Monday, April 9, 2018

The SBA and rhubarb

A heated dispute; brawl.

The origin of the plant name rhubarb is from Greek rha (perhaps from Rha, an ancient name of the river Volga on whose bank rhubarb was grown) + barbaros (foreign)

In Shakespeare’s day when a play called for a crowd scene,a group of actors was asked to repeat the word rhubarb which reverberated through the theatre like the sounds of an angry horde.

From this "rhubarb" eventually came to be theatrical slang for "commotion." Actors who did it were called "rhubarbers." This standard stage practice then became a verb "rhubarbing", eventually "rhubarb" came to mean, "fight."


A rhubarb over the new SOP has gone quiescent with a recent policy change from SBA.

SBA Notice 5000-17057 dated 4/3/2017 revises and clarifies several policies in SOP 50 10 5(J).

Under the revised guidance, lenders will now be required to consider the liquidity of owners of 20% or more of the applicant business. The Notice increased the ownership percentage for which liquidity must be considered from 10% to 20%.

As a reminder, the liquidity of the owner includes the liquid assets of the owner’s spouse and any minor children.  For those that want to start rhubarb over why a non-owner spouse must be included keep in mind that the SBA’s lending programs qualify as “Special-Purpose Credit Programs” under the Equal Credit Opportunity Act (ECOA). This regulation stipulates that information pertaining to the Applicant’s marital status, sources of personal income, alimony, child support, and spouse’s financial resources can be obtained and considered in determining program eligibility.


SBA LIBOR Base Rate April =N/A
SBA Fixed Base Rate April = TBA


SBA 504 Loan Debenture Rate for April

The debenture rate is only 3.31% but note rate is 3.36454% and the effective yield is 5.029%.

Keep in mind a rhubarb over the new 25 year debenture won’t estivate.


A rhubarb about Federal Reserve recrudescence on monetary policy is causing some splenetic presentiment and if it is enervating inflation.


At their last meeting on monetary policy the Fed decided to increase the federal funds rate target range by 0.25 percent to 1.5 to 1.75 percent.

They also slightly changed the wording in their statement.  The Fed said inflation on an annual basis is “expected to move up in coming months,” after saying “move up this year” in the January statement.

You would think that means inflation is starting to heat up, but they left their inflation forecasts unchanged at 1.9% in 2018 and 2% in 2019.

Will they penelopize and cunctate any further?

Fed funds futures showed a decline in the odds for tightening, with the probability of rates being higher after the June meeting dipping to around 72 percent from 76 percent after the report on jobs came out on Friday.

Employers added a disappointing 103,000 jobs in March as colder weather appeared to crimp hiring after solid employment gains the first two months of the year.  In February, unseasonably warm weather pulled forward hiring in industries such as construction and retail, leading to blockbuster job gains that topped 300,000.   As a result, the weak showing is being viewed as a blip rather than a sign of a weakening labor market.

After the jobs report, the 30-year Treasury bond dropped 4.1 basis points to 3.032 percent.

Keep your eyes and ears open for Thursday’s auction of 30 year Treasury bonds.

Here is what the 30 year Treasury bond has been doing and this week’s interesting little table:
2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61
2011- 2.89
2012- 2.77
2013- 3.25
2014- 3.97
2015- 2.91
2016- 2.32
2017- 3.16

Wait a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

At last month’s auction of $13 billion of 30 year bonds bidding was tight and pulled down the high yield to 3.109 percent.  That’s 6.1 basis points below the high yield awarded in March 2017.

So long term rates have declined while short term rates continue to climb.  The $14.7 trillion Treasuries market is sending clear signals that a flatter yield curve could be back in vogue.


My first exposure to rhubarb came from listening to Vin Scully on the radio describe a brawl between the Dodgers and Giants.

Vinny got it from his predecessor Red Barber.  The Oxford English Dictionary has the first citation from 1943:  "Mr 'Red' Barber,.. who has been announcing the games of the Brooklyn Dodgers, has used the term 'rhubarb' to describe an argument, or a mix-up, on the field of play." (NY Herald Tribune) Red’s autobiography was titled “Rhubarb in the Catbird Seat."

My second exposure to rhubarb was at Mrs. Knott’s Chicken House.  Dinner featured cherry rhubarb, salad with French dressing, handmade biscuits, cabbage and sweet pickles, three pieces of fried chicken and mashed potatoes smothered with gravy. For dessert: a slice of boysenberry pie with vanilla ice cream.

Rhubarb, a springtime stalk most commonly used in the creation of America’s second best pie, the strawberry-rhubarb, is a very strange plant indeed. Most often used in sweet applications, it’s a sour vegetable that looks like crimson celery. And its leaves are spectacularly poisonous. Rhubarb leaves are very high in oxalic acid, which quickly causes kidney failure in humans. About 25 grams of pure oxalic acid is the average amount needed to kill a human. That said, rhubarb leaves aren’t pure oxalic acid, and it would take around 11 pounds of the leaves to secure that much. But still! I’d stay away.

America’s best pie of course is that boysenberry pie.  Boysenberry is a cross between a red raspberry, a loganberry and a blackberry. The fruit was a failed experiment of Anaheim Parks Superintendent Rudolph Boysen, who was unable to keep the vines from withering. Walter Knott tried his hand at it and after successfully turning a harvest, named it the boysenberry, whose jams and jellies became a staple at the stand, and later at the restaurant.

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