The Iced Coffee Hour - WTF Happened To California?! | Newsom Failures, Insurance Cancellations, & Water Shortages

Starting point is 00:00:06 When the sun came up, we could finally see the scope of the devastation. The Palisades Fire alone, the most destructive fire in L.A. history. So why has 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? Because I don't believe it.

Starting point is 00:00:28 The entire state is a disaster. Crime is completely out of control. The water crisis is a literal. unmitigated hell. Because Karen Bass didn't fill the reservoirs. So the fire jokes are there, they couldn't pump water. Insurance is a complete

Starting point is 00:00:46 rip-off, heavily in part because of our politicians. Some number of private insurance companies have been non-renewing policies in the Pacific Palisides area. It's going to take a massive political shift away from the super majority of Democrats that we have right now in this current leadership.

Starting point is 00:01:02 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. 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 amazing. 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

Starting point is 00:01:30 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 Newsom and his recall in California. He 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 yeah, and you were in the same location, basically, as Jack. We opened our windows. Well, I mean, Lauren, I had like four hours of sleep that night.

Starting point is 00:02:14 And Lawrence's like, Kevin, there's an evacuation order. 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 fire's coming in that close. We were in the flatlands under it.

Starting point is 00:02:30 But yes, that was a terrible, terrible day. It was pretty brutal. 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 I think it would be an important thing to discuss. So that's where 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

Starting point is 00:02:52 Newsom can't get anything done. Yeah. Well, this is one of the things I found very interesting. Technically, now, this is the most destructive natural disaster 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.

Starting point is 00:03:27 San Francisco Bay Area, San Francisco obviously has turned into a disaster under the leadership of people like London Breed, the mayor of San Francisco and Gavin Newsom, who was the mayor before that? and it's now the governor. But a lot of jobs, a lot of jobs in the East Bay, a lot of jobs in, you know, farming, the San Joaquin 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 grow your investments in California. Simply make it, make a simple comparison to taxation. out here in Vegas, your top tax bracket is 38%, your Fed plus your maybe Obamacare tax 3%.

Starting point is 00:04:14 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 all. Great way to do it, because then you get the benefits of California without paying the taxes. or you probably want to live somewhere else. It's just gotten so challenging, especially with what you guys had to deal with in Santa Monica.

Starting point is 00:04:44 It's so sad seeing what... You had such a great video on what happened to a 3rd Street promenade, the 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 Lyft is now suing San Francisco for overcharging them and taxes as a percentage of the revenues they were collected. It's just, it's a cost-prohibitive place to do business, but it is a great state, and one day

Starting point is 00:05:10 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 Wins. We had over 1,000 structures burned down in the Thomas fire. And on top of that, water pressure was basically gone.

Starting point is 00:05:35 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 has 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,

Starting point is 00:05:53 which I think should be pretty interesting. Yeah. What we'd like to know from you is what do you think the outcome of something like this will be, the massive California wildfires that are going on right now? Yeah. Well, 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. 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 Palis 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, rezoning to more multifamily for the, the palisades, we'll talk about that. But I do believe that between now and the long-term future, it'll be probably five years out, the palisades will probably be one of the most

Starting point is 00:06:43 beautiful places, again, just like it was when you had the Palisades Village, which actually survived this fire, all of that will be rebuilt. All the homes, instead of being 60s, 70s, 80s homes will be brand new homes, 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, which we have a lot of hillside in California, fire hydrants might stop

Starting point is 00:07:23 working. They might stop working because you don't have adequate water supply or because the power goes off and the pumps 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 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 mean, 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 to sort of answer your question, it comes down to what do you think Newsom can do?

Starting point is 00:08:06 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 SB, I believe it was 148 or 149, to fund about $7.5 billion for six new reservoirs in California for water reservoirs. We'd have enough water, keep hydrants full and keep tanks full. As of 2021, not a single dime was spent on actually building them. And over the last three years, we've 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 2030. 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?

Starting point is 00:08:56 2014, you funded it to 2032 it's built, 18 year projects to maybe get more water and things done better. I don't think it'll be that bad for people rebuilding their homes. But the point is, will California ever get around to fixing regulation to fixing how our infrastructure is handled, preventing hydrants from going dry and reservoirs 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.

Starting point is 00:09:29 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 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 it. 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's preventing these things from getting done right now?

