Sunday, September 9, 2012

The SBA and enchiridion



A handbook or a manual.

From Latin enchiridion, from Greek encheiridion, from en- (in) + cheir (hand) + -idion (diminutive suffix).

In the beginning an enchiridion was a book concise enough to be carried in one's hand, as its origin from Greek cheir (hand) suggests. Both 'handbook' and 'manual' are literal equivalents of the word from English and Latin (from Latin manus: hand) respectively.



The enchiridion for SBA loans is the SOP 50-10-5 (E).

It was last updated June 1, 2012.

The prior enchiridion, SOP 50-10-5 (D) had just been released last October. 

Another new enchiridion, SOP 50-10-5 (F) original scheduled for October 1st now won’t be out for awhile.

I have been doing SBA loans for over 28 years now.  I was beginning to wonder if it was really one year repeated 28 times.



SBA LIBOR Base Rate September 2012 = 3.23%
SBA Fixed Base Rate September 2012 = 4.47%

504 Debenture Rate for August  

The debenture rate is 2.37% but note rate is 2.41% and effective yield is only 4.45%. 



The Federal Reserve does not have an enchiridion.

Flying by the seat of its pants, the Fed has held the fed funds rate at zero percent since December of 2008.

The Fed has also exploded its balance sheet with two rounds of quantitative easing purchasing over $2 trillion of mortgage back securities and longer term Treasuries.

Despite this, employers added a disappointing 96,000 non-farm jobs in August.

The change in payroll employment for July was revised down from +163,000 to +141,000, and June was revised down from +64,000 to +45,000, for a total revision of minus 41,000 over those two months.

The past three months, monthly job gains have averaged 94,000 compared with 95,000 a month in the second quarter and well below the average monthly gain of 225,000 in the first quarter.

The minutes of the Fed’s July 31-Aug. 1 meeting showed many policy makers said additional stimulus would be needed unless the economy shows signs of a durable pickup.

With NO signs of a durable pickup, what will the Fed do?  

The Fed meets this week and will announce what it is going to do on Thursday the 13th.

The next day, the Federal Reserve will release its report 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.

The capacity utilization rate, which measures how much plants and factories are being used, is one of the Federal Reserve’s favorite gauges of the economy.

The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher.

Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

In July, capacity utilization for total industry moved up 0.4 percentage point to 79.3 percent. 

While capacity utilization is up 2.3 percent from a year ago, it probably will stall also.

Last week’s job report reflected factory payrolls decreasing by 15,000, its biggest drop in two years.

The jump in capacity utilization was driven by a jump in utility production as Americans tried to cool their homes.

July was the hottest month in the lower 48 states in records going back to 1895, according to the National Oceanic and Atmospheric Administration.  The average temperature in the 48 states was 77.6 degrees Fahrenheit (25.3 Celsius), or 3.3 degrees above normal, the agency reported. 

The Fed must also be feeling the heat.



9/11.  It’s been eleven years already.  I guess we are still writing the enchiridion on that one.

Important enchiridions include-

The Holy Bible
Poor Richard’s Almanac by Benjamin Franklin
US Army Survival Manual
Etiquette in Society, in Business, in Politics, and at Home by Emily Post
"Coach Wooden's Pyramid of Success: Building Blocks for a Better Life"
Strunk & White’s The Elements of Style
The Enchiridion of Epictetus
The list on the refrigerator my wife wrote for me

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