The California fires are both literally and metaphorically alarming. At face value, they represent an enormous tragedy for the afflicted people. The same, for me, as those of Lahaina Hawaii, or Western North Carolina. I do not place a premium on rich people’s suffering.
However, the economic scale of the CA fires is magnitudes higher which could have national economic and financial consequences. Could this be the pin that finally bursts the many financial bubbles? I think so, and I’ll be covering this in detail for Peak Prosperity subscribers in Part II of this Scouting Report.
The literal devastation of the CA fires is so large it’s difficult to absorb.
Whole neighborhoods have been reduced to ashes.
Nobody was spared. The mansions of famous celebrities burned to the ground as did the homes of middle-class residents. Banks, schools, churches and synagogues, museums, and businesses both large and small all burned to the ground.
The rebuilding will take years. Many will not be able to rebuild, their insurance having been terminated right before the fires swept through. California is a notoriously difficult place to build due to many ridiculous, overbearing, self-imposed regulatory hurdles and limitations.
There won’t be enough skilled tradespeople to go around. Add it all up, and the LA region is well and truly boned. Economic activity is hereby crushed. Tax receipts are destined to crater.
LA County’s annual budget is around $45 billion. LA City’s budget is another ~$13 billion. Both seem destined for billions of lost revenues for years to come. The municipal bonds of the LA Water & Power department are already taking a hit:
More to come, you can be sure. This is just the beginning.
While it’s true that fires are a part of life in CA, and always have been, now they are more potent for three reasons; (1) CA is more densely populated than in the past, with more and more people cramming houses into canyons and upon hillsides where fires can cause more destruction, (2) those houses and other structures have been inflated to absolutely ridiculous prices, and (3) CA leadership at all levels is incompetent.
It’s that third part that should be most concerning to everyone everywhere. While CA may be in the spotlight at the moment, the same dynamic of driving out competence and replacing it with ideology and nonsense has afflicted the entirety of Western civilization.
It’s shot through politics and corporate boardrooms alike. And the mentality of the incompetent people is exceedingly difficult for regular people to stomach.
Gavin Newsom, for example, shamelessly and easily lies straight to the camera. When caught, he doesn’t blush or skip a beat. He immediately pretends as if it never happened at all as he did in this exchange:
In the above exchange, Newsom says “The reservoirs are completely full here in Southern CA” but when challenged on that by the reporter observing, “But that one reservoir serving the Palisades was not full…” Newsome immediately shifts and says “And that’s exactly what I was referring to.”
Mmm, hmm. Right.
Or in this exchange where Gavin Newsome attempts to comfort a distraught woman, or possibly to make himself look better, that he’s “literally talking to the President right now!”
Within seconds that devolved into Gavin admitting that he’s been trying to call the President, which then morphed into he needs to get somewhere with a cell signal.
Again, perfectly shameless lies told glibly and without either compunction or apparent shame.
Yes, politicians lie, but when it is your go-to automatic reflex, when telling the truth would be no different from lying, but your first instinct is to reflexively lie? That’s the hallmark of a pathologically toxic personality.
The issue is that such people are almost universally functionally incompetent at their jobs because their priorities are shuffled in such a way that “doing the right thing” and “doing what’s best for other people” are never anywhere near the top. Instead, “advancing my own interests” and “appearing in a good light” and “saying things that my fellow incompetent bureaucrats won’t dislike” are in the top three positions.
Which is the only way I can begin to understand Gavin’s statements in this interview:
And it’s how we can best begin to understand the tone-deafness of Elizabeth Warren who decided that the CA tragedy was an irresistible moment to lie to everyone by claiming that 100% of their donations would go to help CA organizations when a nearly 4% skim was going to be taken by ActBlue, a preferred funding conduit for her political party.
As always, if the choice is between being honest, and lying, we get lying.
Perhaps this explains why during Covid one of the more consistent charges leveled against the dissident doctors (myself included) was that of being a grifter. If there’s one thing these pathological sorts are completely consistent about it’s accusing their opposition of their own worst traits, a.k.a. “projection.”
The Predicament
Look, during the fat times we can almost completely ignore political incompetence, as there’s plenty of abundance to go around.
But during the lean times? It’s a stone-cold prosperity killer.
When both engines have sucked in a flock of geese and flamed out, you really want Captain Sully in the hot seat. You want someone of the highest possible competence when your life is on the line.
Not this lady who said that if someone’s husband was stuck in a fire that “He got himself into the wrong place if I have to carry him out of a fire.”
This is what happens when you let things go too far, which they have. We have too many incompetent people in positions of actual power where they can cause real harm.
Western Civilization is on the ropes. It’s facing severe predicaments that will require real adults to make highly competent and often painful tradeoffs.
This is true in the areas of fiscal policy, energy policy, illegal migration, housing, and education to name but a few.
I have lost hope that these incompetent people will somehow realize they are in over their heads and do the right thing by resigning to clear the way for better people.
They are going to grasp the wheels of power even more tightly as they steer us straight into poverty and squalor.
Now, let’s turn to part II, or Peak Prosperity subscribers, where I’ll make the case that the CA fires will be the pin that pricks the financial bubbles.
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