Starting point is 00:10:01 And a lot of that has to do with Siqua, a California Environmental Equality Act. Now, Reagan passed this in 1970, which is really interesting because Reagan was deemed to be a hero that people were. 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 landslide in the low 300s of electoral votes, I think it was. But that was a landslide back then in 1980. He was a governor of California first. But anyway, I think SICWA 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

Starting point is 00:10:45 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, or eviction notice, basically, to get signed off on 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. Because that's for what should be a slam dunk case, you know, an eviction, which is supposed to take three weeks.

Starting point is 00:11:29 Yeah. Turns into three months, four months because they're so backlogged. Now try that with environmental litigation where you have experts from all angles on, you know, fish or 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. All of that comes into play. Now, Newsom and Democrats signed a law. Again, it was either SB 149 or 148, one of us, that allows the CEQA litigation process to be shortened to no more than 270 days. only for projects that Newsom signs off on.

Starting point is 00:12:12 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 Sequel. So the amount of power that the Democratic machine has, I don't even get me started with the media control

Starting point is 00:12:28 they have out here. But the power that they have is unmatched. They are the most powerful political body, I would argue, in the world. Because there's just, there's no counterbalance 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, if Republicans weren't standing in the way of climate change, we could have done something. There is no Republicans standing in your way

Starting point is 00:12:56 in California because you have a supermajority of votes in the legislature. Even Arnold Schwarzenegger didn't, you know, have that problem when he was governor as a Republican in California. Supermajority 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% and 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 has it become a left versus right issue? Well, I mean, everything becomes a left versus right issue, right? I mean, look, do I think that if tomorrow we had all Republicans in charge, this would flip, not necessarily, unless they actually fulfilled the promises?

Starting point is 00:13:43 I mean, every politician makes promises. But, you know, when I ran for governor against Newsom, one of mine was that we were going to build a water pipeline to make sure that our rivers, like the Colorado River especially, were always full of water. So our reservoirs don't go dry. Like the Santa Yines Reservoir, which is vertically and physically 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, one 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.

Starting point is 00:14:34 But it was bone dry before this fire because of, again, mismanagement by a political atmosphere. So why does an issue become politicized? 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 politicized too. And then the question is, 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.

Starting point is 00:15:07 Of course. And they're using this as a way to make themselves look better. Absolutely. I mean, that's like the, see, the job of a politician is just to get reelected, in my opinion. 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.

Starting point is 00:15:30 Well, now all of a sudden stuff could get done. So Gavin Newsom in 2021, when Biden took over, said, oh, this is great. Biden has taken over. He's on video saying this at a press conference. Biden has taken over. We can now work in coordination with the Biden administration and finally conduct land management, forest management, a wildfire prevention work. We could do it all because we're all.

Starting point is 00:15:54 all working in unison. We have a Democratic legislature in, 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 Cal Fire, for the LA County Fire Department. Because when budget complaints come up, their pet projects don't get killed like the high-speed rail to nowhere or homeless prevention, which we spend, you know, $6 for every $1 on homeless

Starting point is 00:16:28 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 a different topic. So I don't know how you can't blame the existing government. I don't care who they are, Democrats, Green Party, liberals, Republicans, I don't care who it is. Whoever's in office right now sucks. That's my opinion.

Starting point is 00:16:53 The fact that who's it, the Department of Water and Power Lady earns $751,000 as a salary. $750,000 salary to a tractor from private work, yet can't keep the reservoir filled. Now, what do you see to people who say that this was simply a perfect storm where you have brush that broke out after 15 years of a drought,

Starting point is 00:17:12 you had two years of excessive rain. A lot of shrubbery grew from that. And you had, after that, another two years of drought. A lot of that shrubbery died off. You have a perfect storm. A record Santa Ana winds happening at the same time as something sparks up in somebody's 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, what was it? Was it? A minute. A minute or like. It's crazy. Very fast. Yes. And on top of that,

Starting point is 00:17:48 also at wins that speed, I heard that you also can't have the air support. No. 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, yeah, right on. Exactly. 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

Starting point is 00:18:22 well, I feel like. Or a massive earthquake. Or a massive earthquake. It kind of is just something that happens. Sure. What do you think? Well, let's break it down. So California has always had fires for thousands of years to wear plants in California, like California lilacs, Manzanitas, these plants have evolved to thrive through fires. That's how we know California has just always been on fire, right? And the way they really work is that the plants expect to burn down. They've evolutionarily

