All good comments, thank you, each one revealing the interconnected nature of the problem: pull one thread and a dozen more start unraveling.
David, you're right, mobility is a form of insurance, but it too has its costs.
Gordon, I tend to think the logical outcome of what you describe is many people will give up on rebuilding because it may make emotional sense but not financial sense.
Kevin, you're right about disaster-proof housing: sure, concrete bunkers / high-rises are solid, but flooding can wipe out the contents, fires routinely burn out concrete structures, and what's the point if there's nothing left of the region but concrete bunkers?
Polistra, you make a good point about yields, but I tend to think the core issue is this: insurance only functions if the risks / losses can be reliably estimated actuarily. If there is no reliable way to pin a dollar sign on predictions / probabilities, then the whole game is impossible, a crap shoot that involves huge risks for returns that are modest compared to the potential losses.
Two other points: 1) the areas that burned in LA were havens of the wealthy and influential. No effort was spared to save their homes. Less wealthy neighborhoods won't receive the same effort, regardless of official pronouncements.
2) the economy of LA is dependent on tourism, entertainment, the container port and real estate development, which has been a core industry / source of growth and profits for 100+ years. The same can be said of Florida. As demographics reverse and insurance costs mount, real estate becomes a deflationary drag rather than an inflationary engine of "growth".
Another factor is all the easy-to-build on land is long gone, so development pushed into the hills and exurbs, creating killer commutes that are basically forms of unpaid servitude.
The probability that real estate development will no longer drive the economies of Calif. and Florida but instead become a net drag as valuations plummet to Earth seems very high.
In a recession, the first canaries to expire in the coalmine are tourism and entertainment. As for the port, as globalization contracts, that too may no longer be an engine of growth.
In other words, the viability of huge swaths of heavily populated areas is in doubt on several fronts. Nobody seems willing to ask if the economy and climate are still conducive to tens of millions of people inhabiting these regions. These are not easy questions to ask because there may be no good answers that meet with our approval. warm regards, charles
Mayor Karen Bass is a Marxist. She's been to Cuba fifty times or more. She and her Marxists want the rich homes to burn. That is why Bass cut the Fire Dept. budget $17.5 million. Gave "extra" fire equipment to Ukraine. Drained the Ynez Reservoir. Stopped clearing the brush on the hills. And she was in Ghana during the fires celebrating the inauguration of the new Idi Amin Marxist of Ghana.
There is even a book, "Burn, Malibu, Burn." The Marxists want the rich to lose everything.
Altadena is a working-class neighborhood. The LAFD contained 30% of the fire. They do not favor the rich. They will do extra to protect landmarks and key infrastructure.
For those with a penchant to think in terms of political economics; the LA fires are proof, the socialist government in California is now "consuming it's host".
Timmy, the insurance biz does have similarities to a protection racket, and that's why we should worry when the mafia can't make money and bails out.... OTOH my friends' car was wrecked by an uninsured motorist in a nice truck, he suffered no penalty or consequence for causing the wreck or being uninsured. How is that right?
John, for sure taking the obvious measures to reduce risk makes excellent financial sense. I have trimmed the only tree that could have fallen on our house, installed a 500-gallon reserve water tank, etc., and we have a metal roof. One of the issues I was trying to raise is what happens if the infrastructure and economy both decline as a result of the risk event. Surviving the event is step 1, but if everything around us is crippled, then our options are limited by that systemic decline.
Jim, for sure rates are rising everywhere to cover the losses. As noted, the Mafia is not in business to lose money.
In other words, the entire idea of being an "insurer of last resort" is based on an unlimited supply of money to fund losses that no longer make financial sense. If rebuilding a house destroyed in a "100 year flood" once made sense, now that there's a "100 year flood" every five years, rebuilding in that locale no longer makes sense. So why should taxpayers absorb the costs of this selective blindness to the realities of rising global risks?
