WTF Happened To California?! | Newsom Failures, Insurance Cancellations, & Water Shortages

[Music] when the sun came up we could finally see the scope of the devastation the Palisades fire alone the most destructive fire in La history so why is this fire become so politicized I don't know how you can't blame the existing government literally talking to the president right now can I hear it can I hear your call cuz I don't believe it the entire state is a disaster crime is completely out of control the Water Crisis is a literal unmitigated hell cuz Karen bass didn't fill the reservoirs so the fire TRS there they couldn't pump water insurance is a complete ripoff heavily in part because of our politicians some number of private insurance companies have been non-renewing policies in the Pacific paldes area it's going to take a massive political shift away from this super majority of Democrats that we have right now in this current leadership I'm not saying Democrats are bad I'm not saying Republicans are good I'm just saying that the current people that are in office all need to go because they've all failed [Music] California Kevin thank you so much for coming on the ice coffee I really appreciate it my pleasure I feel like I've been here before I think so a few times you've probably been our most recurring guest that's am well thanks for having me back I appreciate it well thank you for putting this together last minute this is one of the episodes that we were not planning on posting at all and I think with everything going on it's really important to talk about what's happening we wanted to call you in particular because you actually ran against Nome in his recall in California you have a lot of insights into the political system what actually goes on behind the scenes you're in real estate and we've all been affected by the fires in one way or another not a lot of people know this but my mom actually lost her house in the 2018 fires Jack you lost your home lost my home in the Thomas fire which was like late 2017 early 2018 yeah and uh yeah and you were in the same location basically is is Jack we opened our window well I mean Lauren I had like four hours of sleep that night and Lauren's like Kevin there's there's an evacuation order and and this is the fire I'm like ah fake news fake news this was back in 2017 I didn't believe it we opened the blinds above our bathtub and we could basically see where your house was and the fires coming in that close we were in the Flatlands under but yes that was a terrible terrible day it was pretty brutal uh we all have experiences we can share obviously in how it pertains to the fires that are currently going on in California so I think we all have a few unique insights and uh I think it'd be an important thing to discuss so that's why we're recording the podcast absolutely well I'm excited to talk about it and the solutions that hopefully California can Implement and we'll see if the new Trump Administration can help with those as well because Nome can't get anything done yeah well this is one of the things I find very interesting uh technically now this is the most destructive natural disaster master in the history of Los Angeles the fire was moving five football fields a minute it's one of the worst Wildfire episodes in California history with an economic loss of 135 billion to $150 billion a question I want to ask you do you think California is still a good place to live for the average person oh great question well I think there are a lot of opportunities in California outside of the political Spectrum just because we have a lot of jobs San Francisco Bay Area San Francisco obiously has turned into a disaster under the leadership of people like London breed the mayor of uh San Francisco and uh Gavin Newsome who was the mayor before that and it's now the governor uh but a lot of jobs a lot of jobs in the Eastbay a lot of jobs in uh you know farming the San San wien Valley a lot of jobs in Los Angeles San Diego so I think there's a lot of opportunity the problem is the politics have made it so prohibitive to advance in certain types of businesses to grow your business to try to uh grow uh your investments in California simply make it make a simple comparison to taxation what out here in Vegas your top tax bracket is 38% your fed plus your maybe Obamacare tax 3% look at that same thing in California and you're at 54% more than half of your money is going away to the government so I think California is a great place to live if you can spend all of your money and not pay the taxes by expensing it great way to do it because then you get the benefits of California without paying the taxes uh or um you probably want to live somewhere else it's it's just gotten so challenging especially with what you guys had to deal with in Santa Monica uh it's it's so sad seeing what you you had such a great video on what happened to Third Street prominade that before and after business is leaving because you can't do business how are you supposed to start as an entrepreneur in California with the regulation the red tape the permitting the fees that they want to take I think lift is now suing San Francisco for overcharging them in taxes uh as a percentage of the revenues they were collecting it's it's just it's a cost prohibitive place to do business but it is a great state and one day it'll be fixed politically it's just not there right now and in terms of the regulatory environment I remember when we were rebuilding on the lot that obviously our original house burned down on it was so complicated and dragged out so long to rebuild the house that was burned down because of a lot of the failures of the city like same thing happened where we had the Santa Ana winds we had over a thousand structures burned down in the Thomas fire and on top of that water pressure was basically gone a lot of the fire hydrant stopped working people couldn't defend their homes and so it was kind of a failure on that behalf as well so it's like continually over time California has consistently struggled and it's hard to know who's to blame for all of this stuff and Graham's actually done a ton of research so he's pretty well educated in that we're going to get into a lot of the misinformation which I think should be pretty interesting what we'd like to know from you is what do you think the outcome of something like this will be the the massive of California wildfires that are going on right now yeah well a a lot to unpackage there so I think it's worth starting with the regulatory because that's going to build into what the answer is uh in some sense you were not lucky to have your house burned down but lucky to have the rebuilding process happen in Ventura because even though Ventura is bad Los Angeles and the Palisades is going to be way worse I mean there are now rumors we don't know if they're true circulating about potential attempts to rezone and we can talk about that in the future uh resoning to more multif family for the Palisades we'll talk about that uh but I do believe that between now and the long-term future could it'll be probably 5 years out the Palisades will probably be one of the most beautiful places again just like it was when you had the Palisades Village which actually survived this fire uh all of that will be rebuilt all the homes instead of being 607s 80s homes will be brand new homes uh all the infrastructure will be brand new and hopefully we'll be able to learn from the mistakes that helped contribute to this fire and prevent those in the future but that's where we get into that regulation side where I don't know if California can pull it off and prevent it again because let's talk about that Thomas fire and those fire hydrants not working why is it that in 2017 the state of California gets a heads up that hey when you have properties at elevation on a hillside we have a lot of Hillside in California fire hydrants might stop working they might stop working because you don't have adequate water supply or because the power goes off and the pump stop working to pump water to those fire hydrants why is it that that 2017 lesson where hydrants were going dry didn't teach California that oh my gosh we should make sure hydrants never go dry again if that could have been prevented for the Palisades fire and we actually would have had for hydrants maybe fewer homes would have been lost maybe fewer people would have died we're at 10 deaths but we expect that number to rise substantially I you just can't find all the people who have died yet which is horrible so that's where in order to know where we go in the future and and to sort of answer your question it comes down to what do you think Nome can do and what do you think the super majority of Democrats can do in California I think the best answer is what they have been able to do over the last 10 years well 10 years we passed um s SP I believe it was 148 or 149 to fund about 7 and a half billion dollars for six new reservoirs in California for water reservoirs so we'd have enough water to keep hydrant full and keep tanks full uh as of 2021 not a single dime was spent on actually building them and over the last 3 years we finally gotten to where we have engineering approvals to build one of the reservoirs and they might start construction in 2026 on it and maybe it'll be done by 2032 so if you look at that the answer to your question of what do I think will be done is more 20 what is that 2014 you funded it to 20 32 it's built 18-year projects to maybe get more water and things done better I don't think it would be that bad for people rebuilding their homes but the point is Will California ever get around to fixing regulation to fixing uh how our infrastructure is handled preventing hydrants from going dry and and reservoirs from from emptying out it's going to take a massive political shift away from this super majority of Democrats that we have right now in this current leadership I'm not saying Democrats are bad I'm not saying Republicans are good I'm just saying that the current people that are in office all need to go because they've all failed California some of that seems like a bit of a policy issue that it takes that long to get something done My worry is it's a bit like the LA freeways where they build just enough for demand so they'll they'll anticipate demand 10 years from now but it takes 20 years to get done and then by the time it's done and they expand the freeways it's still too small because the population is outpaced could it be the same way with something like this where they're anticipating something but it's not going to be enough given that the fires are getting worse well the problem is what preventing these things from getting done right now and a lot of that has to do with squa the California environmental equality act now Reagan passed this in 1970 which is really interesting because Reagan was was deemed to be a hero that people loved I mean he I think he got the most electoral votes when he ran for president ever against Jimmy Carter he had over I think it was over 450 electoral votes which is a crazy Landslide people say Trump won with a land slide in the low 300s of electoral votes I think it was but that was a landslide back then in 1980 and he was the governor of California first but anyway uh I think squa is a disaster because it allows anybody with any beneficial claim either Pro or con to sue any developer of solar infrastructure housing infrastructure fire infrastructure water infrastructure schooling infrastructure anything Transportation infrastructure anything you could sue and basically tie up any project in court until it's litigated which let's put it this way right now in certain counties if you evict somebody you win okay you slam dunk an eviction against a tenant you could sit in court waiting for your eviction notice basically to get signed off on uh for months because the courts are so backlogged so you could win the tenant is still there but the courts sit on it for months signing the final order because they're so backlogged said that's for a what should be a slam dunk case you know an eviction which is supposed to take 3 weeks turns into 3 months 4 months because they're so backlogged now try that with environmental litigation where you have experts from all angles on you know fish on Wildlife on salmon on trout on the Delta smelt on on noise on air pollution on air quality on environmental rights on that person's Legacy shed that's historic you know all of that uh comes into play now Nome uh and Democrats signed a law again it was either s sp4 148 one of us M uh that allows the