It’s official: Paul Krugman is right

For the past five years, a fierce war of words and policies has been fought in America and other economically challenged countries around the world.

On one side were economists and politicians who wanted to increase government spending to offset weakness in the private sector. This “stimulus” spending, economists like Paul Krugman argued, would help reduce unemployment and prop up economic growth until the private sector healed itself and began to spend again.

On the other side were economists and politicians who wanted to cut spending to reduce deficits and “restore confidence.” Government stimulus, these folks argued, would only increase debt loads, which were already alarmingly high. If governments did not cut spending, countries would soon cross a deadly debt-to-GDP threshold, after which economic growth would be permanently impaired. The countries would also be beset by hyper-inflation, as bond investors suddenly freaked out and demanded higher interest rates. Once government spending was cut, this theory went, deficits would shrink and “confidence” would return…

Those in favor of economic stimulus won a brief victory in the depths of the financial crisis, with countries like the U.S. implementing stimulus packages. But the so-called “Austerians” fought back. And in the past several years, government policies in Europe and the U.S. have been shaped by the belief that governments had to cut spending or risk collapsing under the weight of staggering debts.

Over the course of this debate, evidence has gradually piled up that, however well-intentioned they might be, the “Austerians” were wrong. Japan, for example, has continued to increase its debt-to-GDP ratio well beyond the supposed collapse threshold, and its interest rates have remained stubbornly low. More notably, in Europe, countries that embraced (or were forced to adopt) austerity, like the U.K. and Greece, have endured multiple recessions (and, in the case of Greece, a depression)…So the empirical evidence increasingly favored the Nobel-prize winning Paul Krugman and the other economists and politicians arguing that governments could continue to spend aggressively until economic health was restored.

And then, last week, a startling discovery obliterated one of the key premises upon which the whole austerity movement was based.

An academic paper that found that a ratio of 90%-debt-to-GDP was a threshold above which countries experienced slow or no economic growth was found to contain an arithmetic calculation error.

Once the error was corrected, the “90% debt-to-GDP threshold” instantly disappeared. Higher government debt levels still correlated with slower economic growth, but the relationship was not nearly as pronounced. And there was no dangerous point-of-no-return that countries had to avoid exceeding at all costs.

The discovery of this simple math error eliminated one of the key “facts” upon which the austerity movement was based…

The argument is over. Paul Krugman has won. The only question now is whether the folks who have been arguing that we have no choice but to cut government spending while the economy is still weak will be big enough to admit that.

Between Congressional Republicans blind to the failure of their ideology and their candyass Blue Dog Democrat counterparts there still is a struggle to enforce austerity upon our limping economy. The so-called sequester is an example of their success at reducing the number of employed in our country.

Most Congress-critters are as ignorant as the average American and don’t know that something similar happened as Keynesian reforms were having a comparable success during the Great Depression. Politicians and pundits forced austere reversals to the reforms in place in the mid-1930’s and started the whole country on the way back down to the depths of economic despair. Only the dramatic need to prepare for the war against Fascism around the world reversed the start of a second depression.

But, stupidity seems to still be part of the job description for conservative politicians. We’ll get to see who prevails over the next few years. Not that any pundits will be joining folks at the unemployment office. There’s always a job for reactionary ideologues in corporate America.

Novartis sued for bribing pharmacies

Novartis marketing secret

Novartis AG was sued by the U.S. for alleged health-care fraud, saying the company paid kickbacks to pharmacies for switching transplant patients to its drug Myfortic.

The U.S. sued Basel, Switzerland-based Novartis in federal court in Manhattan yesterday, claiming it violated the False Claims Act by paying kickbacks, disguised as rebates and discounts, to at least 20 pharmacies for switching patients to Myfortic from drugs sold by other companies. The scheme caused the Medicare and Medicaid programs to pay tens of millions of dollars in false claims, according to the government’s complaint…

The U.S. is seeking triple damages, restitution and civil penalties. In a statement yesterday, Bharara called Novartis “a repeat offender,” saying the company had settled kickback claims less than three years ago.