Starting point is 00:18:52 evolved to survive in their root systems, and they sprout back up. And now they can actually flourish because there's no competition for resources on top of now all burned land. It was actually kind of brilliant. These plants like, yes, burn everything down, kill all

Starting point is 00:19:09 my friends and enemies. They start the fire. Exactly, yeah, they start the fire. It's the lilacs. So, Okay, so we know that fires have always occurred. Okay, so what's different? Well, obviously, 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? Well, they destroy all of the dry brush that's there.

Starting point is 00:19:33 And in history, fires have always occurred. They burn the brush. The fires go away. People don't lose their lives because they're 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 can.

Starting point is 00:20:13 called controlled burns. So, you know, Berkeley, I love using them as a reference. I got into Berkeley. I never went to Berkeley, though. But 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 an L.A. area? Oh, yeah. Well, it's not, it's not, nobody likes controlled burns in their areas because, oh, this can affect the air quality. This is why you want to do it on low wind days.

Starting point is 00:20:53 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, federal parks. But again, these, these controlled burns need to happen in the Palisades. But you have to have the political appetite as well to actually do that. And you don't want to go to the Palisades Village and, oh, what's that? There's a fire there. It's a controlled burn.

Starting point is 00:21:17 We kind of have to get used to that. But this all leads to your question of why do we have these megfires? 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. And the East wins, Santa Ana wins, the Diablo wins. They have gotten stronger over time. So whether we can attribute that to just the natural.

Starting point is 00:21:39 evolution of climate or human-caused climate change, it could be either of them. We don't know the answer with certainty. 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 not clearing out dead brush, or doing what the Getty did, we increased the likelihood of worse fires. In fact, you mentioned that your house that was rebuilt was built much better than, you before the podcast here, 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.

Starting point is 00:22:20 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. 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 looked like 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 rosemary was burned.

Starting point is 00:22:49 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, again, they cleared any of the dead mulch or debris along the floor.

Starting point is 00:23:04 And of course, it helps that firefighters are there as well, who have water, which is why it's important that our fire hydrants work. But all of these things together actually save the Getty despite those 200 mile an hour 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 we should be conducting controlled burns. Maybe we should pre-deploy firefighters when we're expecting 200 mile an hour gus. And maybe we should crisis test our water infrastructure

Starting point is 00:23:40 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 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 SelectQuote, you can secure your family's financial future

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Starting point is 00:26:34 To some extent, it's a moving inferno, there's nothing you can do. But if every home is built the way you said, fire hardened, and you have fire crews deployed, and you have a land that's being irrigated because people have enough water, and it's in many, you know, people are building in drought-tolerant manners, you reduce those risks. So the get irrigated, all of their landscaping, the same morning of the fire, they purposely drenched everything because they had the availability of water. They were trained in how to prevent a fire

Starting point is 00:27:04 from burning down the Getty. And it goes to show that you can prevent even in those winds destruction. Do you think L.A. 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

Starting point is 00:27:22 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. Yeah. Where we kind of heard about this, maybe like the day-ish before. As like, hey, there's a high wind advisory. Yes. High chance of fire. Just be prepared. And that was about it. Well, I mean, a few things. So yes, number one, I honestly, I don't think, I would argue that 99% of people

Starting point is 00:27:51 don't know the best way to fire hard on their home. And that's, that's an education failure by the government by the state, right? It's sort of like, do you recycle styrofoam or not? Okay, well, the answer is no, but people still throw styrofoam in the recycling bins all the time. I'm guilty of it. Yeah, because, yeah, especially when the shippers stick the styrofoam to the side of the package, is like, this is freaking annoying. But anyway, so, yeah, I mean, like, you can only blame the government, a failure of education. Same thing like with shootings, a failure of mental health education. and the buck stops with the government. So education helps.

Starting point is 00:28:30 Building codes help. But 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 mayor of Los Angeles, 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 L.A. didn't take those wind advisory seriously. Because if Lauren, I just became a pilot, by the way. My wife, thank you.

Starting point is 00:29:01 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. And B, she's like, it's going to be windy. So like people have known that the winds are coming, but apparently nobody cared enough to work. even the point of the mayor of L.A. 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.