squa litigation process to be shortened to no more than 270 days only for projects that Nome signs off on so now what you've actually done is you've made the governor of California even more powerful where he's control of the whole Democratic legislature and now his signature can approve which projects get the shortcut for squa so the amount of power that the Democratic machine has don't get we started with the media control they have out here but the power that they have is is unmatched they are the most powerful uh uh political body I would argue in the world because there there's just there is no counterbalancing force and it's ironic and I'll stop talking for a moment but it's ironic that now you have this media talk about Democrats saying well you know it's if Republicans weren't standing in the way of climate change we could have done something there is no Republicans standing in your way in California because you have a super majority of votes in the legislature even Arnold Schwarzenegger didn't you know have that problem when he was governor as a republican in California super majority means literally a republican can't do anything they've got over 70% of the legislature you've got the Democratic governor so Democrats are 100% an entirely at fault for whatever happens in the political process because there is nothing a republican can do to balance it out in California so why is this fire become so politicized why is it become a left versus right issue well I mean everything becomes a left versus right issue right um I I mean look do do I think that if tomorrow we had all Republicans in charge this this would flip uh not necessarily unless they actually fulfilled the promises I mean every politician makes promises but you know when I ran for governor against Nome uh one of mine was that we were going to build a water pipeline to make sure that our Rivers like the Colorado River especially we're always full of water so our reservoirs don't go dry like the Santa YZ Reservoir which is vertically and physically north north and up the Palisades 117 million gallon Reservoir that's bone dry because of a crack in the concrete that politically nobody was able to get around to fix which again is sad and there should be no excuse for because you have full control of the process so it blows my mind because the Palisades were fed with three tanks of water 1 million gallons each yeah there was so much demand which drained those tanks but they could have been replenished by a reservoir with 117 million gallons 30 to 40 times the capacity of those tanks but it was bone dry before this fire because of Again mismanagement by a political atmosphere so why does an issue become politicized uh well I mean social media helps but I actually think it's a good thing because the more politicized this becomes the more attention comes to the problem and hopefully it drives change but mass shootings get publicized too and then the question is what what ends up happening do we ever spend a dime more on Mental Health it worries me that it seems like politicians are really just trying to sling crap at each other of course and they're using this as a way to make themselves look better absolutely I mean that's like the the see the job of a politician is just to get reelected in my opinion I I feel like so much of me is like every politician should only be allowed forget about term limits you get one term and then once you're in office you never have to worry about having another election well now all of a sudden stuff could get done so Gavin Newsome in 2021 when Biden took over said oh this is great Biden has taken over on video saying this as at a press conference Biden has taken over we can now work in coordination with the Biden Administration and finally conduct uh Land Management Forest management Wildfire prevention work we could do it all because we're all in working in unison we have a democratic legislature and you know in California we've got the Democratic governorship but now we've got a democratic Congress and presidency at the federal level nothing can stand in our way of solving wildfires in California except they did nothing except cut the budget for calire for the LA County Fire Department because when budget complaints come up their pet projects don't get killed like the uh High-Speed Rail to Nowhere uh or uh homeless prevention which we spend you know $6 for every $1 on homeless prevention that we spend for fires so again to clarify that $6 goes to homelessness $1 goes to fires yet the homeless problem is people would argue worse than ever before but different topic so I I don't know how you can't blame the existing government I don't care who they are Democrats uh green party liberals Republicans I don't care who it is whoever's in office right now sucks that's that's my opinion the fact that who's it the Department of Water and Power lady earns $751,000 as a salary yeah $751,000 salary to a tractor from private work yet can't keep the reservoir filled now what do you say to people who say that this was simply a perfect storm where you have brush that broke out after 15 years of a drought you had two years of excessive rain a lot of Shrubbery Grew From that and then you had after that another two years of drought a lot of that Shrubbery died off you have a perfect storm of record Santa Ana winds happening at the same time as something Sparks up in somebody's back backyard starts a fire that like even if the reservoir were filled a lot of people say that that wouldn't have made a difference that even if we had the water that we needed when it's moving five football fields uh what was it was amount of FO Fields per yes it's crazy and on top of that also at winds that speed I heard that you also can't have the air support because they would just go it would be way too dangerous and on top of that you see videos of people with their hoses trying to put out fires and it's like yeaha five football fields a minute at what point can you say and this is a super unpopular opinion because it's a nuanced opinion and people on the left want to point at people on the right and people on the right want to point at people on the left and I have the answer for it but at what point can you just be like look like this was a crazy Calamity a natural disaster in the same way that Florida has them on occasion it's like you can't really stop a hurricane that well I feel or a massive earthquake or a massive earthquake it kind of is just something that happens what do you think let's down so California has always had Fires for thousands of years to where plants in California uh like California lilacs mananas these plants have evolved to thrive through fires that's how we know California has just always been on fire right uh and the way they really work is that the plants expect to burn down they've evolutionarily uh you know uh evolved to survive uh in their root systems and they sprout back up and now they can actually flourish because there's no competition for resources on on top of now all burned land was actually kind of brilliant these plants like yes burn everything down kill all my friends and enemies they start the fire exactly yeah they start the fire it's the lilacs so um okay so so we know that fires have always occurred okay so what's different well uh obviously what we're going to talk climate change as well but one of the things to think about is when fires always happen what do they do do well they destroy all of the dry brush that's there and in history fires have always occurred they burn the brush the fires go away and people don't lose their lives because there are no humans yet at this point right okay so what's different now well every low wind fire that we have is just a brush fire and we put it out so we actually firefight the vast majority of the natural fires that occur that would do the land clearing for us so now what's happening is all of that unburned fuel the dead brush that you're talking about stays all over California because nobody's doing Nature's job of the smaller Burns which we as humans now we call controlled Burns so uh you know Berkeley I love using them as a reference I got into Berkeley I never went to Berkeley though but uh Berkeley obviously a left leaning institution they are big fans of controlled Burns because they work you low wind days when you have the water and the staff in place you pick an area you torch all the brush and you burn it all down to the ground you do what nature used to do naturally where do we practice that like in California and do they just like completely avoid or ignore that in Southern California like in LA area oh yeah well it's not it's not uh nobody nobody likes controlled Burns in their areas because oh this going to affect the air quality this is why you want to do it on low wind days uh they don't fund for it that's probably the biggest factor is they don't fund for it because the fire Cal fire does control burns and we also want to remember that the vast majority of land in California is owned by the federal government the federal Parks but again these these control burns need to happen in the Palisades but you have to have the political appetite as well to actually do that you don't want to go to the Palisades Village and oh what's that there's a fire over there it's a controlled burn we kind of have to get used to that but this all leads to your question of why do we have these mega fires well in part it's because of all the fuel that's there yes California's Fire season has gotten longer California has gotten drier uh and uh the East Winds Santa Ana winds the Diablo winds they have gotten stronger over time so whether we can attribute that to just the Natural Evolution of climate or human caused climate change it could be either of them we we don't know the answer with certainty uh but to say that oh climate change is absolutely what is making the fires worse confuses that well we have actually interrupted the natural clearing process and by n clearing out dead brush or doing what the Getty did we increase the likelihood of worse fires in fact you mentioned that your house that was rebuilt was built much better than you know before the podcast here uh than the 1960s homes because it's built with you know stucco or concrete tiles it's fire hardened you don't actually build as much brush around them anymore that is useful but also what the Getty did is useful so the Getty's Historic Museum how did they not burn down few little things uh one they trimmed their brush so much that they were interviewed and they said the brush that caught fire by the Getty was like Rosemary on top of a hot pizza in an oven it burned and it it looked like a a large fire but it was more like a flash so it burned up and then it was gone there was no more fuel the RO Rosemary was burned they had their shrubs trimmed so far down that when their shrubs caught fire they basically self-extinguished there was nothing to catch fire their tree canopies were higher they uh again they they cleared any of the Dead uh mulch or debris along the floor uh and of course it helps that you know firefighters are there as well who have water which is why it's important that our fire hydrants work uh but all of these things together actually save the Getty despite those 200 mph gusts which are really bad you're right you're not aerial dropping in those winds some luck probably plays into that as well but when you put those things together it goes huh okay interesting Maybe maybe we should be conducting controlled Burns maybe we should pre-employ firefighters when we're expecting 200 M hour Gus and maybe we should crisis test our water infrastructure and actually spend the money to make sure our hydrants don't go empty that we have backup generators to pump fire hydrants how much do you think that would have mattered in this case though with the Palisades fire but before we get into that on this podcast we talk a ton about how you can grow your wealth but there's also a question that's just as Cru crucial which is what if you're not around to protect it what happens to your family your home your future well don't wait for the unexpected with our sponsor Select Quote you can 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land that's being irrigated because people have enough water and it's in a Manu you know people are building in drought tolerant manners you reduce those risks so the gy irrigated all of their Landscaping the same morning uh of the fire they purposefully drenched everything because they had the availability of water they were trained in how to prevent a fire from burning