Unquote
This is why I am skeptical of 30 year mortgages
A nice neighborhood can go to the dogs in 30 years see areas in Michigan Iliinois Ohio
Near Detroit there are formerly wealthy neighborhoods with real mansions that went down
No jobs the real estate crashes
Now throw in natural disasters which have dramatically increased as you write
Thinking about the Los Angeles fires, I have read that it was already difficult (and expensive!) to get homeowners insurance in California. Now, with the fires in Los Angeles, I suspect that even more insurers will either leave the state or raise their rates to levels that most owners simply won't be able to pay. If you can't get insurance, you can't get a mortgage, which will further complicate efforts to rebuild.
I wonder how this may affect efforts to rebuild burned homes, or, if people are unable to do so, what the follow-on impacts may be for California, and by extension, to the rest of the country.
Reconstruction will require the efforts of tens of thousands of skilled builders, the majority of which (according to reports) speak Spanish as their native language, and may not be legally resident in the US. And where will these laborers live while they are working to rebuild homes? And oh so many more questions that follow.
I am very glad that I am not in charge of organizing these efforts, but when I look at the current leadership of California and Los Angeles in particular, I suspect I might do a better job. Fortunately, I am sure that I won't be invited to help, as I am retired and live south of the equator.
Charles am reading Clash of Civilizations by Samuel Huntington
Cool diagram from the book unfortunately cannot paste it
Idea is modernization improves wealth of a society but it atomizes and alienates people so they move more religious or culture focused so not universalism
Obviously then we see the random lone wolf violence that arises because of radicalization
Simplest explanation: ZIRP made all insurance less profitable because insurers traditionally invested in safe bonds. Often they were required to use only bonds. Second: Real estate "values" have doubled in the last ten years thanks to Blackrock. Replacement costs thus doubled, while income available to pay premiums stayed about the same.
There is a house in Malibu built by a Mormon. He surrounded his house on the beach with a dome of fireproof material. The house has never burned. The earthquakes have never damaged it. Floods went around it.
Every time I've dealt with an insurance company, it has been a nightmare to get the money from them. Insurance companies are scams. The fact that we have to buy auto insurance to drive our vehicles is the biggest scam of all.
As a pensioner in Texas, I’ve seen my insurance costs rising every year. The big risks here are tornadoes and roofs destroyed by hail. If the trend continues, I can see that I will eventually get to the point where I can no longer afford insurance. I suspect that we are making up for the losses that insurers have had in other states. There’s also the insurance company practice of offering discounts to new policyholders, which decline year over year, resulting in increasing premiums. The only way to avoid that is to change carriers every few years.
People are demonstrating that they are unwilling to true-up their activities to what the environment can sustain (financially, ecologically, socially, politically, etc.). And as a result we are are going to have a hell of a poly-crisis reckoning. The Los Angeles fires are just the beginning. We are entering an age where reality will become much more important than it has been in prior years (like the Federal Reserve printing money with abandon).
I don't think it's possible to build a structure that is damage-resistant from all types of weather phenomena, although there's a family in Missouri that's trying to build such a structure. But I wouldn't choose to build a home in a place that's prone to major weather disasters like many in Los Angeles have done.
When I'm in the United States for extended periods, I live in a home that is located in Tornado Alley. While there is a higher likelihood of tornado damage to this home than there is fire damage, the home has a storm shelter. It would get utilized if fires came through also. But the likelihood of hurricanes, which have the chance to flood the shelter? Low.
Maybe I just can't conceptualize extraordinary housing for myself. Which makes it more difficult for me to think of building a large home where there is such a high propensity for physical destruction to that home.
You can't build invulnerable, but you can build for the high probability events by choosing materials. So steel roofs, steel siding and minimal combustible vegetation would increase the odds of survival
All good comments, thank you, each one revealing the interconnected nature of the problem: pull one thread and a dozen more start unraveling.
David, you're right, mobility is a form of insurance, but it too has its costs.
