Russian roulette, not just for the speculator and the lender, but for the markets and the economy as a whole.

A general leverage regulator is needed because, like the cancer process, financial markets are endlessly inventive (aka "innovative") at devising new ways to gamble. Mutations and lapses in attention will always occur, so that formal rules will always be out of date. No regulatory system is perfect, just as nobody is completely immune to cancer, but we can learn from history and do better, on a speedier time frame than that of evolution. The Fed is ideally positioned to be this regulator, and should have the function of restricting all kinds of leverage added to its portfolio of regulating banks, keeping the currency stable, and promoting sustainable economic growth.

---

While I am at it, let me throw out several more pieces of an economic reform program, though this is mostly oriented to the car bailout and general economic mess, not the financial industry specifically.

• Health care: Relieve businesses of the administrative burden of health care by nationalizing it, as per the pending Obama plans, or something more adventurous like single-payer. Businesses should not shop around for younger employees because they are cheaper to insure. Employees should not depend on employers to provide health care. Incidentally, one step towards cost control could be to revise the FDA approval process to have two levels of approval- one basic level for safety and efficacy, as is done now, and a second level for demonstrated cost/benefit advantage over the current standard of care. One cause of rising health care costs (aside from the absurd duplication and expense of private care insurers/deniers) is that new treatments are not put through a rigorous benefit analysis. Drug and device companies relentlessly push marginal products through the approval process, then devote vast sums to advertise them for benefits that are often absent or minimal.

• Pensions: Businesses should likewise be relieved of the administrative burden and cost inequality of pensions, switching to a nationalized program combining a beefed-up social security with government-run 401K funds. Nowhere is the burden of retirement provisioning more apparent than in the domestic car industry. With roughly 2 or 3 retirees for every worker, they are groaning under this burden, and every sensible program to downsize them in accordance with their self-managed decline in market share makes this ratio even worse. Pensions for all companies (and government entities, which are likewise facing financial chaos from their pension obligations) should be immediately nationalized, so that each employer pays a set tax rate per current employee (like the social security system, only not capped by maximum income). This could be a mix of defined benefits as a safety net and an optional 401K-like account with the government, offering a few selections of risk. Then all retirees, including those not employed (such as housewives, for instance) would get a mix of defined benefits and invested returns that are partially tied to their contributions and former income, and partially set as a safety net not dependent on prior work at all. This would allow older companies with many retirees to compete on a level playing field with new startups, give all citizens the assurance of retirement income whether or not they worked or were married to a worker, and allow workers to switch jobs without fear of losing their pension.

• Unions: I support greater unionization, but unions impose costs as well, especially when they are too successful in gaining income and working (or non-working) condition benefits. Unions should organize downtrodden farmworkers and janitors, not dictate no-work jobs, antiquated labor-intensive technologies, and 100K/year longshoreman salaries. My proposal would be that unions be prohibited from representing anyone over the national median income. This would put higher-salaried workers into the regular job market, instead of an artifically negotiated system. What would this do to NBA players? I am not sure- Insofar as management has monopoly power, in this case congressionally sanctioned, workers should likewise be able to organize. However the government's role should generally be to break monopolies, not sanction them.

• Executive pay: The salaries of many corporate and investment managers have been clearly excessive and economically detrimental, motivating them to find beneficial option sale and exit strategies rather than building better companies. Salaries should be capped at 25X the median salary of the managed corporation including subsidiaries. Extra income should be restricted to a new kind of stock option granted on a five year plan, where the grant price is the mean price for the current year, and the options can be redeemed only after five years, at the mean stock price of the trailing year. This would go a long way to re-aligning the interests of management with those of employees and stockholders. There would be no private pensions, parachutes, etc. One interesting side-effect of this proposal would be to motivate management teams to separate themselves from the underlying base companies so that they could be paid more. But since they would have separated rather than subsidiary relationships, this might open a new market for management services, which might enable corporate boards to bid more effectively for these services, enhancing competition and keeping prices down.