patrick.net

Okay, so houses go down the pan, banks foreclose and people declare BK. That will have a knock on effect on Bank shares surely - and then of couse on our mutual funds in 401K's etc, as we have no control over the funds holdings and most funds offered all have a banking/finance element - anyone got any suggestions?

Mike, here is a link anyway:

http://en.wikipedia.org/wiki/California_Proposition_13_(1978)

I too would stay away from a subcompact. I drove one for about a month recently, while my wife's car was in the shop after someone backed into us in the grocery store parking lot. It was a Chevrolet Aveo, sort of halfway between a Corolla and a Scion XA/C in size.

The gas milage was great, no doubt about it, but when a Suburban went by on the 10, the whole car would shake when it was hit by the gust of air displaced by the Suburban. It felt like you were driving a skateboard, at 80mph, on the Interstate. Not a good feeling.

The 4cyl engine was so tiny that it seemed like the rear bumper of the truck in front of you was only about an inch away.

It had no power at all; while driving up a hill, I literally had to plant the gas pedal to the floor just to maintian a speed of 80 mph. And this was with no passengers or cargo in the car, only me.

The build quality was OK, but you just knew that the car would fall apart in 2 or 3 years. It was so lightweight that you knew every pothole was bending the frame, dash, etc., shaking some internal bolt loose which would eventually start to rattle.

Back in the 80's, my mom had a subcompact. A 3cyl (yes) Chevrolet Sprint. One day I got caught by a gust of wind and was literally blown into the next lane. If a semi had been driving in the lane, and speeding up, I might well have died. Fortunately there was no one in the next lane, but that was just a matter of luck.

Subcompacts are cheap, and they can be useful, but I don't know that I would buy one.

Claire,
You make a good point and one that I think most of us don't want to admit, which is that either way, we're going to have to pay some way or another for a lot of irresposible people. Some states like california and new york will be a hit a lot harder and might actually have severe recessions as a result. But nationally, we will all probably have to do some bailing. Sad.

Lefantome,

Good points, and some angles I hadn't considered. I know I've referenced this before but several months ago Bankrate.com ran an article pretty clearly stating that over half of the mortgages in this country are under TWO years old. So........ if any portion of them did their "equity extraction" thing it may not matter as much "when" you bought your home. As Surfer X is fond of reminding us when you "re-fi" your home you're basically "re-purchasing" it all over again. Even though mort. fees became more competitive during the boom most working class people probably opted to go ahead and take the equity out while they were paying the fees anyway. Wasn't there also an article that said that homeowner's equity is at historic lows?

When people complain on this blog about Prop13, are they complaining about the RE part or the 2/3 vote for rate increases part?

I complain about the philosophy behind it. In particular, it does not incentivize economic efficiency.

People who cannot afford to stay should be kicked out so that the free market can put the land into better use.

I do not care too much about the fairness issue, as life is inherently unfair.

OK. How about just tell me why it’s political.

If an issue involves a conflict of interests among groups of people, it is political.

We own a SUV because, just before we moved here, a student of my husband's test drove a sub-compact - hit wet diesel on the road, lost control and hit a Land Rover Discovery coming the other way side on - the two friends in the back and the car salesman in teh passenger seat were killed, he was paralysed all down one side. Police said it was not his fault, as he was not speeding or driving dangerously.

Therefore we changed our minds about owning anything low down and small, especially when you see that your childrens heads are lower than most bumpers on other cars.

I don't know the full ins and outs of Prop 13, but most people complain that one neighbor will be paying less than $1000 property tax and the next $13,000, because of when the houses were bought and how much they had to pay for the house.

Claire,

Fear not! The trend for 401K's (particularly the larger plans) is toward ETF's (Exchange Traded Funds). I've never advocated someone "own the market" and it doesn't sound like you do either. They're cheap to run, focused and have better liquidity. The prospectus is easier to read also so you can better understand what you're getting into. You'll be able to target the asset classes and markets you want to be in and avoid the rest. If your employer doesn't currently offer them bring it up at the "info share" and get co-workers excited about. Making the switch is no big deal.

*General Investment Information (not specific inv. advice)

My current fantasy car is a used Audi A8L. It is boxy, pretty, and big. However, I doubt its reliability.

Peter- The issue with prop 13 is that it helped create the unaffordable environment we've been in for 30 years. Prior to these laws, SF, and CA were on the same level of affordability as the rest of the country.
and SQT, Volvo is a Ford product. The large Volvo SUV they produce has the same engine as the Ford Explorer, so you're essentially paying for the name alone. Buy an Explorer. Same vehicle.

I really wished car manufacturers will design more non-luxury sedans with 5000+ lb curb weight. :(

Claire,

get your co-workers excited about (ETF's!)

is what I meant to say.

The issue with prop 13 is that it helped create the unaffordable environment we’ve been in for 30 years. Prior to these laws, SF, and CA were on the same level of affordability as the rest of the country.

The issue is that it interfered with the market mechanism, so everything is out of whack.

A BMW saved my Dad’s life. I’d drive one if I could afford it, but it’s a little too pricey right now.

How about a previous generation 7 series? But is it less reliable than an older volvo?

Peter P,

Currently my "fantasy" car, is one that's paid for!

You need this to counter the threat from hummers:

http://www.marketingshift.com/2004/09/biggest-suv-navistar-international.cfm

Huh, no kidding? But doesn’t the safety lie in the frame not the engine? Even if they have the same engine, the Volvo should be safer, shouldn’t it?

