Monday, August 19, 2013

The SBA and confabulate



1. To talk informally.
2. To replace fact with fantasy to fill in gaps in memory.

From confabulari (to talk together), from con- (with) + fabulari (to talk), from fabula (tale).



The SBA continues to confabulate over changes to its SOP (Standard Operating Procedures).

As a result, the draft of the latest change to the SOP may not be released in a timely manner.

The effective date for the anticipated changes is also unknown at this time.



SBA LIBOR Base Rate August 2013 = 3.19%
SBA Fixed Base Rate August 2013 = 5.47%

SBA 504 loan Debenture Rate for August 

The debenture rate is only 3.16% but note rate is 3.21% and the effective yield is a whopping  5.24%.


The confabulation over the differences between moderate and modest may soon end.

At its last meeting on monetary policy, the Federal Reserve said the economy “expanded at a MODEST pace” while a month before it had said that the economy “has been expanding at a MODERATE pace.”  What was the Federal Reserve really trying to say? 

Keep your eyes and ears open for this week’s release of the minutes from that Federal Open Market Committee meeting as they agonized whether things were modest or moderate.

FOMC Minutes is a vital piece of information that is released three weeks to the day after the conclusion of each FOMC meeting.    Though the gist of the Fed’s official views are disclosed at the end of each FOMC meeting with a public statement, we can closely scrutinize details of the Fed opinions in the minutes for better understanding.

Short term rates are at historical low levels and prior Fed minutes reiterated that they will keep rates this low until unemployment drops or inflation rises above 2.5% a year.

One of the Fed’s favorite gauges of inflationary pressure is the capacity utilization rate which measures how much plants and factories are being used.  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.

Last week the Fed reported that capacity utilization for total industry edged down 0.1 percentage point to 77.6 percent.  That was the FIFTH consecutive monthly decline. 

Employers added only 162,000 jobs in July and job gains for May and June were revised down by a total 26,000.   May's gains were revised to 176,000 from 195,000 and June's to 188,000 from 195,000.

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

July 162,000
June 188,000
May 176,000
April 165,000
March 88,000
February 332,000
January 148,000
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.

It would appear that the Federal Reserve will continue to be con-fabulous about interest rates.

We can all soon confabulate on what we did over summer.

The three day Labor Day weekend is almost here!

According to the Federal Reserve, here are the remaining holidays for 2013:

Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28

Christmas Day December 25

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