Starting point is 00:29:36 It's not that state farm new. But it's not that hillsidey. 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 tough because, so I like to use this app. It's called Windy. And I've only ever started using it since I became a pilot. But it's really cool because you can sort of for it, not sponsored, you can sort of forecast 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

Starting point is 00:30:17 play around with it, 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 funnel 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. But I would imagine the reason state farm canceled 70% of their policies in certain regions in California, specifically the Palisades, was because they knew the wind pattern. and could basically paint on a map and say, okay, this is where the funnels are, this is where a 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.

Starting point is 00:31:04 But I can tell you what the Wall Street Journal just said today, which is that insurance companies in California spend $1.9 per $1, $1,000 they collect in California on just claims, which doesn't account for older operating expenses, which could be another $0.40, $0.50, who knows, maybe a dollar, I don't know. So the 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 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

Starting point is 00:31:33 cars under one policy. And I went to so many places and they say, oh, we'll insure everything, but we're not touching California. And I was like, okay, because this had never happened before. So I started calling other companies just to shop around, just to get an idea. I'm paying a fair rate. no one is writing new policies. And so I talked to my guy with my current insurance company.

Starting point is 00:31:57 He's like, yeah, man, your grandfathered in. You got in at like, you know, because I started working with him in like 2011 when I bought my first property, the same company. Wow. And because I have a longstanding history with them and just keep adding to policies, never file the claim, no nothing, they're keeping it for now. Yeah. But yeah, you can't find a new insurance policy.

Starting point is 00:32:18 Yeah. You know, part of that, too, is just, so 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 three 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.

Starting point is 00:32:39 But when the 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 any time, and this is macroeconomics 101, what happens every single time we put a price ceiling on something? Shortages.

Starting point is 00:32:59 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

Starting point is 00:33:12 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, you got about $750 million in the California 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 policies. Fair Plain does have a $2.5 billion

Starting point is 00:33:44 reinsurance on top of that. So here's the funny thing about reinsurances. Reinsurance is coming from the private sector. But reinsurance, 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. If let's say it costs $100, you know, and 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 and we're going to sell that and basic or get insurance. on this bundle of properties that we're insuring,

Starting point is 00:34:19 reinsurance, 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 $0, which is obviously bad. Again, why they're losing money.

Starting point is 00:34:34 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 you turned and said, okay, okay, okay, we will let you add reinsurance costs to premiums

Starting point is 00:34:56 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. 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.

Starting point is 00:35:22 So, like, you have to ask yourself, if Gavin Newsom 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 Newsom 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 Newsom to actually have water in the fire hydrant? or the people that, you know, operate under him, fire chiefs, whatever it is. Well, the answer

Starting point is 00:35:52 for most insurance companies is no, they can't trust them because for not just years, decades, they've been told, oh, we'll 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 two-thirds of people in California are underinsured. The average person is underinsured by 20 to 60%. Wow. That's what I thought. It's really bad. Because I 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. Up your limits, yeah. 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.

Starting point is 00:36:31 So I got the limits increased a little bit. Yeah. But it's wild. And it's not going to keep up. No, it doesn't. And insurance company is never going to remind you. Like, hey, man, you might be a little underinsured here. They're going to keep it as low as possible.

Starting point is 00:36:45 Right. Exactly. 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 San Joaquin Valley is also approved for Ventura County. Now you can have little modifications because I understand climate. are different. But let's be real, 90%

Starting point is 00:37:17 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. So you simplify the building code, it's easier for 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

Starting point is 00:37:33 that county's overlay, and blah, blah, it's a disaster. So, fire codes are one, also earthquake codes. And a lot of the homes that were rebuilt in California, or in Ventura County, they had to build in expensive earthquake retrofit pylons for new construction, especially on fill lots that were rebuilt after the fires. And people spent 400 grand on pylons for a $1 million build that they were only insured on

Starting point is 00:38:01 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 that's one of the reasons people are underinsured.

Starting point is 00:38:22 A second factor is really just usually the bump in insured value is maybe 1% a year or whatever, but appreciation and inflation in building materials is much more than the 1% of labor. 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 SICO exemptions, you have to use prevailing wage labor, which is like instead of market rate labor, you're paying maybe two times

Starting point is 00:38:48 market rate labor for contractors to actually do work on your properties. And I'm not saying that people shouldn't be paid what their worth, especially with their skill sets and all that. Just saying insurance companies, look at that. Oh my gosh, we have to get through SICO and the prevailing wages 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 Newsom, local county officials, local political appointees, and so on.