Gordon, I tend to think the logical outcome of what you describe is many people will give up on rebuilding because it may make emotional sense but not financial sense.
Kevin, you're right about disaster-proof housing: sure, concrete bunkers / high-rises are solid, but flooding can wipe out the contents, fires routinely burn out concrete structures, and what's the point if there's nothing left of the region but concrete bunkers?
Polistra, you make a good point about yields, but I tend to think the core issue is this: insurance only functions if the risks / losses can be reliably estimated actuarily. If there is no reliable way to pin a dollar sign on predictions / probabilities, then the whole game is impossible, a crap shoot that involves huge risks for returns that are modest compared to the potential losses.
Two other points: 1) the areas that burned in LA were havens of the wealthy and influential. No effort was spared to save their homes. Less wealthy neighborhoods won't receive the same effort, regardless of official pronouncements.
2) the economy of LA is dependent on tourism, entertainment, the container port and real estate development, which has been a core industry / source of growth and profits for 100+ years. The same can be said of Florida. As demographics reverse and insurance costs mount, real estate becomes a deflationary drag rather than an inflationary engine of "growth".
Another factor is all the easy-to-build on land is long gone, so development pushed into the hills and exurbs, creating killer commutes that are basically forms of unpaid servitude.
The probability that real estate development will no longer drive the economies of Calif. and Florida but instead become a net drag as valuations plummet to Earth seems very high.
In a recession, the first canaries to expire in the coalmine are tourism and entertainment. As for the port, as globalization contracts, that too may no longer be an engine of growth.
In other words, the viability of huge swaths of heavily populated areas is in doubt on several fronts. Nobody seems willing to ask if the economy and climate are still conducive to tens of millions of people inhabiting these regions. These are not easy questions to ask because there may be no good answers that meet with our approval. warm regards, charles
Mayor Karen Bass is a Marxist. She's been to Cuba fifty times or more. She and her Marxists want the rich homes to burn. That is why Bass cut the Fire Dept. budget $17.5 million. Gave "extra" fire equipment to Ukraine. Drained the Ynez Reservoir. Stopped clearing the brush on the hills. And she was in Ghana during the fires celebrating the inauguration of the new Idi Amin Marxist of Ghana.
There is even a book, "Burn, Malibu, Burn." The Marxists want the rich to lose everything.
Altadena is a working-class neighborhood. The LAFD contained 30% of the fire. They do not favor the rich. They will do extra to protect landmarks and key infrastructure.
One of those officials has a salary of 700k
Wow
For those with a penchant to think in terms of political economics; the LA fires are proof, the socialist government in California is now "consuming it's host".
Timmy, the insurance biz does have similarities to a protection racket, and that's why we should worry when the mafia can't make money and bails out.... OTOH my friends' car was wrecked by an uninsured motorist in a nice truck, he suffered no penalty or consequence for causing the wreck or being uninsured. How is that right?
John, for sure taking the obvious measures to reduce risk makes excellent financial sense. I have trimmed the only tree that could have fallen on our house, installed a 500-gallon reserve water tank, etc., and we have a metal roof. One of the issues I was trying to raise is what happens if the infrastructure and economy both decline as a result of the risk event. Surviving the event is step 1, but if everything around us is crippled, then our options are limited by that systemic decline.
Jim, for sure rates are rising everywhere to cover the losses. As noted, the Mafia is not in business to lose money.
warm regards, charles
Quote
In other words, the entire idea of being an "insurer of last resort" is based on an unlimited supply of money to fund losses that no longer make financial sense. If rebuilding a house destroyed in a "100 year flood" once made sense, now that there's a "100 year flood" every five years, rebuilding in that locale no longer makes sense. So why should taxpayers absorb the costs of this selective blindness to the realities of rising global risks?
