Each of us has two distinct choices to make about what we will do with our lives.
The first choice we can make is to be less than we have the capacity to be. To earn less; To have less. To read less and think less; To try less and discipline ourselves less. These are the choices that lead to an empty life—the the choices that, once made, lead to a life of constant apprehension instead of a life of wondrous anticipation.
And the second choice? To do it all; To become all that we can possibly be; To read every book that we possibly can; To earn as much as we possibly can; To give and share as much as we possibly can; To strive and produce and accomplish as much as we possibly can. All of us have the choice.
To do or not to do; To be or not to be; To be all or to be less or to be nothing at all. Like the tree, it would be a worthy challenge for us all to stretch upward and outward to the full measure of our capabilities. Why not do all that we can, every moment that we can, the best that we can, for as long as we can?
Our ultimate life objective should be to create as much as our talent and ability and desire will permit—to settle for doing less than we could do is to fail in this worthiest of undertakings.
Results are the best measurement of human progress. Not conversation. Not explanation. Not justification. Results! And if our results are less than our potential suggests that they should be, then we must strive to become more today than we were the day before. The greatest rewards are always reserved for those who bring great value to themselves and the world around them as a result of whom and what they have become.
The Wall Street Journal reports that during the second and third quarter of this year, more than $110 billion worth of auto loans were made to people with poor credit (below 660 score), and that nearly 70 percent of those loans were made to borrowers with credit scores below 620. Some analysts are correct to see similarities between the current boom in subprime auto loans with “what happened in mortgage-backed securities in the run-up to the crisis [of 2008].”
The way the new subprime business works is explained very clearly in a post on Bloomberg, "Longer Leash for Subprime Car Buyers in U.S. Stokes Debt Concern." It points out that one-third of the 14,628 loans recently bought by American Credit Acceptance (a company that buys and sells debt) were tied to borrowers with credit ratings below 500. It also explains that a borrower with bad credit does not get a sweet deal but a loan that has a high interest rate and is very long (five or more years of payments). All of this has heated the auto industry like nobody's business. Americans are shopping for new cars in the age of climate change.
But why are creditors so eager to loan expensive money to poor people? They want to transform their payments into securities, which are then sold to investors who are forever looking for assets with high yields.
Even with the built-in protections, some market participants are starting to caution that buyers may be letting down their guard for the sake of higher yields.
All of this sounds so familiar. Just as the American economist Hyman Minksky would have predicted, we have left the moment of caution and entered the speculative stage. Next will be the Ponzi period.
The problem with all of this can be explained by what the classical thinkers of political economy (Adam Smith, David Ricardo, Karl Marx) distinguished as exchange value and use value. With an automobile, the exchange value declines as the cost of the use value increases. And so, in the future, many poor Americans will be stuck paying high-interest loans for cars that have little value and mounting expenses. This will, of course, lead to an increase in delinquencies (which at present make up only 3 percent of auto debts), and this will, of course, lead to the market being flooded with auto-related securities everyone wants to sell but no one wants to buy, and this will lead to a crisis in the financial markets.
You can expect all of this to happen in about four years. We will also see a lot of worthless cars being abandoned, a leap in the number of poor people who have no cars, and a public transportation system that was severely stunted during the car bonanza. Meanwhile, the vampirish financial sector will search for another hardened vein of the American dream to suck.
Falling unemployment and low interest rates meant good news for the owners of commercial real estate properties in the third quarter of 2015, according to the latest numbers from CoStar Group.
In its latest report, CoStar reported that these two factors played a key role in boosting the value of commercial real estate properties in the third quarter. But a more interesting factor helped, too: Uncertainty across the globe. According to CoStar the shaky economic conditions throughout the rest of the world continues to send investment dollars into U.S. commercial real estate. That’s because investors are looking for save places to stow their money.
U.S. real estate remains among the most stable of investment vehicles today. CoStar’s equal-weighted U.S Composite Index — one of the broadest measures of pricing within the company’s recently released — jumped by 2.6 percent in the third quarter. This means that the value of U.S. commercial properties continued to increase during the quarter. For the 12 months ended in September of this year, this popular measure of commercial property value increased 11.2 percent.