Starting point is 00:39:25 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 $600,000 worth of structure coverage? Yeah, they can't rebate. 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 the spec builders. What I found that lot owners will do is they'll kind of get together and like

Starting point is 00:39:49 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 adjo. Oh, people on Twitter are posting already. They've already got offers. Oh yeah. Oh, for sure. Oh, yeah. Because the earlier they start this process to buy these lots, a better deal they're going to get. Because let's be real, this real estate, and 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. All the celebrities live there, you know, that is the place for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for wealth and living. And so it will get rebuilt and it will be beautiful. So 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.

Starting point is 00:40:53 And they'll end up having to be. 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 have the money. Like, let's not feel sorry for them. Not ever. I know so many people whose parents have bought their house there in like the 1980s. Generational. And they spent maybe $300,000, $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'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

Starting point is 00:41:36 whatever loans that they have, they might never live in the palisades again. It's what I said. 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 for two years. Yeah, exactly. Yeah, two years is how much they'll do. 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

Starting point is 00:42:15 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. Yeah, yeah, because LA is notoriously slow with everything. And the magnitude of this damage is so much. much that I think probably what will happen is they're going to try to rewrite 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 yeah I mean I think to what you're saying the market demand is going to be insane not yet for contractors but in two years it's going to be good business to be a contractor

Starting point is 00:42:58 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 email. 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 six months. It's not going to do anything. Yeah, it's, I mean, I wish the Biden administration was already doing more.

Starting point is 00:43:36 It seems like Trump is talking more about what's going on in California than Biden is. I mean, I think a lot of people, I'm not trying to sound anti-Biden. I know it already does sound that way. I definitely anti-Nusom. I will say that, definitely anti-Nuson. That's why I ran against him for governor. But, yeah, the government can help. But unfortunately, I don't know that, again,

Starting point is 00:43:58 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 align it 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 l.a 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 all of LA. Heck, that could hurt our international or our nationwide inflation numbers. It was interesting. Jason Oppenheim shared a story on Instagram that a client showed up to a rental listing, just an average listing. Nothing special. There are 20 people outside. Oh, yeah. 20 people were outside.

Starting point is 00:44:52 Yeah. Every one of his listings, he has a listing for $13,350, you know, $13,500 a month. Got off for $20,000 a month for it. Six months up front. The owner wants more. There you go. Yeah. And that's going to, well, every single person who's like, okay, my house is either

Starting point is 00:45:14 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 redfin, whatever, right? 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. Or then the flip side of the argument is, well, there's a shortage of available housing.

Starting point is 00:45:42 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 run 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.

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Starting point is 00:46:47 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? It might be a bit extreme. So which Republican wrote that? Yeah, that's I would say that is far-fetched,

Starting point is 00:47:23 mostly because at some point, when insurance becomes impossible to get, at some point the political leash, if you will, will loosen and people will enter the insurance market. It's always how it works. The price goes up high enough for insurance, that insurability becomes like an option again. I mean, look,

Starting point is 00:47:44 you could literally start an insurance company today. Hey, we'll do all the insurance in L.A. Whoever's 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 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 a thing now. There you go. Exactly. So, 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.

Starting point is 00:48:21 In fact, and this is... 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, $10, $20 million homes, sometimes even more. Of course, insurance is going to be prohibitively expensive there

Starting point is 00:48:36 because they're either going to fall onto the ocean. They're 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 out. Well, this also says many residents of 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.

Starting point is 00:49:00 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, which means March. is 10 months ago, which means 10 out of 12, 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 once have lapsed. If they couldn't find other coverage, they've gone to California fare or have been uninsured.