down The Getty and it goes to show that you can prevent even in those winds destruction do you think La did the proper thing by notifying residents enough ahead of time to warn them for stuff like this because I feel like if a lot of people had maybe a little more insight into what might happen or maybe the risks associated with this they would be watering their plants more they would have taken more precaution ahead of time because to me this seemed like it almost came out of nowhere where we kind of heard about this maybe like the dayish before as like hey there's a a high wind advisory High chance of fire just be prepared that was about it well there I mean a few things so yes number one I I honestly I don't think I would argue that 99% of people uh don't know the best way to fire Harden their home and that's that's an education failure by the government by the state right we it's sort of like do you recycle styrofoam or not okay well the answer is no but people still throw Styrofoam in their recycling bins all the time guilty of it yeah does because you especially when when the shippers stick the styrofoam to the side of the package it's like this is freaking annoying right um but anyway so yeah I mean like you you you can only blame the government a failure of Education same thing like with shootings the failure of mental health education it's it's it's it all the buck stops with the government uh so education helps building codes help uh but um as far as notice education around what high wind advisories mean would be useful as well because first of all it shows you how stupid I mean the the mayor of Los Angeles uh Karen bass is in Ghana to celebrate the inauguration of the president of Ghana the reason I bring that up is because even the mayor of La didn't take those wind advisories seriously because if Lauren I just became a pilot by the way mhm my wife thank you my wife is like yeah and I never thought I would do it my wife is like please do not go fly Sunday Monday Tuesday Wednesday Thursday Friday of this week because a she's deathly afraid of me flying uh and B she's like it's going to be windy so like people have known that the winds are coming but uh apparently nobody cared enough to work again even the point of the mayor of La deciding oh yeah let's go on a trip to Africa and be Ghana and Ghana well I'll tell you my perspective I never thought that area was that big of a risk it's not that farm new it but it's not that Hillside like a lot of the residential area I'll give you this the highlands when you go up the mountain I understand that but when you go to the residential Parts down below I would never think that those were a significant risk sure yeah it's it's tough because so I like to use this app it's called windy uh and I've only ever started using it since I became a pilot but it's really cool because you can sort of for not sponsored you can sort of forecast uh what's going on with winds and where they're moving at different elevations different locations different wind speeds you see it all it's really cool and when you play around with it you you actually end up seeing how the wind funnels between all of the mountains and the ranges we have and as I was looking over the last few days of the fire the Palisades were the perfect for for all of that wind and I would venture to say I mean I'm not an insurance actuary it's one of the licenses I don't have actually Insurance out of all the licenses um but uh I would imagine the reason State Farm cancelled 70% of their their policies uh in in certain regions in California specifically the Palisades was because they knew the wind patterns and could basically paint on a map and say okay this is where the funnels are this is where our risk is this is where we don't want to be now I'm not here to defend insurance companies at all okay insurance companies have a lot of problems but I can tell you what the Wall Street Journal just said today which is that insurance companies in California spend $19 per $1 they collect in California on just claims which doesn't account for older operating expenses which could be another 30 40 cents 50 cents who knows maybe a dollar I don't know so then net losing in California yeah so why do they continue to operate they don't that's exactly why they leave I'll tell you an insurance comment here but uh about a year ago I wanted to bundle all of my insurances together between all the properties in California the place here in Vegas all the hars under one policy and I went to so many places and they say oh we'll Ure everything but we're not touching California and I was like okay because I this this had never happened before so I started calling other companies just to shop around just to get an idea am I'm paying a fair rate no one is writing new policies and so I talked to my uh my guy with my current insurance company he's like yeah man you're grandfathered in you got in at like you know cuz I started working with him in like 2011 when I bought my first property the same company wow and because I have a long-standing history with them and just keep adding to policies never file the claim know nothing they're keeping it for now yeah but yeah you can't find a new insurance policy yeah you know part of that too is just so the it goes back to this political thing too of politicians want their votes again to get reelected and so well what's been unpopular last 3 years well inflation okay so the costs of things have gone up we all know the cost of things have gone up so of course the cost of insurance is going to go up but when insurance premiums go up because they have higher costs to pay that's very politically ugly for politicians and so politicians try to fight it so they put caps on it and what happens anytime and this is macroeconomics 101 what happens every single time we put a price ceiling on something shortages and so that's what we have a shortage of insurance options in California and so California decided okay okay okay well we'll solve that problem by creating the California fair plan so the California FAIR Plan gives you temporary insurance for a catastrophe it gives you no liability protection so it's like a scam of insurance because now if somebody trips and falls on your property they're like oh no no we don't cover that they've got about 700 uh they got about $750 million in the californ Fair Insurance Fund right now that'll cover about 350 homes in the Palisades and then you're out well we just lost 9,000 structures they're not all under California fair plan but a lot of them are because State Farm just canceled a bunch of polic go to does have a 2.5 billion reinsurance on top of that yeah so here's the funny thing about reinsurance is reinsurance is coming from the private sector but reinsurance uh up until December of 2024 insurance companies were not allowed to add to the premiums that they collected the fees for reinsurance so put a different way yeah if let's say it costs $100 you know in calculated risk for an insurance company to insure your asset whatever it is $100 and then they go to the marketplace and say okay we're going to take this we're going to sell that and basic or get insurance on this bundle of properties that we're insuring reinsurance uh we'll keep a portion of the risk we'll keep 25% of the risk but we want to sell 75% of the risk well if it costs them $100 to sell that now they're taking 25% of the risk but zero of the money they keep zero dollars which is obviously bad again why they're losing money so normally insurance companies say okay well we need to sell this for more so we add to the premium the cost of reinsurance that has not been a possibility in California until December of 2024 when so many insurance companies were threatening to leave that California insurance commissioner finally u-turned and said okay okay okay we will let you add reinsurance cost to premiums so you can actually survive in California so again politics so what's the impact going to be on the average person with home insurance in California terrible terrible like rates are going to go up uh because I mean the way I look at it is it's nobody thinks that the politicians are going to change nobody thinks that how now magically California is going to build more reservoirs have more water have working fire hydrants so like you have to ask yourself if Gavin Nome tells you for 10 years we're going to be better at fires we're going to be better at fires we're going to be better at fires and let's say he runs an island called the Smith Island okay and you're like yeah I want to consider doing insurance for the Smith Island and Gavin Nome runs it it's a town of 30 people an island of 30 people you want to offer Insurance there are you going to trust Nome to actually have water in the fire hydrants or the people that you know operate under him Fire Chiefs Whatever It Is Well the answer for most insurance companies is no they can't trust them because for for not just years decades they've been told oh well be better at Water infrastructure and it just never happens what happens if someone's underinsured I'm really curious what's going to happen with a lot of these properties because 2third of people in California are underinsured the average person is underinsured by 20 to 60% wow that's I thought it's really bad uh because I did a whole video about this about a year ago and it forced me to actually call my insurance company and up the limits your because I realized like wait a second I'm covered like 800 Grand rebuild for a property that I'm going to have to probably spend 1.3 on maybe so I got the limits increased a little bit Yeah but it's wild and and it it's not going to keep up no it it doesn't an insurance company never going to remind you like hey man you're you might be a little underinsured here they're going to keep it as low as possible right exactly um well one of the reasons homes are typically underinsured is because codes evolve over time a fire codes naturally this is fair but also because of the fragmentation of codes in California so when I ran for governor of California I said we should have one building code for the entire state so that way a furnace that's approved in the sanen valley is also approved for ventur County now you could have little modifications because I understand climates are different but let's be real 90% of building should have the same building codes throughout the entire State we could have little different paint schemes and designs or whatever but simplify the building code once you simplify the building code it's easier for cont contractors to bid and actuaries to evaluate their risk because they're not dealing with you know oh this has to meet this city and then that County's overlay and blah blah blah it's it's a disaster so fire codes are one also earthquake codes you know a lot of the homes that were rebuilt in California or in Ventura County they had to um build in expensive uh earthquake retrofit pylons for for new construction especially on fill Lots uh that that were rebuilt after the fires and people spent 400 Grand on pylons for a $1 million build that they were only insured on up to 600k because now they have $400,000 of pylons that they have to build which was never underwritten in the first place again because the standards change for every city and every County and nobody tells you hey by the way if you ever have to rebuild your house these codes just all changed and it's going to be a lot more expensive so uh that's one of the reasons people are underinsured a second factor is really just usually uh the the bump in insured value is you know maybe 1% a year or whatever but appreciation and inflation in building materials is much more than than the 1% lab too oh my gosh yeah especially in California so that's also funny you mention that because if you look at if you want to get through the SQL exemptions you have to use prevailing wage labor which is like instead of market rate labor you're paying maybe two times market rate labor for contractors to actually do work on your your properties and I'm not saying that people shouldn't be paid with their worth especially with their skill sets and all that just say saying insurance companies look at that oh my gosh we have to get through squa and the prevailing wages uh and all these scattered building codes of course it doesn't make sense to do business in California now I'm not saying insurance companies don't suck they definitely suck because they leave a lot of people hanging at the worst times in their lives but frankly I think a lot of that starts with the political environment and