Forecasters keep eye on looming ‘Solar Max’

Forecasters keep eye on looming ‘Solar Max’ The coming year will be an important one for space weather as the Sun pulls out of a trough of low activity and heads into a long-awaited and possibly destructive period of turbulence. . "The latest prediction looks at around midway 2013 as being the maximum phase of the solar cycle," said Joe Kunches of the Space Weather Prediction Center at the US National Oceanic and Atmospheric Administration (NOAA). But there is a prolonged period of high activity, "more like a season, lasting about two and a half years," either side of the peak, he cautioned. At its angriest, the Sun can vomit forth tides of electromagnetic radiation and charged matter known as coronal mass ejections, or CMEs. They can unleash static discharges and geomagnetic storms that can disrupt or even knock out the electronics on which our urbanised, Internet-obsessed, data-saturated society depends.

Tax Revenues Gain, but Still Below Peak – State and local tax revenues continue to recover as the economy improves, but remain below pre-recession peaks and are likely to face continued pressure in 2011.  Combined state and local tax revenues rose 5.2% to $284.3 billion in the third quarter of 2010 from the same period a year ago, the Census Bureau reported Wednesday. That was a big reversal from the third quarter of 2009, when tax revenues fell by 5.4% from the year-earlier period.  This gain in third-quarter revenues was driven in part by increases in income- and sales-tax receipts, which have rebounded along with Americans’ salaries and spending. Many cities and states have also passed income- and sales-tax increases to battle falling receipts during the recession. Personal income tax receipts rose 4.8% in the third quarter while sales taxes rose 4%, according to the Census. Corporate income tax collections, which are volatile, fell 3.3% in the quarter.

State and Local Tax Revenues Grow – The U.S. Census Bureau reported this morning that state and local tax revenues for the third quarter were up 5.2% over the third quarter a year ago, marking the fourth consecutive quarter of positive growth. For the twelve months ending September 2010, total state and local tax revenue was $1.278 trillion, still under the September 2008 peak of $1.307 trillion. (See Table 1.) Property tax collections grew 7.8% from 2009 to 2010; individual income tax, 4.8%; sales tax, 4.0%; gasoline tax, 8.2%; cigarette tax, 8.3%; and alcohol tax, 1.9%. Corporate income tax collections fell by 3.3% over 2009.

States’ Revenues Continue Upward Trend  — State tax revenues rose for a third consecutive quarter, continuing the reversal of a downward trend that has devastated state budgets, according to preliminary data in a new report from the Rockefeller Institute of Government.  Despite the improved collections in July-September 2010, however, revenues remain significantly below peak levels and are still weak in a number of states, the report shows. Tax collections increased by 3.9 percent in the third quarter of 2010, compared to the same period a year earlier, based on data from 48 states. Of states reporting, 42 showed gains in overall tax revenues. Collections improved for the two largest revenue sources — personal income and sales taxes — while corporate income tax revenues declined slightly.

State Budget Cuts: The Undeclared War on the Middle Class – The next round of the Great Recession — the feared “double dip” in employment — is coming. The Federal Reserve Board is so worried about it that it is encouraging inflation. What policy makers are not saying is that the next round will be the direct result of government policy and that this round will disproportionately target women, families and the most vulnerable. The explanation is simple. In a recession, tax revenues fall, increasing deficits. State governments are required by law to balance their budgets, so they must either raise taxes or cut spending. Doing either in the middle of a recession makes it worse by increasing unemployment and reducing the money people have to spend, setting off another round of economic decline. Since the Great Depression, economists have emphasized the importance of efforts to counter this vicious cycle. Republicans, starting with Nixon, have argued that revenue sharing that sends federal money to the states is the most effective way to save jobs and avoid waste.

Marginal Income Tax Rates and Economic Growth, Ctd. – Building on yesterday’s post about Mike Kimel’s data crunching of top marginal rates vs. economic growth, today Kimel has created a handy bar chart of t+1 real GDP growth vs. top marginal income tax rate. Personally, I’d like to see some numbers run on effective tax rates vs. GDP growth (not to mention some inclusion of state and local tax data), but Kimel’s use of the data shows pretty effectively that cutting the top marginal income tax rate does not, in fact, lead to improved economic growth–if there was a cause and effect relationship between low taxes and improved economic growth, there would definitely be a stronger correlation between the two–but there simply isn’t. This is contra the opinions of pretty much all mainstream economists, and defiitely contradicts one of the fundamental talking points of conservative politicians. It also, I might add, goes against what my intuitive expectations would lead me to believe. But the numbers are what they are

Nuclear Power: Running on fumes? – I went to a debate on nuclear energy on Monday evening sponsored by the Center for Climate Change Law at Columbia.  The Center is headed by Mike Gerrard, a force of nature in environmental law for over thirty years. “Should nuclear power be an important component of U.S. strategy to combat climate change?” The pros, as ’twere, for nuclear were Susan Eisenhower, an old hand in power and proliferation circles, and Barton Cowan, a lawyer who’s been representing the industry for decades.  The skeptics — it’s not an inherently bad word, it’s just been tarred by those who would make you believe the earth is flat — were represented by Peter Bradford, a long-time utility industry regulator and a member of the Board of the Union of Concerned Scientists, and Robert Alvarez, a senior scholar focused on nuclear disarmament, environmental, and energy policies at the Institute for Policy Studies. The proponents, I’m sorry, but not surprised, to tell you, had nothing in the least convincing to say.