Not just the frame. An SUV needs gadgets like electronic stability control. I am sure Volvo has more standard safety equipments.

The smallest sub-compacts are problematic because they're not really highway worthy. But anything with over 120 HP ought to be fine for the road.

I really really loath SUVs. They make everyone else's driving experience so much less safe and less pleasant. Ditto RVs. There should be a law that forces RVs to pull over and let vehicles behind them pass. Ditto with semis that block both lanes of a highway for miles just so they can make their mileages. I wish California had the same law as Oregon and forces them onto the right most lane at all times, so they don't impede traffic for everybody else.

I wish California had the same law as Oregon and forces them onto the right most lane at all times, so they don’t impede traffic for everybody else.

That is a good law. I also want the national 55mph law back with serious enforcement.

Peter P,

I'd actually seen one I think the other day. I just assumed it was like a "state" vehicle until I went to pass and saw a family inside. Weird huh?

The smallest sub-compacts are problematic because they’re not really highway worthy. But anything with over 120 HP ought to be fine for the road.

You do need something that can merge safely into freeway traffic though.

Peter P,

That's never going to happen. But taking trains and planes for long distance travel will help you avoid the 85 MPH traffic (and perhaps more importantly, avoid bad karma from the pissed off people behind you).

astrid,

I think part of the reason we have that law is because "triple trailers" are legal here. These things are huge and when it rains it's like they create their own weather system!

I’d actually seen one I think the other day. I just assumed it was like a “state” vehicle until I went to pass and saw a family inside. Weird huh?

The A8? Yes, it is very popular amongst European politicians.

DinOR,

I hope those people at least have a commercial license. A nice round of insurance premium increases and more stringent licensing requirements ought to cut down the nuisance factor for big SUVs, big trucks, and RVs.

Forcing people to relocate is not economically efficient in the slightest, not to mention it is totally lacking in compassion.

Forcing unproductive people to move is not uneconomical. The policy that produces the best utility may lack compassion towards some people but it is a small price to pay. Misfortune occurs every day.

Life *is* fair as long as people contribute to making it so and don’t throw basic morals in the trash can just because others choose to do so.

Huh?

The main problem is speeding and inexperienced drivers.

Solution, GPS tracking device. The loss of privacy is a small price to pay.

I meant to say - the main problem is speeding and inexperienced drivers - not the size of the cars.

Bill C,

I've never heard of Liz Ann Sonders (Chief Schwab Strategist) but I like her already. I like her assesment that 2006 could break RE streak going back to to WWll! Good summation.

Some people secretly like the bland, unpopular Ford 500 sedan because it has the Volvo frame and safety systems, and is pretty cheap.

Make sure you choose the optional side curtain airbag system. It is between life and death.

Michael Anderson,

I too drove Volvos for years. My 940 was quite heavy and it always felt like there was an emphasis on safety (hit a deer once). But I've heard that the data is "skewed". Europeans don't drive as much or nearly as FAST! Some in the community are now challenging that claim.

Prop 13 is one of the reasons I use to justify renting

newsfreak,

I'm not sure I follow you. I find the semis hogging all the lanes to be a huge pain precisely because they show little courtesy to other drivers. A couple of them can be side by side for miles and slow the entire flow of traffic down. Sure these people do this for a living and they're optimizing their gas consumption, but it makes the driving experience suck for people behind them for miles and miles with no visibility.

As for safety and unneccessarily large vehicles/reckless drivers. The roads are a public resource and there's no reason that they have to degrade into a war of all against all. We have rules of the road that everyone adhere for everyone else's safety. There's no reason why we can't start putting SUVs and RVs out of commission, particularly out of hands of reckless drivers.

I find the semis hogging all the lanes to be a huge pain precisely because they show little courtesy to other drivers. A couple of them can be side by side for miles and slow the entire flow of traffic down.

Actually, I find big rig drivers to be quite courteous. If they slow the entire flow of traffic down to the speed limit, God bless them! :)

We have rules of the road that everyone adhere for everyone else’s safety.

Half of that sentence is incorrect. I just wish the CA's "keep right" and "pull over" laws were properly enforced.

SQT,

Unsafe SUV drivers are not in the majority, but I see at least a couple instances of women talking on their cell phone and minding the kids while changing lanes, through curves, or backing out of parking lots. However, most of my observances of truly insane driving are connected with minivan drivers. The vast majority of minivan drivers seem fine, but there seems to be a fringe of crazy minivan drivers.

However, I still don't see why there ought to be so many SUVs from a purely practical stand point. You and Peter P are both advocating SUV based on the idea that it protects you from other drivers and gives you a better view of what's happening around you. If there were laws (maybe a one time sales tax based on height or if insurance companies quit pooling SUVs with cars) that decreased the total number of SUVs on the road, you wouldn't need SUVs nearly as much and everyone ends up safer.

that decreased the total number of SUVs on the road, you wouldn’t need SUVs nearly as much and everyone ends up safer.

This is similar to a nuclear arm race. We may need something like START than. :)

Claire,

I'm not even thinking about fuel consumption, just road conditions whenever there are a lot of tall vehicles around. However, if I was to keep that in mind, most other gas guzzlers at least pay a gas guzzler tax at the time of sale. SUVs are still getting exempted based on their light truck classification, even though they are actually a substitute for minivans and wagons.