Starting point is 00:49:36 Yeah, they're screwed. In this case, it was 69.4% of the Pacific Palestine got dropped. Yeah, 0.4. It would be funny. $69.420. Yeah, yeah, exactly. That's state farm. It was dropped. Yeah. So exactly. So their choices are you either go to a different carrier, if you can get it, pay the higher fees, or you go to California Fair or you self-insure. Self-insure obviously would be catastrophic at this point. Oh, absolutely. Yeah. Allstate two announced plans. This was in November of 2022. Paws 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 dollar home listed on Zillow that burnt down in the fire. All of these crazy expensive homes that are not insured at all. Is there? They're probably insured. At that level, you have to. It's not like you have to. It's like when you have a 30 million dollar home, your net worth is probably so your self-insured? $250 million plus. They're having insurance. There's no way those people

Starting point is 00:50:43 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 $200,000 a year on insurance. And insurance company will make that happen. Well, I'll give an example just to make an insurance comparison. So, you know, I own a plane. The cost to insure my plane is $30,000 a year with two professional

Starting point is 00:51:17 phenom rated pilots. I am a brand new pilot. I've got 100 hours. I've landed a plane 300 times, a little single engine Cirrus with a parachute. In order to be the second

Starting point is 00:51:33 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.

Starting point is 00:51:51 So, like you say, and like I was saying, you can sure anything, how much you want to pay. And what about the insurance companies? Are any of them going to, like, go bankrupt over something like this? Maybe. Yeah. And what's the ripple effect from something like that? Oh, yeah. I mean, that's good.

Starting point is 00:52:09 I mean, there are massive insurance funds. like I think there was just a headline. I wish I read up on this one. I think it was Black Rock or Blackson. One of their insurance funds just tanked in the stock market today after these fires because yeah, I mean, there's loss. But 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 trades. Oh yeah, I have all state insurance. Let me swipe up on Robin Hood and buy some shares. They're the ones holding the bag. So, yeah, it's it's all been thought of. But can they go bankrupt? Yeah, totally. Because when California

Starting point is 00:52:41 Fair plan fails, and as you said, they send that reinsurance risk back to the private market. Absolutely, there could be bankruptcies. But bankruptcy has just turned into some other insurance company buying the dip on that 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. You know, and then got stopped by Lisa Kahn and people like, oh, Trump's going to replace her and who knows, maybe then the merger will go through and maybe Spirit still be alive. Yeah. Now, a lot of this for insurance companies really caused by Prop 103.

Starting point is 00:53:15 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 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.

Starting point is 00:53:46 We need to raise our rates. Yeah. Again, it always seems to come back to politics. And again, I want to just be clear that insurance companies are no angel. 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 are new building codes. You're underinsured. Hey, here's how you should fire harden. Whatever.

Starting point is 00:54:10 hey maybe you should have an extra policy for all the insurable inside your home, whatever. So communication and the service they provide, insurance companies, claims processes, they're all designed to be a pain in the ass. It's kind of like what happened with Luigi, what we're on the shell casings, deny, defer, defend, defend and decline. Depose. Okay, perfect. You know what better. There's so many of these D phrases. is. Dick.

Starting point is 00:54:40 Insurance companies suck, okay? So, 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 and doing this because it props their bottom line. When their bottom line gets propped up, all the people who get stock-based compensation

Starting point is 00:55:04 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 on a walk with Lauren yesterday.

Starting point is 00:55:20 And there was a guy walking around. I've never seen the shirt before walking around. 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 you can never get reelected as a politician,

Starting point is 00:55:35 you can't, you don't really get all the outside funding anymore because you have an expiration. So that's why I thought it was so funny when I was running for governor of California. I'm like, look, I'm not trying to pull a Newsom where he's trying to do his eight 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 it's 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 fundraise for the presidency, right? Let me actually take, because this is what I would do.

Starting point is 00:56:05 emergency control. I mean, look, Newsom 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 or repairing the Sanayanes 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 states greedy, they just leave and then prices go up anyway because there's so little competition.

Starting point is 00:56:50 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, you dealt with the delta smelt, you know, and the fish. Yeah, let's talk about that. 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.

Starting point is 00:57:14 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 the 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 the ocean.

Starting point is 00:57:50 It just naturally all goes into the ocean. It follows the San Joaquin 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 SoCal, keep the Colorado River filled up, build more reservoirs so that we have enough water pressure for our fire hydrants. California, specifically Gavin Newsom, have actually bragged about closing down dams and bragged about how, yay, now we have more of a salmon population.

Starting point is 00:58:24 And so really what they've done is they've bowed to environmentalists, we say, well, you know, the steelhead trout population or the Delta smelled or 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, have you heard about the marijuana farms? Oh, yeah, they pop up and they just take water from the fire hydrants.