the failures of Gavin Nome local County officials uh local political appointees and so on so what does someone do if their home is underinsured though let's say they lose their home in this sort of case what happens if they have a lot that's valued at $2.5 million but they have 600 Grand worth of structure coverage yeah they can't re most unfortunately most of them sell most of them will sell their lots to then developers who come in and they build so they sell to spec Builders what I found that lot owners will do is they'll kind of get together and like consortiums almost they'll be like none of us are going to sell unless we all sell for a higher price so you see that and so usually what happens is land Developers they try to get in early before people start connecting with each other and developers I guarantee you developers are already calling everybody every address Twitter are posting already they they've already got offers lot oh for sure oh yeah because the earlier they they they start this process to buy these Lots the better deal they're going to get because let's be real this real estate I'm talking about the land not the structures this is some of the most valuable real estate in the world understand fires suck and they can happen again but people want to live there it's the best weather in the world you have the best proximity to jobs you have the Los Angeles International Airport minutes away from the Palisades like that all the celebrities live there you know that is the place uh for for for wealth and and living uh and so it will get rebuilt and it will be beautiful so that that land is very very valuable but it's just going to suck because a lot of people who live there now they might get forced out because they're underinsured they can't afford the difference and they'll end up having to yeah that's a Nuance that I think a lot of people are missing when it comes to exactly that is they think oh it's all these rich people they they have the money like let's not feel sorry for them I know so many people whose parents bought their house there in like the 1980s generation and they spent maybe 300 $200,000 on the house but they've kept it ever since they've owned it the entire time so now it's paid off sure it might be worth $4 million on paper but they didn't have that money I mean it never existed they they're living in the home they never expected that right right so now they get their underinsured payout of say 600k to rebuild their home and then they've got a $2 million lot they've got to pay off whatever loans that they have uh they might never live in the Palisades again it's really sad how long do you think it's going to take to actually rebuild all of that area in LA because I know specifically with the Thomas fire and Ventura our house took about three and a half years to build and a lot of the insurance companies the kind of standard rate is that they'll float you for temporary rent not that years exct yeah two years is how much they'll do and and very very few people especially if 10,000 plus structures are burned down every contractor is going to be spread thin they're going to be like trying to work multiple sites at one one time you have all these subcontractors that are going to be busy all of the permitting process like that's going to be super super busy I have no idea how this is going to get resolved how do you how long do you think it's going to take for it to get back to normal 2030 2030 yeah yeah because La is notoriously slow with everything and the magnitude of this damage is so much that I think probably what'll happen is they're going to try to reite building codes first before they get anyone through to try hopefully to mitigate the issues of these these the way hydrants are built the way reservoirs are built and all hopefully they figure all of that out right this time correctly this time uh but um yeah I mean I think to what you're saying the market demand is going to be insane not yet for contractors but in 2 years it's going good business to be a contractor there and on top of that we noticed during our rebuild process that it probably cost between 35 and 50% more during the fire rebuild because in the Thomas fire it was like a thousand structures I think burnt down but in this so far it's 10,000 10 times the and I just think like overwhelmingly people are going to really struggle unless if Biden says or I guess eventually Trump helps and bails him out because there have been you know I mean he did say that he was going to help and float for like 6 months it's not going to do anything yeah it's um I mean I I wish the Biden Administration was already doing more it seems like Trump is talking more about what's going on in California than Biden is uh I mean I think a lot of people I'm not trying to sound anti-biden I know it already does sound that way or I definitely anti- Nome I will say that definitely anti- Nome that's why I ran against him for governor but um yeah the government can help but unfortunately I don't know that government will be able to muster it just because trying to take this what's going to be a five or six year process and try to streamline it line it it's it's going to get tied up in all of the red tape that people like Gavin Newsome say they can solve and they just never do so it's unfortunate but I want to talk about another byproduct that you just brought up it's not just Contracting prices that are going to go up it's rents that are going to Skyrocket for all the normal people in La now there are fewer apartments available there are fewer single family homes available so anybody who wants to renew their lease now or move into LA because they got a job I wouldn't be surprised if you see rents go up 20% in in all heck that could hurt our internation or our uh Nationwide inflation numbers it was interesting Jason oppenheim shared a story on Instagram that uh a client showed up to a rental listing just an average listing nothing special there are 20 people outside 20 people are outside every one of his listings he has a listing for 13,350 you know $13,500 a month got offer $20,000 a month for it 6 months up front the owner wants more there you go yeah so and that's that's going to well every single person who's like okay my house is either burning down going to burn down or burn down over the last two or three days the first thing they do is okay where am I going to live I'm not going to live out of a hotel on a suitcase so zillow.com look at the rentals or red whatever right yeah uh and exactly what you're saying is what you would expect now then this is where things get interesting because then the political idea is okay well all those people are price gouging they're being greedy well and then the flip side of the argument is well there's a shortage of available housing what does that go back to oh well it goes back again to politics we just don't build enough so yeah prices will Skyrocket although really quick if you're in a business you understand that managing the finances could be a hassle things like cards payments and receipts pile up very quickly but with today's sponsor ramp it doesn't have to be that way ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket with ramp spend policies are built into the card to control spending before it even happens it automatically collects and categorizes receipts so you'll never have to chase them down again plus ramp enforces compliance by flagging violations and locking cards for non-compliance ramp also helps streamline your entire Financial workflow from expense reporting reimbursements and vendor payments all in one place not to mention businesses save an average of 5% in their first year with ramp plus right now you could get $250 is a thank you for joining ramp just go to ramp.com to get started today ramp.com I cards issued by Sutton Bank member FDIC terms and conditions apply seriously guys a huge thank you to ramp for sponsoring this episode and back to the podcast now this is interesting the Senate budget committee recently said this is predicted to Cascade into plunging property values in communities where Insurance becomes impossible to find or prohibitively expensive a collapse in property values with the potential to trigger a full-scale financial crisis similar to what happened in 2008 what are your thoughts on this might be a bit extreme so which Republican wrote that uh yeah that's um that I I would say that is is far-fetched uh mostly because at some point when when Insurance becomes impossible to get at some point the political uh leash if you will will loosen and uh people will enter the insurance Market it's always how it works the price goes up high enough for insurance that insurability becomes a f like an option again uh I mean look you could literally start an insurance company today hey we'll do all the insurance in La whoever is having trouble getting Insurance we'll do an insurance company and you just securitize the risk by selling it on the market hey who wants uh 10 % yield on a bond for this high-risk insurance company people will buy it as part of their portfolio yeah they're calling them catastrophe bonds have you seen these there you go yeah it's already it's already a thing now there you go uh exactly so and and that so people will get people will be able people will always be able to diversify away their risk so I don't see property values plunging in fact and this is this but this is in areas that you can't get insurance or insurance is so expensive yeah well I mean some of those areas like the coastline of Malibu those are you know 1020 million homes sometimes even more uh of course insurance is going to be prohibitively expensive there because they're either going to fall into the ocean or they going to burn down again potentially right but people want to live there so somebody will pay those exorbitant fees and then again people will risk it well this also says many residents in the Pacific Palisades are reporting that they had no property insurance because insurance companies no longer provide coverage for real estate in highly priced and high-risk areas right yeah because even the California FAIR Plan has a limit of how much they'll cover I think it's $3 million per home is the limit that they'll cover some of those homes are $8 million homes so yeah that's possible that people have just entirely dropped their coverage State Farm announced their non-renewals in March correct uh which means March is 10 months ago which means 10 out of 12 uh proba what is that over 80% 85% of insurance policies have probably lapsed assuming you know an equal amount of dispersion there that not everybody's renewing in lumps so in English most of those policies the State Farm ones have lapsed if they couldn't find other coverage they've gone to the California fair or have been uninsured yeah they're screwed in this case it was 69.4% of the Pacific pal9 got dropped yeah it would be f94 yeah exactly that's State far was was dropped yeah yeah so exactly so their choices are you either go to a different carrier uh if you can get it uh pay the higher fee or you go to California fair or you self-insure self-insure obviously would be catastrophic at this point oh absolutely yeah all state too announced plans uh this was in November of 2022 P new homeowners condo and commercial insurance policies in California to protect current customers yeah what about tens of millions of dollars homes that that are not insured at all like I saw there was like a $30 million home listed on Zillow that burnt down in the fire all these crazy expensive homes that are not insured at all what is there they're probably insured at that level at that level you have to you think it's not like you have to it's like when when you have a $30 million home your net worth is probably so your self Insurance $250 million plus they're having Insurance there there's no way those people wouldn't have insurance my understanding is if you're if you're that high net worth you could basically have anything underwritten because insurance companies can cater to what you want like very customizable policies because you're spending so much money they might spend 200 Grand a year on insurance and insurance company will make that happen well I'll give I'll give an example uh just to to make an insurance comparison so um you know I own a plane uh the cost to insure my plane is $30,000 a year uh with two uh professional Phenom rated Pilots I am a brand new pilot I've got 100 hours I've landed a plane you know 300 times a little single engine serrus with the parachute uh in order to be the second pilot with a