A new type of wind-turbine platform can be placed much farther from shore. – Deepwater Wind, a company based in Providence, Rhode Island, has drawn up plans for what could be the largest wind farm in U.S. waters, the company announced last week. The proposed farm would generate a huge 1,000 megawatts of power and would be located 18 to 27 miles off the coast of Rhode Island and Massachusetts at a depth of 52 meters—considerably deeper than any other large scale wind project to date. By moving into deeper waters, turbines can harness stronger, more sustained winds. And the massive turbines the company plans to use—each capable of generating more than 5 megawatts of power, with blades rising 150 meters above the water’s surface—will be nearly invisible from shore, thereby avoiding potential legal battles with coastal communities that perceive the turbines as eyesores.

Robert Reich and old people ‘clogging up the pipes’ – Video of Robert Reich is here discussing unemployment: Transcript: >>and when we’re at a time when there’s so many people in their 50s who are unemployed and may not be able to get back into the job — the job market, I mean, it’s unlikely to happen, but wouldn’t it be a good idea to actually lower the eligibility for social security retirement? >>It might be, Sam. In fact, a lot of people right now are saying that the eligibility age for social security retirement given the depth of our continuing jobs recession — and this jobs recession does continue — maybe should be lowered so that you create openings for younger people coming into the job market who right now don’t have a chance because there are so many older people clogging up the pipes, as it were.
Home Builders’ Pain Will Persist Into New Year – With no relief to their turmoil in sight, home builders will ring in the new year with poor sales, anemic traffic and weak financial results. That’s bad news for investors who might have been excited earlier this year when optimistic builders spent wildly on land in preparation for a market upturn they felt was imminent. This confidence was fed by the federal tax credit for home buyers, which offered up to $8,000. However, buyer traffic and sales have tumbled in the months following the credit’s April 30 expiration, a trend that has continued during the cold weather and holidays. As a result, builders are cancelling land contracts, exiting and consolidating softer markets and laying off employees. Companies continue trimming prices and consolidating markets as new-home sales remain weak.
BLS Change on Unemployment Duration – To make this clear (since I mentioned this change earlier): This change will have no impact on the number of unemployed or the unemployment rate. This will only impact the average duration of unemployment. From the BLS: Changes to data collected on unemployment duration Currently if someone says they have been unemployed longer than 2 years, they are listed at 2 years (the current maximum). This new change will allow for responses up to 5 years and will probably have a small impact on the average (mean) duration of unemployment, but will have no impact on the median duration – or on the number unemployed or the unemployment rate.
Fannie, Freddie, and the Pain Caucus – The members of the Pain Caucus see things differently when they will be the ones blamed for the pain (which tells us something about how all those calls for deficit reduction from the GOP are likely to turn out). House Republicans, who now have responsibility for the oversight of Fannie and Freddie, have decided that dismantling Fannie Mae and Freddie Mac isn’t so urgent after all: Suddenly, some members of the GOP realize they actually will be part of the government. Earlier this year, leading House Republicans proposed to privatize mortgage giants Fannie Mae and Freddie Mac or place them in receivership starting in two years.  Now, as Republicans prepare to assume control of the House next week, they aren’t in as big a rush, cautioning that withdrawing government support in the housing market should be gradual.

 Pittsburgh City Council, Mayor Clash on Pension ‘Armageddon’ – Pittsburgh’s City Council ordered Mayor Luke Ravenstahl to attend a meeting today to hash out a plan to avoid a state takeover of the underfunded municipal pension, which may more than double its cost to taxpayers. A vote to compel Ravenstahl to come before the council’s finance committee followed about six hours of debate on shoring up the pension system using parking fees. The retirement plan has about $325 million in assets to cover $1 billion in promised benefits, according to a consultant’s report. The city has until Dec. 31 to show the state how it will bolster the plan. “It’s merely an accounting gimmick to get past Dec. 31,” Pittsburgh, whose pension problem was called a “financial Armageddon” by two city councilors yesterday, joins cities such as San Diego and states such as Illinois and New Jersey that may cut services or raise taxes to meet ballooning retirement costs. Those states and 18 others skipped payments or underfunded their retirement systems from 2007 to 2009,

 A Time to Spend –  A normal gap between supply and demand for some subset of currently produced commodities is not a serious problem, because it is balanced by excess demand for other currently produced commodities. As industries suffering from insufficient demand shed workers, industries benefiting from surplus demand hire them. The economy rapidly rebalances itself and thus returns to full employment – and does so with a configuration of employment and production that is better adapted to current consumer preferences. By contrast, a gap between supply and demand when the corresponding excess demand is for financial assets is a recipe for economic meltdown. There is, after all, no easy way that unemployed workers can start producing the assets – money and bonds that not only are rated investment-grade, but really are – that financial markets are not adequately supplying. The flow of workers out of employment exceeds the flow back into employment. And, as employment and incomes drop, spending on currently produced commodities drops further, and the economy spirals down into depression. Thus, the first principle of macroeconomic policy is that because only the government can create the investment-grade financial assets that are in short supply in a depression, it is the government’s task to do so. The government must ensure that the money supply matches the full-employment level of money demand, and that the supply of safe savings vehicles in which investors can park their wealth also meets demand.

Mortgage-Assistance Efforts Declined in Third Quarter – The number of troubled U.S. homeowners receiving assistance with their mortgages fell in the third quarter as the government’s foreclosure-prevention effort tapered off. Federal bank regulators reported Wednesday that about 470,000 homeowners received loan assistance in the July-to-September quarter, down 17% from the second quarter and down 32% from the same quarter a year earlier. Banks have largely sifted through a big pool of eligible borrowers who weren’t getting any assistance before the Obama administration launched its effort to combat foreclosures in early 2009, officials said. The government’s mortgage-assistance program, known as the Home Affordable Modification Program, has fallen far short of expectations. It is now likely to aid between 700,000 and 800,000 borrowers, compared with the 3 million to 4 million it had aimed to assist, according to an oversight panel’s report published earlier this month.
A few for Graphs for 2010 – a dozen from calculated risk
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