Starting point is 00:58:58 hydrants. No, explain to me this. Yeah, so they're 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 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 farms 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. California's solution to this rapid issue was not penalizing people stealing the water.

Starting point is 00:59:43 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. 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 Newsom doesn't. How do you go after those people? What were they doing, just letting them off?

Starting point is 01:00:06 The people that are growing the plants? 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.

Starting point is 01:00:24 They're so underfunded. The police have essentially been underfunded, defunded, almost. 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,

Starting point is 01:00:47 usually they defer their prosecution, waive 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 a $5,000 fine. we won't do it again. That's a, if you're running in the legal marrow on a 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?

Starting point is 01:01:11 Like, as their environment continues to get worse, I mean, I grew up in Ventura, which is a California city. I mean, 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 excited. I'm like, I love this. I love going back to visit Ventura. Two times ago, I saw someone get...

Starting point is 01:01:33 I'm going to bleep this out. Outside of a bar. Are you serious? Saw it happen. Yeah, right there. Did you tell me about this? I don't know if I told you about it. You did not tell me about this.

Starting point is 01:01:45 Yeah, well, I mean, I don't particularly love talking about it. It was pretty... You saw it? Yeah, it was pretty gnarly. It was gnarly. Wow. Yeah, so, I mean, he basically, there was like a scopper. outside of a bar and I think it was either gang related be it's most likely gang related behavior

Starting point is 01:02:00 from a neighboring city um and yeah you got one uh insertion right into his heart oh yeah and he was like a 24 25 year old guy that's terrible that's yeah that's so sad you know i i i don't feel safe out anymore in california either no 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 californ anymore now i'm licensed so it's okay but it's gotten to that point. There is definitely a strong difference between what it was like when I grew up there and what it's like now.

Starting point is 01:02:32 I'm continually every single time I go back, I'm like, yikes. It's their approach on crime, I feel like. Oh, yeah. Even it's, because I got a camera in the back of one of my properties, which is facing the alley. Okay.

Starting point is 01:02:43 The amount of things that I've seen back there. You can make a TikTok channel out of it. I have someone sending me, sending me go to this timestamp right here, and I go, and it's awful. Oh, my God. Because 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.

Starting point is 01:03:02 And you just see him just nodding out there. And yeah, it's so sad. Or just passing out in the middle there. I've seen so many times, like urination, defecation on the camera. Surringe is also just on the ground sometimes. But he'll be walking around. It just exists. So sad.

Starting point is 01:03:21 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 and like going out surfing, imagine just stepping on something. A needle. 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, yeah, recently, we had to make a call for something and they came within like two minutes. Wow. Yeah. Yeah, I think Santa Monica is really trying because I think they've seen the devastation that happened, especially on Third Street Pormon. And there is also

Starting point is 01:03:55 this shift away from the defunded police and progressive movement that we had during the COVID era, really. And this is happening around the world. I mean, you're seeing this with the LFD 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 Democrat voting basically in part because of inflation, because of the lack of enforcement of crime. And to some extent, people have become very upset over prioritization of diversity equity and inclusion funds or priorities. Like, take LA County, for example, or the LA Fire Department.

Starting point is 01:04:40 Have you seen the Adam Carolla clip? Yes. Okay, that was great. Incredible. Seven-year wait to become a firefighter because he's a woman. white dude and a woman applied the Wednesday before and in the same place. Crazy. Crazy. This was obviously wrapping up his story on that. But basically, a lot of companies are now you turning away from that. John Deere was one of the first. Meta just announced yesterday, oh, it may have been

Starting point is 01:05:05 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 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 and 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 hard for you to

Starting point is 01:05:50 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, will 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 any underprivileged schools throughout the entire state.

Starting point is 01:06:22 The politicians might not even be alive anymore who funded those schools 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, the impedance to being able to build. in California, and schooling, mental health. These should be no-brainer apolitical issues that a government with all the power in the world

Starting point is 01:06:55 should be able to solve, yet they don't. 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 existing governments power over the media in California. Most Californians, I would argue, aren't on X every day. They're turning on their local news. They're KTLA. They're, you know, Fox L.A or whatever. They're KCR in Sacramento, whatever. They're turning on their local news stations. And who knows? This could be wrong. But this is what

Starting point is 01:07:35 I was told by an anchor who's still on TV today in California. He asked me never to tell. Well, who he is, which is fair. And he sat down with me at a coffee shop during the election. He said, Kevin, 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.