professional pilot who's flown for 2,000 hours or whatever my insurance policy goes from $30,000 a year and 10 companies want to offer us Insurance to one company wants to offer us insurance and that'll be $130,000 a year wow yeah so like you say uh and like I you can sh anything how much you want to pay so yeah and what about the insurance companies are any of them going to like go bankrupt over something like this or what's what's the and what's the ripple effect from something like that oh yeah I mean that's good I mean there there are massive Insurance funds like I think there was just a headline I wish I read up on this one this was I think it was black rock or Blackstone one of their insurance funds just tanked in the stock market today after these fires because yeah I mean there's there's L but that's that's why a lot of these insurance companies want to trade publicly because what you're really doing is diversifying the risk to the public you know to retail Traders oh yeah I have All State Insurance let me swipe up on Robin Hood buy some shares they're the ones holding the bag right so yeah it's it's it's all been thought of but can they go bankrupt yeah totally because when California FAIR Plan fails and as you said they send that reinsurance risk back to the private Market absolutely there could be bankruptcies but bankruptcies just turn into some other insurance company buying the dip on that and and taking over those companies like Spirit Airlines somebody's going to buy those planes and somebody's going to buy those routes some other Airline as they're in bankruptcy now I mean JetBlue tried to yeah uh you know and then got stopped by Lisa con and people like oh Trump's going to replace her and who knows maybe then the merger will go through and maybe spirits will be alive yeah now a lot of this for insurance companies really caused by prop 103 oh now this was passed in November of 1988 and according to this insurance companies must get approval from the California Department of Insurance before implementing any rate change they have to argue why they need to charge more money this this process could take more than a year so rapid increases can't happen California is one of the only states that allows outside groups to participate in the rate review process that is why insurance companies are unable to go and say well our risk went up from last month we need to raise our rates right yeah yeah this again it always seems to come back to politics and again I I I want to just be clear that insurance companies are no Ang uh and and so many people get left hanging because you know I do think it should be incumbent upon insurance companies to say like we talked about earlier hey you know there new building codes you're underinsured hey here's how you should fire Harden whatever um hey maybe you should have an extra policy for all the in the insura bles inside your home whatever so communication and and the service they provide Insurance Company claims processes they're all designed to be a pain in the ass it's it's kind of like what happened with uh Luigi what what were on the shell casings uh deny uh defer defend defend and decline depose depose okay perfect you know it better than me there's so many of these D phrases dick insurance companies suck okay so um and that was inspired by the book that was written I think in 2010 or so on how insurance companies basically try to make your life miserable like why is it so hard to get a customer service rep on the phone because maybe you won't put the claim in if we make it hard for you right it totally makes sense that insurance companies are scummy in doing this because it props their bottom line when their bottom line gets propped up all the people who get stock-based compensation make more money and they get to go buy bigger homes and cars or whatever they want the game is obvious like it reads like a book it's obvious why they do it and it's scummy but again a lot of the problems do also point at politicians it's funny I was walk I was on a walk with Lauren yesterday and there was a guy walking around I've never seen the shirt before walking around uh and I told Lauren I go that's a great shirt defund politicians like that's a good one that's a great one that's why I'm saying if if you can never get reelected as a politician you you can't you don't really get all the outside funding anymore cuz you have a expiration so that's why I thought it was so funny when I was running for governor of California I'm like look I I'm not trying to pull a Nome where he's trying to do his 8 years of damage here and then try to go on to the presidency because I was born in Germany I can't be the president so like let me just do the governorship and that's it there's no it's not like I'm going to now I'm going to fund raise for the presidency right let me actually take because this is what I would do uh emergency control I mean look Nome declared a state of emergency but he doesn't build with a state of emergency deploy the National Guard not to protect against looters you could do that as well but also the Army Corps of Engineers to start building start building the reservoirs that we need repairing the Sanz Reservoir under emergency Powers build now yeah in terms of insurance companies all state made the statement that they would resume selling new policies in the Golden State Should Regulators adopt proposed regulatory changes to make it easier for insurers to raise rates right which it sounds also very unpopular because again nobody wants to hear that rates are going to go up so it's like oh all state greedy they just want they just leave and then prices go up anyway because there's so little competition so it's hard I think it's not just the regulation though it really comes down to if you built out infrastructure better the reservoirs the the you dealt with the Delta smelt you know and the fish yeah let's talk about that yeah is there a water shortage in California what's causing it okay so this is an interesting one to answer at any given moment in time there is usually a water shortage but of the amount of water that goes into California there is a massive excess of water that's because when the snow melts or when it rains off the Sierra Nevadas the snow melts and water comes down or when it rains most of it just washes into the ocean this is why Donald Trump argues Oh California is diverting all their water into the ocean well not quite Donald the water naturally flows into the ocean because if you look at a topography map we have a lot of mountains and it just makes sense water goes downhill and into the ocean that's just the natural flow of it so it's not California on purpose dumping into into the ocean it just naturally all goes into the ocean we it follows the sanen river the Sacramento River they come together in a Delta and they just flush out into the ocean that's just Geography okay but what is California not doing well they're not building dams or reservoirs that could actually divert this water down to uh SoCal keep the Colorado River filled up build more reservoirs so that we have enough water pressure for our fire hydrants California specifically gavan usum have actually bragged about closing down dams and bragged about how yay now we have more of a salmon population and so really what they've done is they've bowed to environmentalists who say well you know the steel had trout population or the Delta smelt or uh the salmon populations have declined because of damning or rivers and the byproduct of this because every action has a reaction the byproduct of this the externality is houses burned down in SoCal because we don't have enough water in fire hydrants it's also partly because people actually steal water from our fire hydrants and California doesn't do anything about it what do you mean people steal water oh the have you heard about the marijuana Farms oh yeah they pop up and they just take water from the fire hydrants mhm no explain to me this yeah so uh they're they basically you could just drive up to a fire hydrant with a water truck people have private water trucks and they just steal water they fill up their water trucks and then they drive them to their illegal marijuana Farms often and uh they irrigate all their crop with the water they stole from the fire hydrants that became such a problem you can Google this that became such a problem that instead of California enforcing these problems because when they tried to they would raid the farm Ms and they'd be like oh no no no okay they wouldn't prosecute them and they would just set up shop again the next day and just get back to illegal marijuana farming uh California's solution to this rapid issue was uh not penalizing people stealing the water it was removing fire hydrants so they just removed more fire hydrants in California which has fire problems so that's California's government for you uh and you know if you had somebody who was in power who also had full legislative control they probably would be able to do something about it if they had the willpower to do it but Nome doesn't how do you go after those people it what were they doing just letting them off the people the growing the plants or it's it's that gets pretty complicated and I don't know every detail about it but from what I've heard as with any almost crime in California the district attorney is so buried that they just have to choose the highlighter of what they want to go through they're so underfunded the police have essentially been underfunded defunded almost uh and so you just don't have the money to prosecute all these crimes so you have to come up with plea deals or just don't do it again pay little fines whatever and you just never get through the process so to where it actually just becomes a cost of doing business so these Farms would pay the legal fines you know after prosecution lasting for you know usually they just defer their prosecution wave their right to a speedy trial and then they just litigate this for you know a year maybe and then they come up with a settlement okay we'll pay $5,000 fine we won't do it again that's a if you're running an illegal marijuana Farm you're making a whole lot more than that it's just a cost to doing business at that point why do you think California citizens are so divorced let's say like on the ballot from the reality of their environment like as their environment continues to get worse I mean I grew up in Ventura which is a California City I you you know you live there Graham grew up in California I have watched the state continue to get worse every single time I go back to visit Ventura and see my family I'm so I'm like I love this I love going back to visit Ventura two times ago I saw someone get I'm going to bleep this out and outside of a bar downtown saw it happen yeah right there it was did you tell me about this I don't know if I told you about that you didn't you did not tell me about this yeah well I mean you know I don't particularly love talking about it it was pretty it was pretty uh you saw it yeah it was pretty gnarly it was gnarly wow yeah so I mean he basically there was like a scuffle outside of a bar and I think it was either Gang Related it's most likely Gang Related behavior from a neighboring city um and yeah you got one uh insertion right into his heart oh yeah and he was like a 20 24 25y old guy that's Terri that's so sad you know I I don't feel safe out anymore in California either like I feel I I feel like and then I do uh I won't go outside without a gun sometimes because I'm just like I don't feel safe in California anymore now I'm licensed so it's okay uh but it's got to that point there there is definitely a strong difference between what it was like when I grew up there and what it's like now I'm continually every single time I go back I'm like yikes that's a it's their approach on crime I feel like oh yeah even it's CU I got a camera in the back of one of my properties which is facing the alley the amount of things that I've seen back there I make a Tik Tok I have someone sending me uh sending me go to this time stamp right here and I go and it's awful cuz he doesn't prepare me usually for what I'm looking at but I saw a guy come up on the bicycle and injected stuff in his leg and you just see him just nodding out there and uh yeah it it or just passing out in the middle there I've seen so many times uh like urination defecation on the C syringe is also just on the ground sometimes you'll be walking around it just exists so sad it's not being picked up you don't know if that's infected with something especially when you're walking