Yesterday an entire California town burned down. Paridise, CA has (had) 27,000 residents and over 1,000 buildings, and now it’s pretty much gone. A fire started nearby on a windy day and within hours everything was ash and cinders.
That fire and several others are still expanding across the state, threatening tens of thousands of homes. The sets of the TV show WestWorld are gone. Malibu has been evacuated. And dry, windy conditions persist, so the story is nowhere near over.
If this sounds familiar, it’s because massive, sometimes uncontrollable California wildfires are now an annual occurrence, due in part to gradual warming and persistent drought which combine to suck the moisture out of vegetation and turn the landscape into a tinderbox. Here’s a chart showing the recent take-off in the number of fires reported in the state (2013 was most recent year I could find, but the trend is clear – and since then the number of fires has apparently soared).
The reason this rates coverage in a financial blog is population. We’ve been moving millions of people into a place that has always had and always will have wildfires. California’s population is now about four times what it was in 1950, and the influx continues.
Fire is a crucial part of that and many other ecosystems, clearing out dead plants to make room for living. But add 40 million humans along with their buildings and vehicles, and a healthy, resilient semi-desert becomes a hellscape.
A very expensive hellscape. What does it cost to rebuild a town of 27,000 people from scratch? A back-of-the-envelope calculation (1,000 buildings at $100,000 a pop, 15,000 cars at $25,000 per, $10,000 per person for roads, sewers, landscaping, etc) yields several hundred million dollars. For one little town.
Is California budgeting for this? Are the insurance companies? Is Washington? All probably say they are, but only the insurance companies actually are – and even they are probably under-reserved for the past few years’ natural disasters.
This is a massive public planning failure, and yet another unfunded liability – that is, a future cost incurred but not saved for – to go alongside public pensions, government debt and multiplying environmental time bombs.
The result: A future of unpleasant surprises, in which governments are constantly saying “Oops, there’s this huge new expense that no one could have foreseen, and we’re all going to have to tighten our belts to cover it, sorry about the bad roads and closed libraries” – or – “Oops, there’s a huge unforeseen expense and we’re going to have to create a trillion new dollars to cover it, sorry about the inflation.”
But isn’t this mostly a private sector issue, between homeowner and insurance company, you ask? In many cases that’s true. But insurance companies have to make a profit, which means homeowner policy premiums have to be high enough to cover expected losses. As the latter rise, so necessarily do the former. Which means the part of our cost of living that’s devoted to insurance will soar as a direct result of California’s asleep-at-the-switch population management policy.
Are California wildfires as big an unfunded liability as the one resulting from the Right Coast’s soaring Hurricane Alley population? Probably not, because fires, even big ones, are smaller than tropical storms. Still, it could easily exceed a trillion dollars (let’s see what today’s fires end up costing) which – hitting a state that’s already overburdened with unfunded pensions and crumbling infrastructure – will probably end up being added to the federal government’s balance sheet via some kind of bail-out.
All of which makes a currency reset that much more likely in the not too distant future. Paying off this mountain of debts, promises and “guaranteed surprises” with current dollars is mathematically impossible. But after a 70% devaluation the numbers might work.
16 thoughts on "Yet Another Trillion-Dollar Unfunded Liability, California Wildfires Edition"
The elephant in the living room is that Americans are too stupid to realize they are being f—-d up the a-s by the National Security, Military Empire, Oligarchic banking State. A 17 year war we’re losing in Afghanistan, a war we started in Syria we’ve lost, the useless destruction of Iraq, wars in Yemen, Somalia, infinite support of Israel, a useless military empire spread across the globe supported by F-35s that can’t fly — whose pilot helmets cost twice the average American house– carriers the size of cities that are sitting ducks for hypersonic cruise missiles along with collapsing infrastructure, no medical care, and an opiate addicted, uneducated population that doesn’t even know its own history.
So when shit happens, hurricanes, fire, tornadoes, earthquakes — stuff that has happened since the beginning of time — we run around like idiots blaming global warming, overpopulation — anything and everything except the obvious —
A ridiculous military empire and surveilance dictatorship, and banking bailout oligarchy sucking up trillions and trillions and trillions of dollars while the country is being turned into a slag heap.
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Another example of how the ruling class cannot deal with climate change. If they did anything constructive, they would lose their position. Also, portraying it as a “unfunded liability” is another example of anti-government propaganda. The banking cartel, which controls the money system and issues 97% of the money in use, loves the idea of portraying government programs as unfunded liabilities. But, in this way of thinking, we all are unfunded liabilities from the moment of conception, entirely dependent on meeting credit standards to justify our existence.
Nonsense or not, planned for or not, John is correct. It is another expense for which insurance companies will have to up their premiums. Premiums which already are too high for the average Californian. Maybe if this happened gradually enough, Californians would start leaving the state for a cheaper insurance premium state, and California would start to have population decline it desperately needs ecologically. Put this is all happening too fast and California is going to look to the federal government to take care of the unfunded liability. Which will end in the RESET and Californians are then just going to have to live with wholesale mediocrity, i. e., no government aid — your on your own to rebuild.
Do they want to make people move out of these areas as a part of Agenda 21?
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Nonsense article. Impossible to save and plan for huge and unforeseen events. If we did then every penny we earned would be saved for the unforeseen disaster and we’d all be living in tiny homes, eating rice and beans, and have a million doallars in the bank. Maybe we should start saving 90% of our income for the potential of an asteroid hitting the earth? Bad shit happens. There’s no way to prefund or prepare for a lot of it. I can hardly wait for an article written after a 200 foot tidal wave hits the west coast and all of the Monday morning quarter backs are talking about how foolish it was to build within five miles of the coastline. Grow up. Bad shit happens. We rebuild and figure it out.
Unlike hurricanes, forests and landscapes can be managed and the catastrophic risks can be greatly mitigated. The people of California, or at least a loud, powerful minority, have decided that this is not permissible. The result is that the fires become inevitable. You claim that they are “unforeseen events”. But that is nonsense. They are definitely going to happen and everybody with a working mind knows it. The only question is WHEN. The hundreds of millions of dollars spent on rebuilding a town of 27.000 could have paid for a lot of forest management.
I think immigration is one area where Libertarians get it wrong.
Overpopulation is a real thing.
California is Exhibit A.
In 2022 Californians are being reduced from 100 gallons per person, per day down to 55 gallons per day. If that’s not overpopulation I don’t know what is.
https://www.sacbee.com/news/politics-government/capitol-alert/article211333594.html
I agree. And over-population and leftism are highly correlated. The Libertarian insistence on open-borders is self-defeating because an area that becomes over-populated is not ever going to be voting for the Libertarian position of small government and freedom. Densely populated areas always vote for big government socialism.