Prosopography
pros-uh-PAH-gruh-fee
A study of people in a group, identifying patterns,
connections, etc.: a collective biography.
From German Prosopographie, from Latin prosopographia,
from Greek prosopon (face, mask), from pros- (facing) + ops (eye) + -graphy
(writing).
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TIP OF THE WEEK
The prosopography of SBA borrowers and lenders proliferates
with protean promulgations.
A Promethean $342,277,999,103 in round 1 of the Payroll
Protection Program disappeared seemingly overnight with a profligate lack of
being prospicient.
Proditomania with round 2 of PPP caused an extension of
the covered period from 8 weeks to 24 weeks and an extension of PPP
availability until August 8th.
Last week it was also announced that the California
Infrastructure and Economic Development Bank is providing a Disaster Relief
Loan Guarantee Program even if a small business borrower had previously
obtained a PPP loan or a SBA Economic Injury loan.
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Indices:
PRIME RATE= 3.25%
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SBA 504 Loan Debenture Rate for June
For 20 year debentures, the debenture rate is only 1.21%
but note rate is 1.23325% and the effective yield is 2.528%.
For 25 year debentures, the debenture rate is only 1.34%
but note rate is 1.35995% and the effective yield is 2.602%.
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AHEAD OF THE YIELD CURVE
The prosopography of the Federal Reserve Board is
protean.
Take for example its recent discussion on adopting a
yield curve control policy as reflected in its minutes from its last meeting on
monetary policy.
Combining a yield-curve-control policy with large-scale
asset purchases is not without precedent.
In early 1942, shortly after the United States declared
war, the Fed effectively abdicated its responsibility for monetary policy
despite its concern about inflation and focused instead on helping the Treasury
finance the conflict.
The Fed would maintain a yield curve that was both low
and relatively steep. The low rates kept the Treasury’s borrowing costs down,
while a firmly harnessed term structure convinced investors that waiting for
higher yields was pointless and that the risk of capital loss from holding longer-term
securities was small.
The policy was successful in terms of managing the yield
curve, and that’s certainly good news for central banks today. The Fed’s wartime operations, however, proved
dangerously difficult to reverse once the war had passed. Yield-curve control
gave the Treasury substantial influence over monetary policy and highlighted
the major effect that monetary policies had on the cost of financing the
government’s huge debts.
Keep your eyes and ears open for this Thursday's $19 billion
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
2018- 3.13
2019- 2.594
2020- 1.216
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, results were soft causing the
yield to rise to 1.450%. This was 10.8
basis points higher than May's auction and 12.2 basis points above the record
low posted in March.
A little proditomania is prompting the Federal Reserve to
be protean.
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OFF BASE
Dr. Anthony Fauci used our word "protean" in a
news conference on June 26, 2020.
For those of you that don't remember what protean means,
it means assuming many forms: variable.
If this is starting to come back to you it was our word for the month
back in October.
Dr. Fauci’s actual comment was "I have never seen
anything that is so protean in its ability to make people sick or not" as
coronavirus.
Let me know if you hear him mention prosopography or
proxemics.