Unquote
This is why I am skeptical of 30 year mortgages
A nice neighborhood can go to the dogs in 30 years see areas in Michigan Iliinois Ohio
Near Detroit there are formerly wealthy neighborhoods with real mansions that went down
No jobs the real estate crashes
Now throw in natural disasters which have dramatically increased as you write
Houses can be extremely illiquid
Mobility is a form of insurance
David, 3 million Americans are living in their cars. Others live in vans and RVs.
Thinking about the Los Angeles fires, I have read that it was already difficult (and expensive!) to get homeowners insurance in California. Now, with the fires in Los Angeles, I suspect that even more insurers will either leave the state or raise their rates to levels that most owners simply won't be able to pay. If you can't get insurance, you can't get a mortgage, which will further complicate efforts to rebuild.
I wonder how this may affect efforts to rebuild burned homes, or, if people are unable to do so, what the follow-on impacts may be for California, and by extension, to the rest of the country.
Reconstruction will require the efforts of tens of thousands of skilled builders, the majority of which (according to reports) speak Spanish as their native language, and may not be legally resident in the US. And where will these laborers live while they are working to rebuild homes? And oh so many more questions that follow.
I am very glad that I am not in charge of organizing these efforts, but when I look at the current leadership of California and Los Angeles in particular, I suspect I might do a better job. Fortunately, I am sure that I won't be invited to help, as I am retired and live south of the equator.
Charles am reading Clash of Civilizations by Samuel Huntington
Cool diagram from the book unfortunately cannot paste it
Idea is modernization improves wealth of a society but it atomizes and alienates people so they move more religious or culture focused so not universalism
Obviously then we see the random lone wolf violence that arises because of radicalization
With some
So it’s predictable
A contradiction in our system or not
Almost a law of sociology
Simplest explanation: ZIRP made all insurance less profitable because insurers traditionally invested in safe bonds. Often they were required to use only bonds. Second: Real estate "values" have doubled in the last ten years thanks to Blackrock. Replacement costs thus doubled, while income available to pay premiums stayed about the same.
There is a house in Malibu built by a Mormon. He surrounded his house on the beach with a dome of fireproof material. The house has never burned. The earthquakes have never damaged it. Floods went around it.
Humans can take measures to protect themselves.
Every time I've dealt with an insurance company, it has been a nightmare to get the money from them. Insurance companies are scams. The fact that we have to buy auto insurance to drive our vehicles is the biggest scam of all.
As a pensioner in Texas, I’ve seen my insurance costs rising every year. The big risks here are tornadoes and roofs destroyed by hail. If the trend continues, I can see that I will eventually get to the point where I can no longer afford insurance. I suspect that we are making up for the losses that insurers have had in other states. There’s also the insurance company practice of offering discounts to new policyholders, which decline year over year, resulting in increasing premiums. The only way to avoid that is to change carriers every few years.
People are demonstrating that they are unwilling to true-up their activities to what the environment can sustain (financially, ecologically, socially, politically, etc.). And as a result we are are going to have a hell of a poly-crisis reckoning. The Los Angeles fires are just the beginning. We are entering an age where reality will become much more important than it has been in prior years (like the Federal Reserve printing money with abandon).
I don't think it's possible to build a structure that is damage-resistant from all types of weather phenomena, although there's a family in Missouri that's trying to build such a structure. But I wouldn't choose to build a home in a place that's prone to major weather disasters like many in Los Angeles have done.
When I'm in the United States for extended periods, I live in a home that is located in Tornado Alley. While there is a higher likelihood of tornado damage to this home than there is fire damage, the home has a storm shelter. It would get utilized if fires came through also. But the likelihood of hurricanes, which have the chance to flood the shelter? Low.
Maybe I just can't conceptualize extraordinary housing for myself. Which makes it more difficult for me to think of building a large home where there is such a high propensity for physical destruction to that home.
You can't build invulnerable, but you can build for the high probability events by choosing materials. So steel roofs, steel siding and minimal combustible vegetation would increase the odds of survival