on the beach that's the scariest thing when I'm walking on the sand I'm like going out surfing imagine just stepping on something need and getting some sort of disease or God knows what yeah HIV whatever you know that's terrible no I will say police presence has stepped up recently and yeah recently uh we had to make a call for something and they came within like two minutes wow yeah yeah I think Santa Monica's really trying because I think they've seen the devastation that happened especially on Third Street promod and there is also this shift away from the defund the police and Progressive Movement that we had in in during the co era really uh and this is happening around the world I mean you're seeing this with the offda in Germany you're seeing this in Canada you know Trudeau is now resigning right who would have thought Trudeau is going to resign three or four years ago right so you're seeing this shift away from uh Democrat voting basically in part because of inflation because of the lack of enforcement of crime uh and uh and and uh to some extent uh people have become very upset over prioritization of diversity equity and inclusion funds or priorities like take uh LA county for example or the LA fire department Adam have you seen the Adam Corolla clip yes okay that was great incredible seven-year wait to become a firefighter because he's a white dude and a a woman applied the Wednesday before and in the same place crazy crazy this was obviously wrapping up uh his his uh story on that but but basically a lot of companies are now yout turning away from that John Deere was one of the first meta just announced yesterday uh May been today that they're ending their Dei program Amazon's ending their Dei program they're all getting rid of these Dei programs now because I think they're realizing like Elon Musk says that diversity equity and inclusion is is not getting the best out of us it's getting potentially inferior candidates into positions of being doctors or being leaders simply because either they're black or they're Hispanic or they're a woman when potentially their scores are worse than others now I talked to Lauren about this uh and uh she's like well you know the reason they do this is because you know if let's say you grew up underprivileged or you were discriminated against in an inner city or whatever as a young black person in a school that was underfunded it's it's hard for you to compete with somebody who's going to a you know prestigious High School in a very expensive area so it makes sense why they do it but the resolution we came to which is the same one that I ran on when I ran for governor is well then fix those schools the problem is how is that politically popular to fund and make all the schools great and actually prioritize our funding for schools when it's going to take 20 years for those benefits to come out or longer yeah you know you fix elementary schools in inner cities now or or any underprivileged schools throughout the entire State the politicians might even not even be alive anymore who funded those schools and and improved the schools of the state so they don't care so what do you think are some of the main things that are holding California back right now water crime development uh the impedance to being able to build in California uh and uh schooling mental health these should be no-brainer apolitical issues that a government with all the power in the world should be able to solve yet they don't and and why do you think that people still continue to vote a certain way in the environment that is continually getting worse well part of it is the um existing government's power over the media in California most Californians I would argue aren't on X uh every day they're turning on their local news their KTLA their you know Fox C LA or whatever they're they're KC in Sacramento whatever they're turning on their local news stations and and who knows this could be wrong but this is what I was told by an anchor who's still on TV today in California he asked me never to tell who he is which is fair uh and he sat down with me at a coffee shop uh during the the election he said Kevin uh there are times that we look at what we are told to say and we want to scream at the script because we know it's a lie but we have to do it because otherwise our reporters won't get invited back into the Newsome press briefing and we have to be there to cover it otherwise people will go to a different news station if we don't get invited in we don't get the coverage of their grand new plan so really you don't get exposure to the problems in California through the mainstream television and and I'm not talking about Nationwide CNN Fox Ms all of the local stations I think it's bad the sense ship we saw with the Twitter files or at meta the same thing is happening at every single news station through throughout the entire State I mean Mark Zuckerberg was just talking on Joe Rogan about how as soon as they started saying no to the Biden Administration that they weren't going to remove certain posts they started getting a bunch of agency inquiries and lawsuits against meta well imagine getting sued if you're a small local TV or radio station in California by the governor you're screwed you know after I ran for governor I uh uh you know we we we we joke that um the Department of Financial Protection and Innovation uh came after me conveniently right after the election for a fundraising video that I made when I was running for governor saying oh you were collecting donations while talking about stocks you were giving unlicensed Financial advice basically extorted me for $5,000 which is fine their settlement number or whatever but but we think that specific election video was targeted to send a message that we will come after you if you are a political noise in or fly in our idman if you will what other imped Ms did you come across when you were running for the opposition oh yeah well I mean a lot uh I think the most interesting was that the Democratic regime during the recall election which was a very unique election it's an election where you have a a two-p parted ballot one is do you want to recall Gavin Newsome yes or no if Gavin Nome is recalled whom should be the replacement or who should be your replacement uh and the Democratic strategy was we are not going to allow any candidate to get any airtime in pretty much any debates or coverage or whatever although I was in one debate thanks KC but uh we will give no Credence to any other Democrat the Democratic party would not support any other potential contender against Nome because their thesis was we're going to defeat the recall vote no on the recall literally leave the second part of the ballot blank so the thesis the Democracy aspect of the democratic party of California is leave half the ballot blank because we're going to win anyway that's that's a huge impediment right there so what does that mean well that meant when I was running for governor I couldn't get any Democratic campaign staff so even though I was running as a Democrat to replace Nome and my was a JFK style like reasonable Democrat um even though that was my pitch I couldn't get any Democratic campaign staff lawyers uh you know donation platforms marketing platforms couldn't get anything I'd hire Republicans who wanted to fight Nome to help staff my campaign because I couldn't get Democrats because they all said well we will never be able to get another Democratic job if if we work for you so that's an example wow what about the Delta smelt back to back to the water issu yeah well Berkeley has a piece on this you know I don't know so much about the Delta smelt but I do know that Berkeley says you can conduct what's called hatch and release not to be confused with Catch and Release like Catch and Release illegal immigrants or catch and release fish go fishing uh this is hatch and release where you you actually just in a lab or whatever you you hatch a bunch of Delta smell and you're like here you go and you replenish the populations what happens with the Delta smelt is when when you build a dam or you divert water and there's not enough water flow coming into the Delta that the argument is that you're killing fish populations but look every action has a reaction so yes in nature when something changes or even when a g geography naturally shifts when there's an earthquake and and a new river is formed well duh some habitats are going to get destroyed but others will be created it's not like the new uh you know River or canals or whatever that are formed are all of a sudden going to be devoid of fish or Wildlife or whatever but because a species that is deemed in danger the Delta smelled uh or or a protected species environmentalists have been able to fight uh and drag on litigation that prevents the establishment of uh basins canals or dams to enable more water flow to Southern California which then enhances Wildfire risk in Southern California or wild or reduces Wildfire mitigation and hence we get Los Angeles basically burning down uh because of a fish that we could hatch and release but because of that fish I honestly don't even think the environmentalists care about the fish because of that they are able to fight uh in courts and prevent so let me tell you my understanding with this I did a lot of cuz I love fish so this is you have a beautiful fish tank by the way appreciate that so the Delta smelt has a lifespan of about one year and because of that it's seen as a a bit of a the canary in a coal mine so to speak if there's an issue with the ecological habitat in that area you see it first in the Delta smelt there's about seven or eight different species of fish that live there where environmentalists say hey if it's not the Delta smelt it's going to be any one of these other things it just happens to be the Delta smell because that's very short lifespan so we looked to that what's interesting about the Delta smelt is that it thrives with a salinity of2 basically so it's when the fresh water Mi mixes with salt water it's got to be just the right combination for this fish to live and so if you drain too much water from that there's too much salt that goes in but now in a way it almost helps Farmers to make sure there's not too much salt that's going into their crops so there needs to be that area in between where this fish could live so they're saying that they could tie this up as long as they want to not because of the smelts but because there's a whole bunch of endangered species but that even if the Delta smelt weren't there that wouldn't have prevented anything going on Los Angeles still gets the vast majority of its water from the SE of Nevada and from groundwater and that this Delta smelt water mostly goes to help farmers and central California that's my understanding of it yeah so um let's break that down first the the argument uh specifically on the Delta SM smelt is a perfect example of what we called a slippery slope fallacy which is let's start with the smallest problem and then let's assume that problem continues five iterations further and then let's argue the worst case scenario all the fish are dead Okay so let's go through the thought experiment kill every living animal in the San wiin Sacramento River delta just kill kill all of them okay they're all dead now so what do you do well now you can divert as much water as you want there's no risk to life anymore because you've killed them all okay so what do you have now well now you have a Colorado River that's potentially filled up canals that are filled up dams and reservoirs that are filled up and then you have to ask yourself at what point are you investing in protecting Southern California from losing as you mentioned earlier $120 billion potentially in economic damage which is like 4% of the entire United States GDP that you just literally lit on fire which is bad that's a loss it's a net loss uh to Society at at what point do you say wow you know what kill all the living organisms in that Delta to prevent even half of that from happening because if you prevent half of it from happening then you have 60 extra billion dollars so what if now we take a slice of that and now you build new estuaries or or you know larger pools or ponds or lakes or whatever and you let this fish that would have been endangered or died there or whatever live there right so basically relocate uh the fish or the animal and animals that can all be done with money and that's to say that a small investment into water infrastructure can save hundreds of billions of dollars as we're seeing now but it could also save human lives