The evolution of the FIRE economy in the US: 2006 - 2009

[c1ue]

Latest LEAP is out, even more doomer than normal but still worth reading:

http://www.leap2020.eu/GEAB-N-47-is-...ery_a5168.html

This graph in particular, though, is quite telling:

2349781-3288314.jpg

[Chomsky]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

You can really get your doomer porn on with the LEAP guys, but their forecast really isn't so different from EJ's, is it?

[doom&gloom]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

doom? someone talking abot doom here?

[flintlock]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Gloomy indeed. So we will have millions of young people, most whom never got the chance to accumulate much of anything, unemployed. Recipe for the next Hitler. The radical change needed to turn things around is not even on any of the major party's agendas.

[Jay]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Gloomy indeed. So we will have millions of young people, most whom never got the chance to accumulate much of anything, unemployed. Recipe for the next Hitler. The radical change needed to turn things around is not even on any of the major party's agendas.

It never is by definition.

[doom&gloom]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Gloomy indeed. So we will have millions of young people, most whom never got the chance to accumulate much of anything, unemployed. Recipe for the next Hitler. The radical change needed to turn things around is not even on any of the major party's agendas.

not just the youngsters, the oldsters as well...

http://www.nytimes.com/2010/09/20/bu...l?pagewanted=3

[Rajiv]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Latest LEAP is out, even more doomer than normal but still worth reading:

http://www.leap2020.eu/GEAB-N-47-is-...ery_a5168.html

This graph in particular, though, is quite telling:

Why is North Dakota where it is? Immune from the Great Recession?

[c1ue]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Why is North Dakota where it is? Immune from the Great Recession?

Some say because it had a much lower increase in house prices, thus a lower decrease accompanied by economic decline.

Others say it is because ND is a mineral resource exporting state: energy as well as other below ground substances.

And yet still others attribute it to the Bank of ND (as you have).

The truth is likely a combination, but primarily the former 2.

The latter is interesting, but the BND is both significantly funded from said mineral interests and also ND is hardly the hotbed of small business innovation (to my admittedly relative low level of understanding).

The role of a state bank in helping start and grow small business therefore would be a clear indicator of its economic contribution, or lack thereof.

[Rajiv]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

The role of a state bank in helping start and grow small business therefore would be a clear indicator of its economic contribution, or lack thereof.

From the BoND site

Business Financing Programs
	Commercial Participation
	Small Business
	Guarantee Programs for Businesses
	Business Incentive Programs
	New Venture Capital Program

Venture Capital -
Venture Capital Program

Administered by the North Dakota Development Fund, the New Venture Capital Program through the Bank of North Dakota is an innovative financial program that provides flexible financing through debt and equity investments for new or expanding businesses in the state of North Dakota. BND can fund rapidly growing companies which require equity funding.

The Bank may provide funding for early stage companies which can show clear proof of completed product development and market acceptance as evidenced by growing sales. The Bank will invest in a variety of technologies and types of businesses, including North Dakota Department of Commerce strategic target industries. BND will also invest in growth and later stage manufacturing, service and businesses with profitable growth potential.

Qualifying Requirements

Business Criteria:

• North Dakota industries or businesses that will benefit the state and/or local communities within the state.
• A successful and experienced management team.
• Cooperative management predisposed to communicate and work closely with outside investors toward common goals.
• A market with favorable size, growth and competitive characteristics.
• Adequate capital being raised to support operating objectives.
• Companies working to commercialize university-developed technology within the North Dakota University System.

Loan Limit:
The New Venture Capital Program will invest up to $300,000 with appropriate capital structures favoring the following investment instruments:

• Subordinated debt with warrants to acquire common stock.
• Preferred stock with warrants to acquire common stock.
• Common stock.

Use of Proceeds:
BND's capital may be used to develop production and increase sales growth and management capabilities.

All the programs taken together, it becomes a significant package. In fact, one of the small companies I was dealing with was based in ND almost precisely because of the programs.

[hayekvindicated]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Gloomy indeed. So we will have millions of young people, most whom never got the chance to accumulate much of anything, unemployed. Recipe for the next Hitler. The radical change needed to turn things around is not even on any of the major party's agendas.

Things were WAY worse in the 1930s and America didn't produce a Hitler then. It won't now.

[c1ue]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

All the programs taken together, it becomes a significant package. In fact, one of the small companies I was dealing with was based in ND almost precisely because of the programs.

I don't doubt the BND has such programs - the question is just how many small businesses and jobs are being created through them.

According to this:

http://www.banknd.nd.gov/financials_..._July_2010.pdf

The BND has a $2.8 billion loan portfolio of which $1.0 billion is student loans, $1.02 billion is commercial loans, $475.2 million are residential loans, and $260 million are agricultural loans representing a total of 93.75%

So the majority of BND's business is actually either real estate or student loans.

Of the remaining $1.02 billion in commercial loans - how many are for small businesses?

As BND is not part of the FDIC and apparently doesn't report numbers to the SBA (despite clearly offering SBA services), the true small business impact of the BND can only be seen in context:
http://www.sba.gov/advo/research/bk_08tnd.pdf

From this report, you can see that the US Bank National Association of North Dakota has hundreds of millions of dollars out in small and super small lending - and is an institution of comparable size to the BND.

Of course US Bank is a trans-US institution so these numbers might well apply across the entire country, but it is this type of data which truly indicates just how much the BND contributes to small business.

[Rajiv]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

From this report, you can see that the US Bank National Association of North Dakota has hundreds of millions of dollars out in small and super small lending - and is an institution of comparable size to the BND.

