Sunday, July 15, 2012

The SBA and countervail



To counterbalance or to neutralize.

From Old French contrevaloir, from Latin contra (against) + valere (to be strong).

The recovery in commercial real estate just might countervail this anemic economy.

CoStar indicates that commercial real estate pricing is continuing to recover at a fairly surprising pace despite the disappointing level of U.S. job growth and other economic factors.

If you would like a copy of July’s CoStar Commercial Repeat Sale Indices (CCRSI) report, let me know.

Now might be the time to get a SBA loan to purchase or refinance commercial real estate.


SBA LIBOR Base Rate July 2012 = 3.24%
SBA Fixed Base Rate July 2012 = 4.57%


504 Debenture Rate for July  

The debenture rate is 2.38% but note rate is 2.42% and effective yield is only 4.46%. 


For awhile, manufacturing countervailed the negative economic forces out there.

Manufacturing's rebound had been reflected by a soaring jump in the capacity utilization rate.  This measure of the percent our manufacturing plants are in use is one of the Federal Reserve’s favorite gauges of the economy.

Capacity utilization had increased 11.8 percentage points from the record low set in June 2009.

But last month, the Federal Reserve reported that capacity utilization slumped to 79 percent in May.

Keep your eyes and ears open for the Federal Reserve's July 17th announcement on industrial production and capacity utilization.

Here is what capacity utilization rates have done:

1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 67.3
2010- 74.8
2011- 76.7
2012- 79.0

What does all this mean?

I don't know.

Capacity utilization at 79% is still 1.3 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 80.6% in December 2007.  While this is 2.7% higher than a year earlier, we still have a ways to go.

Continued drops in capacity utilization rates might prompt the Federal Reserve to consider countervailing measures.


A Chicago White Sox World Series just might countervail a Mets World Series recession.

Remember, according to the Mets Recession Theory, every time the Mets go to the World Series, a recession follows.

Now it looks like every time the White Sox make it to the World Series, the economy actually picks up.

Unfortunately, the White Sox have only gone five times (1906, 1917, 1919, 1959 and 2005).

And actually the real reason I like the White Sox is because of Adam Dunn. 

Last year, Adam Dunn was by far the worst player in major league baseball.

His .159 average in 2011 was the lowest batting average since Bill Bergen hit .139 as a starter for the 1909 Brooklyn Superbas.

This year, when he actually hits the ball, it is usually a home run.  Dunn has the fifth-lowest career at bats per home run average in Major-League history. His 13.96 ratio (about one home run every 14 times he comes to bat) is behind only Mark McGwire (10.61), Babe Ruth (11.76), Barry Bonds (12.90), and Jim Thome(13.68).

He currently has 26 home runs, one of the major league leaders.  He also has 134 strikeouts, by far the leader in all of baseball.   Dunn is on pace for 265 strikeouts, 42 more than Mark Reynolds’ major-league record.

His 68 walks also lead the major leagues. 

If this keeps up, he just might have the most home runs, the most strikeouts and the most walks of any hitter in baseball.

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