that's really important too so unfortunately the desire for saving uh these fish which we can save in another way as the liberal institution Berkeley says we can save the Delta smelt in another way there is no shortage by the way of salmon okay we can save salmon in another way then we should really start thinking about uh bettering California's infrastructure and saving lives and saving hundreds of billions of with the Delta smelt separate from that I do find it interesting that uh they do surveys and they see how many smelt or in this area mhm the last time they did the survey they could only find one oh wow yeah and so regardless of this it seems like Rising temperatures are killing them off and so either way either way pretty feeble you know I'm just going to say they live one year they but but that's that's a really good point that's how but that's how they become an indicator species for the entire area because of such a short lifespan yeah you know very quickly if something's up and that affects everything else so it it could balloon from that to other fish to other salmon to other birds to eat the fish to like this which is where the argument is that at some point you have to make the the decision at what point is hundreds of billions of dollars of harm to GDP which we could reinvest to saving more fish lives and human lives and property right at at what where's the balance there it's just a prioritize prior so far it seems like for California the balance is if something goes extinct because of human life yes it's California's resp responsibility to at least keep the lineage going and so you do have some of these fish and some of these insects and things like this that are still going in captivity sure and fine great if that could save lives give them give them a paradise give them the the the bigest largest Paradise pool Reservoir ever all for the Delta smelt they could have the greatest population ever in the world have build a museum around the Delta smelt uh there's so much that money can do to solve these issues but uh unfortunat I mean look with regarding indicator species it's very interesting there's a reason we use mice for drug Discovery and and research because obviously they if if a rat is going to get cancer from pumping them up with 10 times the normal human dose of a certain drug well then maybe there's a risk of cancer in a human uh or at least once you spread it out over population a higher incidence of cancer by using a certain drug so so yeah the idea of something being an indicator species exists it's again the same reason we use mice but that doesn't mean uh that we're necessarily going to see all of the externalities of all humans getting cancer if some of the small indicators come up in mice same thing with the smell doesn't mean that all of the other ones are going to die save the smell put them in captivity captivity save Southern California Jackson indicator species actually oh for what for plenty of things Jack the indicator okay an indicator like the like the pro indicator or the inverse indicator inverse yeah just let me know if you want something to go up or down and I'll just do the opposite yeah there okay well there you go the Jim Kramer effect uh I've had my Jim Kramer moments you we have actually had you know not the greatest Market recently and I did increase my auto invest pretty heavily it was the day Jack was like I invested a lump sum in the market that day it went down but there was also a very specific stock I'm not going to name it Jack that Jack bought into because it was like on the up and up Quantum um how is that doing no no yeah it's uh it completely plummeted and this was maybe within the past few weeks it's okay it wasn't it wasn't a lot usually the heavier I buy the more it you know goes down but this one fortunate I didn't put in a lot it's still going down pretty heavily though yeah it's okay I mean Jack could you pass me a magic mind you may yeah Kevin have you tried these before Oh no you don't you don't that's why you got three I am not an indicator have you had these is there alcohol in it I I don't drink anymore did you hear that there's uh I'm at like 3 months of no drinking you don't drink period I haven't had a single drink since uh September 20th yeah I knew this I didn't know that yeah I think it's fantastic how how how do you Fe there's no there's no alcohol it's just it's like a and Graham loves these they have like a tiny tiny little teeny tiny little burst of work I worked at jamb people come in for these machra shots I always thought it was so disgusting but I'll take it no take your Myster magic mind they sent us a whole bunch of these they sponsored the podcast and I honestly I like them a lot they help with uh Focus attention fine cheers to your sponsor I already I love some people say The Taste is uh not their favorite I love it I sip on it yeah Graham when he when we go on our like work trips he always likes a little caffeine burst like midday take these on trip he'll bring them and like try to slide me magic Minds like throughout the day it'll be like 4:00 5 p.m. we'll be like on some random flight going somewhere like hey man take a magic mind yeah they're local I mean yeah I I love them yeah I take them with me on trips because I could put them in my backpack and TSA doesn't give me any issues with them because it's under the liquid limit nice yeah two fluid ounces that's hilarious sometimes if I like I can't get a coffee in the morning or something like this I'll drink a magic mind yeah organic olive oil in there too see that's brilliant it's really actually not that bad but yeah I mean you were sponsor the podcast so thank you magic mind um yeah man I mean I'd rather have this than shots at tequila I always used to be two shots at tequila uh always it was crazy it was like it was like daily uh and I thought that was normal when when yeah throughout the day 4 4:00 and what would that do for you all my anxiety would go away what were you anxious about don't know but it turns out when I stopped drinking all my anxiety went away yeah people told me it was coffee or caffeine that was creating anxiety but I think what happened was I got used to using alcohol as the medicine so that way like every day around 4:00 I'd get anxious because I was waiting for my medicine I don't know if that's true but that's that's what it felt like for me and you do two shots tequila you just go back to back and then you'd feel better back to back man that's like one little Swig so okay this is so would you enjoy it or is it more just like oh no I looked forward to it you like the flavor no it tastes like ass no tequila sucks but I didn't care because to me I it was like my medicine was what I thought and it just made you feel like emotionally like more mental Clarity no it just uh it just took the anxiety away less mental Clarity actually become an idiot probably two shots for you wouldn't like like two shots for me I'd be on the floor but I'm guessing for you was just like enough to take the edge off so I could do two shots uh and then uh we would we would always play games like oh who would breathalyze the most it it'd be like 2.5 or what was it 0 to F yeah yeah yeah yeah dead that's dead yeah no see I don't even remember the measures anymore it was yeah no it was I'm telling you it was bad it would probably be like I think to hit the limit I'd probably be five or six I mean then then you're pooped it's just it was just bad but it it became so normal for me it was normalized for me and it all started with anxiety which I started having anxiety when I went to college I'd get like like lumps in my throat and pain in my chest and um went to cardiologist ear nose and throat specialists like I thought I was dying of cancer and like I like no man you're just you're just stressed out you're anxious I'm like okay got it stressed anxious oh alcohol cure and it started as early as that as early as College where you'd start may maybe taking like a shot or two per day it was wine back then but yeah kind of gross over time it was wine was the a w so then what made you then realize that you should wean off of alcohol and that that could actually like be the solution I well didn't uh I was just uh I I think what happened is you you get enough uh point you hit enough occasions in your life where you're like man I don't remember what happened last night what did I say did I offend someone did I do something stupid and then like you're going around to the people you were like was was I okay last night did I say something stupid you get enough moments like that where you're like oh man this is dumb and uh and and so then um yeah the the last one that did it for me was going to Napa when you go to Napa for drinking you go drink all day what happened to Napa I don't remember really no so um but yeah the whole the whole trip I mean it it like I guess the what I remember of it is like uh you know those memes where people like uh they're like oh look at my kids and they they open up this like book of and all all the the pictures come out of their wallet the dad wallet I have a dad wallet now too which is kind of funny but uh that's kind of what it feels like for like somebody's playing a slideshow that's kind of the slideshow of the trip well I appreciate your transparency that's cool to it's cool to hear I'm happy that that it's been working out well for you I've been seeing a lot of stuff online tons of different people like Brian Johnson the guy who's optimizing for like longevity oh yeah he says he's never gonna die well as long like you know he is a smart guy like I'll I'll lend him some credit there but a lot of other people that are like the fitness health guys like I think huberman also might agree with this that you should never have alcohol they just say like it only ever does bad things and some people argue that one glass of red wine per night is like uh I think the data now shows that it it's not you don't quote me on it but my general sentiment is it's not a good thing to be drinking a whole lot yeah there's a there's a new study every day tells you something's good something's bad you know but you're right that is the sentiment lately and um you know people like oh there's res veratrol antioxidants in it yeah well there's antioxidants in a handful of blueberries too but yeah I think it's a personal thing like I don't blame anybody for drinking I I wish I could just have one or two drinks and feel good uh but uh for me I don't feel anything for one or two drinks so I'm like ah let me just see how long I can go without drinking so that's where I am right now interesting yeah I'm not saying I'm never going to drink again but for right now I've I've seen good benefits from it and I feel more productive too because I'm not like crashing with anxiety at four anymore I actually feel like I get more stuff done so kind of crazy yeah I can learn more about Delta smelt yeah go and how to beat Gavin Nome in terms of Rick Caruso why do you think he lost Republican you think that was the only reason you don't think people were just like anti-ri guy oh sure they were that too but Republican the California uh is is it just votes Democrat that's just the way it is um yeah why is that California has just after the 70s it's it you know California went through the70s and ' 80s this this Golden Era uh it just had so much money so it just had so much to give uh and and it it actually ran a good budget in the past so what's happened is after generations of having basically the riches they just got really bad with managing everything from infrastructure to water to I mean think about the 1960s they're like we need dams State Water Project boom they built 10 dams in 10 years 10 dams in 10 years we've been trying to build six reservoirs since we funded it in 2014 and we've done nothing in 10 years so it just shows you that like how how different things are now from then when wow California could actually get things done so I don't know if it's like entitlement or what has occurred but eventually there will be a shift either to a more conservative Democratic platform or just Republicans entirely yeah I do find it interesting all of his buildings were intact Bates yes okay so yeah which does that sort of like enhances the conspiracies I the conspiracies that I've seen on Facebook oh gosh there's one that that this entire thing was was the doings of Rick Caruso to be able to buy up land I've also heard the same thing that black rock was behind this uh that it was a Satanic ritual I hear a lot of stuff the most plausible thing is that simply his buildings were brand new