BoND makes no direct loans to consumers. It acts as a banker to state chartered banks. So the state chartered banks further leverage the money of the BoND

from the wikipedia

All state and local government agencies are required to place their funds in the bank. Previously, all public corporations in the state were also required to deposit their funds in the bank, but an initiative measure in 1919 eliminated that requirement[citation needed]. Other entities may also open accounts at the Bank; however, BND offers fewer retail services than other institutions, and has only one office, limiting its competitiveness in consumer banking.

Instead, BND has taken a role more akin to a central bank, and has many functions, such as check clearing, that might be expected from a branch office of the Federal Reserve. The Bank does have an account with the Federal Reserve Bank, but deposits are not insured by the Federal Deposit Insurance Corporation, instead being guaranteed by the general fund of the State of North Dakota itself and the taxpayers of the State.

BND also guarantees student loans (through its Student Loans of North Dakota division), business development loans, and state and municipal bonds.

From the BoND site

Bank of North Dakota Service Areas

Lending Services:

On behalf of the State of North Dakota, the Bank administers several lending programs that promote agriculture, commerce and industry. Financing economic development is the thrust of Bank of North Dakota’s efforts. The Bank is specifically authorized to assist numerous other financial institutions in providing financing to stimulate economic development in the state.

BND is involved in two types of lending: direct lending and participation loans.

BND by statute can do anything any other bank can do, unless restricted by statute. Mostly by practice we do not make direct loans. However, legislative action has given express lending authority to BND for:

• The purchase or acquisition of bank stock or the formation of a bank holding company.
• The acquisition or refinancing of farm real estate by qualified individuals.
• Assistance with post secondary educational costs (i.e., student loans).

All other lending by BND is through participation with a lead financial institution. This lead lender can be any qualified financial institution - most notably a bank, savings and loan, credit union or Farm Credit Services.
.
.
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Business Financing Programs

Bank of North Dakota (BND) offers a number of programs that make financing easier to access, and less expensive. BND’s business financing programs include:

Commercial Bank Participation Loan Program

BND's Commercial Bank Participation Loan Program is founded on the principles that all loans should serve the legitimate credit needs of the state & be made on a sound and collectible basis. The Commercial Bank Participation Loan Program is generally “market driven” in terms of the rates, terms and conditions offered to a borrower. In most instances, BND’s participation under this program is needed to assist a financial institution with a borrower whose financing needs have outgrown the legal lending or exposures limits of the originating lender.

Small Business

BND has a variety of small business programs available. Listed below is a short summary of each.

o Business Development Loan Program

The Business Development Loan Program assists new and existing businesses in obtaining loans that would have a higher degree of risk than would normally be acceptable to a lending institution.

o Beginning Entrepreneur Loan Guarantee Program

This program assists in business start-up financing by providing a financial institution with an 85% guaranty of a loan not to exceed $100,000.

o Ag PACE Program - (Agriculture Partnership in Assisting Community Expansion)

The Ag PACE program provides interest buydown on loans to farmers who are investing in nontraditional agricultural activities to supplement farm income. The program funds are used to reduce the interest rate on loans which have been approved by a local lender and BND. The farmer shall have as his principal occupation, prior to applying for the program, the production of agricultural commodities or livestock.

o PACE Program - (Partnership in Assisting Community Expansion)

The PACE Fund assists North Dakota communities in expanding their economic base by providing for new job development.

The PACE program has two major elements: (1) the participation by BND with a local lender in a community based loan, and (2) the participation by the PACE Fund with the local community in reducing the borrower's overall interest rate.

Flex PACE Program

Qualified Businesses - The Flex Pace feature of the PACE program provides interest buy down to borrowers that do not fit into the traditional definition of a PACE qualifying business. Under Flex PACE, the community determines eligibility and accountability standards. Flex PACE allows communities the ability to provide assistance to borrowers with a business focus or need outside of the current requirements of PACE, such as jobs retention, technology creation with no new jobs, retail, smaller tourist businesses and essential community services.

Guarantee Programs for Businesses

o The Beginning Entrepreneur Loan Guarantee Program

This program assists in business start-up financing by providing a financial institution with an 85% guaranty of a loan not to exceed $100,000.

Business Incentive Programs
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New Venture Capital Program

Administered by the North Dakota Development Fund, the New Venture Capital Program through the BND is an innovative financial program that provides flexible financing through debt and equity investments for new or expanding businesses in the state of North Dakota. BND can fund rapidly growing companies which require equity funding.

[flintlock]

Re: The evolution of the FIRE economy in the US: 2006 - 2009

Things were WAY worse in the 1930s and America didn't produce a Hitler then. It won't now.

I hope you are right. Fascism ran amok in the 30s. Franco, Mussolini, Hitler, and others. Why Europe then and not the US? 2010 America is a very different animal than 1930. It lacks the toughness it used to have. The sense of community. Its very fractured in comparison. Full of a sense of entitlement. The first person to harness the unemployed youth with offers of something more than a handout may be the one to watch out for. We are years away from that. Germany spent 15 years in economic turmoil before Hitler came to power. I don't know. I just don't see millions of broke Americans sitting on their hands for the next 10
+ years. something will have to give.

At the very least we can expect much higher crime, which my area is beginning to see for the first time. Armed robbery, home invasions, and kidnapping on the rise. Someone was murdered a during a robbery a few weeks ago. Previously unheard of here. Drug gangs taking over. Very aggressive criminals. Cars roam neighborhoods here in the suburbs now, looking for targets of opportunity. Unlocked cars, etc. This recession is different. In previous downturns Johnny would borrow money from mom and pop. Now Mom and Pop are broke and Johnny must fend for himself.