Sunday, January 6, 2013

The SBA and addlepated



Confused; eccentric; flustered.

From addle (to muddle or confuse), from adel (rotten) + pate (head).



Don’t be addlepated about SBA loans.

Even with potential fiscal cliff spending cuts, the SBA should fare better than most agencies, because Congress increased the subsidy it needs to guarantee loans to small businesses. 

That means the SBA should be able to back up to $16 billion in loans this year with SBA 7(a) loans.

SBA 7(a) loans can be used for real estate purchase, real estate debt refinance, business debt refinance, business acquisition, working capital, and equipment purchase.



SBA LIBOR Base Rate January 2012 = 3.21%
SBA Fixed Base Rate January 2012 = 4.59%

Debenture Rate for December

The debenture rate is 1.93% but note rate is 1.96% and effective yield is only 4.009%.



The addlepated economy ended the year with payrolls rising by 155,000 workers for the month of December.  This follows a revised 161,000 advance in November.

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

December 155,000
November 161,000
October 137,000
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
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
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)
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)
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.

1.9 million jobs were added last year compared to 2.1 million the year before. 

8.7 million jobs were lost in the recession and so far 4.7 million jobs have been added in the last three years. 

According to the Bureau of Labor Statistics, there are still well over 4 million workers who have been unemployed for more than 26 weeks and still want a job.

Keep your eyes and ears open for Thursday’s sale of 30 year Treasury bonds.  At last month’s sale, the auction of 30-year bonds drew a yield of 2.917%.  In November, the yield was 2.82%.    

On Friday, the 30 year Treasury yield was up to 3.08%. 

If a 30 year interest rate of 3.08% sounds low, it is.  Adjusted for inflation, it comes in at just over ½ percent. 

The real interest rate for a 10 year Treasury note is -0.55%.

 Yes, that's a negative sign there. Investors are giving us $100 now and only asking for $99.45 a decade from now.  Not too shabby.

Our addlepated political debate misses the point- the risk is we're not borrowing enough now, not that we're borrowing too much.



Feeling addlepated about a full work week after taking time off for Christmas and New Year’s?

Another holiday is almost here. 

Monday, January 21th is Martin Luther King’s Birthday. Actually his birthday is January 15th but thanks to the Uniform Monday Holidays Act, we recognize it on the 21th.

According to the Federal Reserve, here are the holidays for 2012:

Birthday of Martin Luther King, Jr. January 21
Washington's Birthday February 18
Memorial Day May 27
Independence Day July 4
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25 

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