construction uh I believe metal roofs uh ever the he didn't have Shrubbery that was touching his buildings either everything is very well manicured very well watered it's like Disneyland right um and now other people were saying too that that his buildings were like sprayed down the day of or something like this which is possible I don't know he's got staff there exactly but it's not surprising to me that a new construction like that would be much more resistant to fire right because right across the street Starbucks in 100-year-old building burned down whereas the newer construction right I me then this goes to like what you were saying uh which is hey're we're building our homes much better now so hopefully hopefully that's what it is because then that gives you hope about the future that you don't have same I think I think in the future for any homes that are going to be constructed in that area probably have to have metal roofs yeah uh they're going to be really strict on uh plant life and which plants are able to like overhang across something and then all the roofs should have that sprinkler system that will come up in the event of a fire the sprinklers come out any new construction here Vegas they have that now that's interesting oh wow yeah I think probably plant life is the biggest which is unfortunate because you plants make everything kind of lush and pretty right I I think uh at uh your Santa Monica one of your Santa Monica you got one of the most beautiful Lush Gardens right dreading tearing that up yeah cuz I have a feeling I don't want to put it out there but I have a feeling that's not going to be there forever because of how dense that plant life is it's yeah gorgeous it it sucks because that's what attracted me to that home just walking in and just like it felt like a tropical forest beautiful yeah that that is the definition of pro a problem for fire I know they should just put your P house up this is what we don't want but beautiful it was built in like the 20s built in very pictures sit duck you know just a 1920 Spanish home surrounded by Green everything it's nice I L it I loved it but yeah in terms of that or a fire I mean it's Fire's dream that's what it is well I mean I think you could look at a lot of actually look at newer Construction in Vegas it's a lot of uh Glass and Metal and and stuckle and they look good but they're much more fire resistant yeah yeah the other thing that I am shocked about is that La is not as strict about plants touching uh fire lines like when they when they really look at the of this thing they they say it's a you know from a person's backyard now we have no idea if that means that someone was barbecuing if a homeless person snuck in and made a fire if it was vandalism or what I think is probably most likely is that in a lot of those areas you have these power lines trees growing over the power lines and in the wind when you have that much wind it Sparks probably that's what's most likely to happen I agree with that power snaps falls down sure and I've seen a lot of uh real estate in Los Angeles where I mean this is obviously overgrown over the power line for like 10 years oh yeah no one ever trims it back and no one ever forces you to trim it back no one mentions anything it just is what it is again infrastructure and and that's one of the things and it's very expensive to put the power lines underground oh God I think it was like $4 million a mile well yeah and that's where it comes to like well if the brush were cleared maybe you don't have to worry about putting the lines underground but then again how often do we get 200 mph gust which is crazy too so In fairness that's crazy but hey you know at least somebody's being paid a $751,000 salary to think about those things over at the Department of Water and Power now Karen bass Karen bass promised affordable housing oh God how could you promise cheaper housing that's the most politic that's the biggest political lie uh the only way you can increase housing affordability is just by building much more housing uh this idea that you're going to come into a very expensive area and say we will have affordable housing here is very stupid because it it simply exacerbates the housing shortage uh so I'm a big fan of just build more and and let the market decide but the idea of affordable housing restrictions they're complicated to get through planning they're they're they become a negotiation contention for developers they slow down the building process and quite frankly uh from an economic point of view they do the opposite affordable housing actually makes housing less affordable because you have massive weight list for those affordable housing units so very few people actually benefit from them and everybody else is left now enjoying less real estate to pay higher prices for do you think it's ever a possibility California could enact a price control on landlords right now from gouging rent oh yeah sure well I I mean but price gouging already exists policies for that so those are probably you don't even need to pass a law for that that probably already exists uh this would be a perfect case where that those sort of laws will come into effect like hey like your place is listed for 13 ,000 you're getting an offer for 20K no you're not going to rent it out for 30k but let's not even talk about those numbers let's use like a a townhouse for example the townhouse was renting for it's a two-bedroom one bath townhouse let's just say let's say it's renting for 3500 bucks a month hey look you can't raise the rent more than 20% or whatever I imagine those sort of policies already exist but it's probably going to happen anyway and people will be willing to pay it because they want to live somewhere people want the certainty that they can sign a lease right now for the next two years while they go rebuild I would I would I mean anybody who who is capable of will who gets screwed are like you mentioned earlier the people who have been there since the 80s they can't pay above Market rents they can't afford to rebuild their homes what happens they get squeezed out of California that's that's the real loss is that sort of culture and diversity that that once was and the character or whatever that that's gone it all gets exported what do you think about that Wildlife Crossing in Thousand Oaks oh I don't know about this oh you pass by it all the time it's wild what yeah they built an overpass over the freeway it's for uh I think Mountain lines right it's for Mountain lines and deer to be able to cross from one side to the other if if I'm not mistaken it brings it from like the mountainous region to residential reason so it it also it makes me wonder like okay why do the mountain lines need to be over in the residential L they Crossing anyway so it's like either they get hit by a car right and somebody maybe crashes into them or they just pass saely I'm pretty sure the budget though for this is like $100 million did you hear about that no I didn't know about the budget it it's a it's a beautiful overpass was you passed by it and it looks like you're going underneath well they haven't finished it yet it says online that the budget is $90 million for the bridge and 60 million is publicly funded and 30 million is privately funded yeah that's dumb so $90 million to make something for a golden eagle to be able to cross a freeway I'm joking that's obviously I'm being a little bit exaggerating right there but there is you know Bobcats and other things but still I mean that is $90 million which is would you rather be spent on that or homeless well the like if it actually went to solve the homeless issue that but the problem is they have a long track record of allocating funds to that and nothing being done and I know you know a lot about this because you talk about like these shelters that are built and they're just sitting vacant while they're still paying like the the lease I think one of the things that you find in California is California is very much about um feel-good policies uh in fact Germany did this as well Germany was building you can look this up German spent over $20 million building bike paths in Ecuador for climate change so these are I just call them like the Feelgood pet projects that politicians get to put their names on but again they do that so they could get reelected the whole premise of look at this beautiful Park I built or whatever this is why when you see those 1500 page bills and they have all the pet projects in them politicians put their names on it so they can get reelected it's always to get reelected you need Doge in California you need somebody to implement Doge C you know Doge California or the California Doge and just rip this budget to shreds and start over you know VI always tell us he says start at the bottom and add in what you need as opposed to starting at the top and cutting what you don't need reverse the order like this might sound unpopular but but it's it's I look was looking at the budget of um San Francisco and uh if I remember correctly the budget of the libraries alone in San Francisco could probably solve the entire homeless problem in San Francisco I'm not saying we don't need libraries and books but we are also in a digital age where it makes me wonder how much we could reallocate resources and actually solve real problems that are killing people needles on the ground people getting stabbed crime safety like actual life issues while not losing the context of books and research and reading which we can do digitally now uh and so the prioritization of the government budget in California is what the ultimate problem is of all it but it's not even the prioritization but it's also just how effective they use their dollar like one dollar for that Library I'm sure they could do both at the same time if they just like were a little bit more conservative with their with their tight with their wallet sure I mean it's the it's the argument of the uh oh what was it it was the hund this just came up it was the $150 B military contractor soap dispenser why you know why is uh the US military paying $150 for a commercial soap dispenser in a Boeing plane for the military when it's available in the commercial market for $5 the $2 million public bathroom that was put I think in like San Francisco New York something like that it's endless it is endless waste in spending and usually usually it's because the person making the purchasing decisions gets taken to dinner by a lobbyist gets handshake gets gifts you know they get a new toaster that shows up at their door uh you know whatever their wife gets tickets to whatever the Broadway show or whatever and oh we're going to write them in because we're going to do them a favor you get approached by any lobbyists when you're running for governor oh no no no and why is that because they didn't want to like seem like traitor to the incumbent well I think there are a few potential reasons I think that's probably the biggest reason is like okay no nobody support the competing Dems against Nome that's probably the biggest reason uh but uh there's also a chance that they're like oh man if we go talk to Kevin he's can make a YouTube video about us oh that's funny that's funny yeah which I I would do they were right they were right got it okay I think that's I think that's pretty good I mean we we kind of hit everything yeah we were kind of spitballing with this one guys so forgive us obviously if it you know any of the information is inaccurate I'm going to do my best in factchecking this episode is also incredibly fast turnover so I'm basically going to devote my entire life tomorrow to editing this entire thing making it look good for you guys we're doing our best out here trying to report the news yeah thank you Kevin for question we'll have Community notes in the comment section where people can Community know everything we said I'm curious to read it because I I don't profess to know everything and I don't think anybody knows everything uh but it's healthy to have that discussion about it and so the comment section will be very entertaining yeah well thank you comment about the Delta let us know what you think down below make sure to hit the like button subscribe Kevin will link to your info Down Below in the description also I'm going to do some research and find some really good funds that you guys can contribute to for victims of the California wildfires we will be living leaving those links down below top lines of the description if you're interested in helping that would be absolutely incredible thank you guys for watching till next time see y