The SBA and draconian

draconian

(dray-KO-nee-uhn, druh-)

Unusually harsh.

After Draco (late 7th century BCE), Athenian legislator, noted for the harshness of his code of laws.

Under Draco's laws even trivial offenses, such as idleness, brought capital punishment. When asked why he had instituted the death penalty for most offenses, he supposedly replied that the lesser crimes deserved it and he knew of no greater punishment for more important ones.  His laws were said to be written in blood instead of ink.

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TIP OF THE WEEK 

The draconian pummeling of commercial real estate is over. 

According to CoStar, prices for commercial real estate are posting significant gains.

The CoStar Commercial Repeat Sale Indices reached its highest level since early 2009. It has now improved by a cumulative 34.1% since the start of 2010.

If you would like a copy of CoStar’s most recent report, let me know.

SBA loans can finance the purchase or refinance of commercial real estate.

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Indices:

PRIME RATE= 3.25%

SBA LIBOR Base Rate October 2012 = 3.21%

SBA Fixed Base Rate October 2012 = 4.47%
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Debenture Rate for October

The debenture rate is 2.18% but note rate is 2.219% and effective yield is only 4.262%.

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AHEAD OF THE YIELD CURVE 

The Federal Reserve met last week and they said that “without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.”

Labor market conditions are atrocious.

Last month, the economy added only 114,000 workers.  That is not even keeping up with growth in population.

On Friday, the Department of Labor will provide its last report on employment before the election.

Here is a summary of net monthly payroll employment and this week’s interesting little table of data:

September 114,000

August 142,000

July 181,000

June 45,000

May 77,000

April 68,000

March 143,000

February 240,000

January 243,000

2011

December 203,000

November 157,000

October 112,000

September 158,000

August 104,000

July 127,000

June 20,000

May 25,000

April 232,000

March 194,000

February 235,000

January 68,000

2010

December 121,000

November 93,000

October 210,000

September (41,000)

August (1,000)

July (66,000)

June (175,000)

May 431,000

April 218,000

March 230,000

February (36,000)

January (26,000)

2009

December (150,000)

November (11,000)

October (111,000)

September (215,000)

August (201,000)

July (304,000)

June (443,000)

May (322,000)

April (504,000)

March (699,000)

February (651,000)

January (655,000)

2008

December (681,000)

November (597,000)

October (423,000)

September (403,000)

August (127,000)

July (67,000)

June (100,000)

May (47,000)

April (67,000)

March (88,000)

February- (83,000)

January- (76,000)

What does all this mean?

I don’t know.

Only one president, Ronald Reagan, has been re-elected since World War II with unemployment above 6 percent. On Election Day 1984, the rate was at 7.2 percent, having fallen almost THREE percentage points in the previous 18 months. 

The unemployment rate now is at 7.8 percent.  It has fallen only 1.2 percentage points in the last eighteen months.

The Federal Reserve will have to keep interest rates low, as they have stated, until at least the middle of 2015.

The Federal Reserve will also need to decide by the end of December whether to continue with Treasury purchases after the expiration that month of so-called Operation Twist. Under that program, the central bank swaps about $45 billion each month of short-term debt and buys the same amount of longer-term Treasuries.  Operation Twist has kept longer term interest rates lower.  The Fed by the end of December will have largely exhausted its supply of short-term debt.

Something draconian needs to be done.

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OFF BASE

Making the wrong choice can have draconian consequences. 

For example, let’s say you win the coin toss before a college football game.  What do you pick?  Kickoff or receive? 

Turns out you actually have more than just two choices.

The visiting team calls the toss. The winner of the toss may defer their choice to the start of the second half, or they may take first choice of:

-Receiving the kickoff to start the game, or kicking off to start the game

-Choosing an end of the field to defend in the first quarter

The loser of the toss gets the remaining option.

At the start of the second half, the team that did not choose first (either because they deferred their choice or because they lost the toss) gets the first choice of options.

A mistake before their game against Arizona State nearly cost UCLA.  At the time of the coin flip, UCLA captains were not yet on the field and punter Jeff Locke, who was out on the field warming up, was left to make the call on the toss.

UCLA won the toss, but Locke chose to kick off -- instead of deferring the ability to receive until the second half. That meant Arizona State took the ball to open the game, and then got to take the ball again to start the third quarter.  ASU got an extra possession.

UCLA freshman Ka'imi Fairbairn had to then kick a 33-yard field goal as time expired to give the visiting Bruins a 45-43 road victory over the Arizona State Sun Devils.  Ka”imi was 0 for 5 on field goals beyond 36 yards.

Ka’imi, by the way, is short for Ka iminoeauloameka ikeokekumupa a. 

If you feel like you are in the dark now, you really will be next week.  Daylight Saving Time ends November 4^th.    A few days later is Election day.  Hopefully you won’t be using a coin toss to help you decide.   Fortunately a three day weekend follows with the Veterans Day holiday (It is Daylight Saving not savingS and it is Veterans Day without the apostrophe).