In September 2010, Novartis agreed to pay $422.5 million to resolve criminal and civil charges that it paid kickbacks and illegally promoted drugs for off-label uses. As part of the settlement, the company signed a five-year corporate integrity agreement with the Department of Health and Human Services, which required reforms including a compliance program relating to promotional activities. The 80-page agreement provided that Novartis may be excluded from participation in federal health care programs, including Medicare and Medicaid, for a “material breach…”

Maybe they wouldn’t be so quick to reoffend if the boss and a few of his flunkies were doing time?

Myfortic is an immunosuppressant drug used to help prevent organ rejection in kidney transplant patients. The U.S. claims that, from 2005 until the present, Novartis offered kickbacks to pharmacies that agreed to convince doctors to switch patients to Myfortic. The drug’s main competitors are Roche Holding AG CellCept and, since 2009, generic versions of CellCept, according to the government…

The U.S. said it told Novartis and other drug companies in 1994 that offering financial benefits to pharmacies for influencing doctors to switch patients from one prescription drug to another could violate the federal anti-kickback statute.

The complaint named five pharmacies that participated in the alleged scheme, including the outpatient pharmacy at Baylor Hospital in Dallas. Prosecutors said Novartis also negotiated with Walgreen in 2011 to switch patients using on-site Walgreen pharmacies at transplant centers and Walgreen’s mail- order division to Myfortic from CellCept and generic CellCept in exchange for payments. The complaint didn’t include whether any deal was reached.

After the Feds throw a few of the Fat Cats at Novartis into the Big Top – follow that up with those in charge at the pharmacy corporations who took the bribes.

AP Twitter feed hacked – tweet phony assault on the White House

Insurgents pose on White House lawn

Hackers took control of the Associated Press Twitter account on Tuesday and sent a false tweet of two explosions in the White House that briefly sent U.S. financial markets reeling.

In the latest high-profile hacking incident involving social media service Twitter, an official @AP account reported that two explosions at the White House injured President Barack Obama.

AP spokesman Paul Colford quickly confirmed the tweet was “bogus,” but within 3 minutes of the tweet hitting the Web, virtually all U.S. markets took a plunge on the false news in what one trader described as “pure chaos…”

Markets quickly recovered their losses after the tweet was knocked down. Some traders blamed automatic electronic trading for the sharp fall and bounce back…

A group calling itself the Syrian Electronic Army, which is supportive of that country’s leader, President Bashar al-Assad, during the two-year civil war, on Tuesday claimed responsibility on its own Twitter feed for the AP hack…

Woo-Hoo! Script kiddie political activism strikes again – achieving nothing more than a 3-minute orgasm in someone’s basement. No doubt they returned to WOW – and will join an online meetup after midnight in some cobwebby corner of internet grunge to plot the next international “attack”.

Another incident which will change nothing in the lives of Syrian citizens brutalized by civil war.

Businessman going to jail for selling phony bomb detectors

A British businessman was convicted Tuesday of selling gussied-up golf ball detectors as devices that could detect bombs, drugs and even diamonds.

Jim McCormick, 57, faces a substantial prison term for fraud, the Evening Standard reported. Investigators said he made millions of dollars selling useless detectors for as much as $40,000 each, with customers that included the Iraqi military…

Trial witnesses included Belgian Police Superintendent Theiry Meunier, who described his experience with one of McCormick’s devices.

“It was not only the cheapest machine, it was the only machine,” Meunier said. “We had no results from it. We tried to use the device for detecting drugs in cars for several months. We also provided the detector to detectives seeking to detect drugs. The results again were negative.”

McCormick, who lives in the Bath area, went on trial in March after a three-year investigation by Avon and Somerset police.

Investigators said he put lives at risk by selling a device that might give security officers a false sense of confidence.

While McCormick has continued to maintain his devices do the job they were supposed to, police, prosecutors and unhappy customers say they are simply golf-ball detectors given a fancy look and fancy marketing.

There’s some sort of object lesson inside this farce. Maybe something to do with the folks in charge of detecting crime, providing security against fraud – unable to figure out on the spot when they’re being hustled, eh?