To no one’s surprise, CoStar pointed to multifamily as a top performer in the commercial sector. The Multifamily Index increased 3 percent in the third quarter and 12.4 percent for the 12 months that ended in September. This index is now 15 percent higher than its prior peak, a rather impressive accomplishment. And, yes, this is all happening despite already-elevated multifamily pricing and heavy construction in this sector.
CoStar reported, too, that the hospitality sector had a strong third quarter. The company’s Hospitality Index rose 13 percent during the 12 months that ended in September. This helped the Hospitality Index move within 11 percent of its previous high. That’s pretty impressive, too, when you consider how far the hospitality business tumbled during the days of the Great Recession. Investors, of course, have taken note of how strong the U.S. commercial real estate market is. CoStar reported a composite commercial sales volume of nearly $91 billion in the first three quarters of 2015. That number grew 32.8 percent when compared to the first three quarters of 2014.
Mortgage applications for new home purchases fell by 8% relative to the previous month, partially due to TRID going into effect during the month, the Mortgage Bankers Association Builder Application Survey data for October 2015 shows.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of homebuilders across the country. This change does not include any adjustment for typical seasonal patterns. “On top of normal seasonal slowdown, the October decline in mortgage applications to builder affiliates was likely amplified by some applications being pulled forward into September ahead of the implementation of the Know Before You Owe Rule on October 3,” said Lynn Fisher, MBA’s vice president of research and economics. “Despite the decrease, our estimate of new single-family housing sales for October was up more than 7% from a year ago.”
This wasn’t the only thing in the industry impacted by TRID. Mortgage applications experienced a volatile month of upswings and downswings due to TRID. Broken up by product type, conventional loans composed 67.2% of loan applications, FHA loans composed 19.2%, RHS/USDA loans composed 1.0% and VA loans composed 12.7%. The average loan size of new homes decreased from $324,884 in September to $320,881 in October.
Additionally, the MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 495,000 units in October 2015.
The seasonally adjusted estimate for October is a decrease of 9.7% from the September pace of 548,000 units.
Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 115,134 U.S. properties in October, up 6% from the previous month. This is still down 6% from a year ago, the latest RealtyTrac Foreclosure Market Report for October 2015 showed.
The rise was caused primarily by a 12% monthly jump in foreclosure starts, with 48,605 properties starting the foreclosure process for the first time in October. This increase marks the largest month-over-month increase since August 2011, when there was a 24% month-over-month increase. Despite the month-over-month increase, foreclosure starts in October were still down 14% from a year ago.
While this increase isn’t a giant surprise, it did exceed expectations. “We’ve seen a seasonal increase in foreclosure starts in October for the past five consecutive years, so it’s not too surprising to see the monthly increase this October,” said Daren Blomquist, vice president at RealtyTrac.
“However, the 12% increase this October is more than double the average 5% monthly increase in the past five Octobers, and the even more dramatic monthly increases in some states is certainly a concern. The upward trend in foreclosure starts in those states in some cases could be an indication of fissures in economic fundamentals driving more distress and in other cases is more likely an indication of long-term delinquencies finally entering the foreclosure pipeline,” he added.
Broken up, October foreclosure starts increased from the previous month in 34 states, including California (up 21%), Florida (up 13%), New Jersey (up 15%), Illinois (up 20%), Maryland (up 300%), Washington (up 34%), and Michigan (up 37%). Meanwhile, Maryland, New Jersey, Florida, Nevada and Illinois posted the highest state foreclosure rates. Maryland posted a total of 5,126 foreclosure filings in October, up 100% from the previous month, but still down 14% from a year ago. For the first time this year, Maryland’s foreclosure rate jumped to the top spot in October thanks to the surge in foreclosure starts. One in every 466 Maryland housing units had a foreclosure filing in October, more than 2.5 times the national foreclosure rate.
New Jersey accounted for 7,559 properties receiving a foreclosure filing in October, a foreclosure rate of one in every 471 housing units. While the state’s foreclosure activity is down 4% from the previous month, it is still up 87% from a year ago.
Recently, Sens. Cory Booker, D-NJ, and Robert Menendez, D-NJ, sent a letter to the heads of the Department of Housing and Urban Development, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency and others, saying that the prevalence of zombie foreclosures in the state is seriously impacting the state’s residents and its economy, and they want to know what the federal regulators are going to do about it.