Monday, October 21, 2013

The SBA and petard

1. A small bomb used to blast down a gate or wall.
2. A loud firecracker.
From French péter (to break wind), from Latin peditum (a breaking wind), from pedere (to break wind). Ultimately from the Indo-European root pezd- (to break wind) which also gave us feisty, fart, and French pet (fart).

Ignore some of the petards about wasteful government spending.

The continuing resolution that will fund the federal government for another 86 days should include broad based support for the Small Business Administration.

 For the SBA 7(a) program, the return to a zero subsidy rate removes the need to seek appropriations.  It also reduces lender fees.  For its 7(a) guaranty loan program, the SBA budget authority will support a program level of $17.5 billion!

SBA loans are good for the economy.    Remember, SBA 7(a) loan volume is a leading economic indicator as the correlation coefficient between SBA 7(a) loan volume and the economy’s Gross Domestic Product is a statistically significant 0.86.


SBA LIBOR Base Rate October 2013 = 3.18%
SBA Fixed Base Rate October 2013 = 5.37%

SBA 504 Loan Debenture Rate for October 

The debenture rate is only 3.37% but note rate is 3.425% and the effective yield is 5.451%.


Lost amongst the petards in Washington was the fact that employment growth is languishing.

The government shutdown has severely affected employment, or at least the reporting of it.

The jobs report from the Bureau of Labor Statistics for the month of September will finally be released tomorrow.  It would have normally come out three weeks ago. 

Only 169,000 jobs were added in August.   The government had also revised down its estimated job growth for June and July by a combined 74,000 jobs, meaning the net gain from the job’s report is under 100,000 jobs.  That does not even keep up with population growth.

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

August 169,000
July 104,000
June 172,000
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.

At the current pace of job growth, it would take more than six years to get back to pre-recession employment levels.  The Federal Reserve’s Federal Open Market Committee meets next week on monetary policy and they have made it clear that they won’t even consider raising interest rate until unemployment improves.

It would appear that interest rates won’t be going up anytime soon.

Our politicians might be hoisted by their own petards yet.
Hoisted by one’s own petard?

Believe it or not, Vin Scully once used that phrase in a baseball game.

On Cinco de Mayo back in 2008, Dodger pitcher Chad Billingsley struck out ineffectually, prompting Vinny to state that "he was hoisted on his own petard"...  The Dodgers would go on to win that game 5-1. 

So what does it mean to be hoisted by one’s own petard?

A petard was a bell-shaped bomb used to breach a door or a wall.  Now that we have advanced to nuclear missiles, this low-tech word survives in the phrase "to hoist by one's own petard" meaning "to have one's scheme backfire".

The idiom was popularized by Shakespeare in his play Hamlet.  Hamlet, having turned the tables on those tasked with killing him, says:
    For 'tis the sport to have the engineer

    Hoist with his own petard 

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