Starting point is 01:08:11 So really, you don't get exposure to the problems in California through the mainstream television. And I'm not talking about nationwide, CNN, Fox, all of the local stations. I think it's bad the censorship we saw with the Twitter files or in meta. The same thing is happening at every single news station 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. They're screwed.

Starting point is 01:08:55 You know, after I ran for governor, we joke that the Department of Financial Protection and Innovation 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, just fine, their settlement number or whatever. 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 or fly in our oitment, if you will. What other impediments did you come across when you were running for the opposition? Oh, yeah. Well, I mean, a lot. 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 two-parted ballot. One is, do you want to recall Gavin Newsom, yes or no? If Gavin Newsom is recalled, whom should be the replacement? Who should be a replacement? And the Democratic strategy was we are not going to allow any candidate to get any airtime in pretty much any debates or coverage, whatever, although I was in one debate. Thanks, KSariari.

Starting point is 01:10:18 But we will give no credence to any other Democrat. The Democratic Party would not support any other potential contender against Newsom 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 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 Newsom and my pitch was a JFK style like reasonable Democrat, even though that was my pitch, I couldn't. get any Democratic campaign staff lawyers, you know, donation platforms, marketing platforms, couldn't get anything. I'd hire Republicans who wanted to fight Newsom to help staff my campaign

Starting point is 01:11:16 because I couldn't get Democrats because they all said, well, we will never be able to get another Democratic job if we work for you. So that's an example. Wow. What about the Delta smelt? Back to back to the water issues. Yeah. Well, Berkeley has a piece on this. You know, I don't know. 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. This is hatch and release where you actually just in a lab or whatever, 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 you build a dam or you divert water and

Starting point is 01:12:02 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 geography naturally shifts, when there's an earthquake 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, you know, rivers or canals or whatever that are formed or all of a sudden going to be devoid of fish or wildlife or whatever.

Starting point is 01:12:29 But because a species that is deemed in danger, the Delta smelt, or a protected species, environmentalists have been able to fight and drag on litigation that prevents the establishment of basins, canals, or dams to enable more water flow to Southern California, which then enhances wildfire risk in Southern California or reduces wildfire mitigation. And hence, we get Los Angeles basically burning down 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,

Starting point is 01:13:13 because of that they are able to fight in courts and prevent the help. So let me tell you my understanding with this, because I love fish. Yeah, yeah. So this is a beautiful fish tank, by the way. I really appreciate that. So the Delta Smelt has a lifespan of about one year. And because of that, it's seen as a bit of a canary in a coal mine, so to speak.

Starting point is 01:13:35 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 smelt because that's a very short lifespan. So we look to that. What's interesting about the Delta smelt is that it thrived. with the salinity of point two, basically.

Starting point is 01:14:02 So it's when the freshwater 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.

Starting point is 01:14:19 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 smelt, but because there's a whole bunch of endangered species, but that even if the Delta smelt

Starting point is 01:14:33 weren't there, that wouldn't have prevented anything going on. Los Angeles still gets the vast majority of its water from the Sierra of Nevada and from groundwater, and that this delta smelt water mostly goes to help

Starting point is 01:14:48 farmers in central California. That's my understanding of it. Yeah. So let's break that down. First, the argument specifically on the Delta smelt is a perfect example of what we call the slippery slope fallacy, which is

Starting point is 01:15:05 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 Joaquin Sacramento River Delta.

Starting point is 01:15:24 Just 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,

Starting point is 01:15:39 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 0.4% 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 to society. At what point do you say, wow, you know what? Kill all the living organisms in that delta

Starting point is 01:16:11 to prevent even half of that from happening. Because if you prevent half of it from happening, then you have $60 extra billion. So what if now we take a slice of that? And now you build new estuaries 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. So basically relocate the fish or the animal and animals.

Starting point is 01:16:39 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. And that's really important, too. So unfortunately, the desire for saving 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.

Starting point is 01:17:12 Then we should really start thinking about better in California's infrastructure and saving lives and saving hundreds of billions of people. Now, with the Delta smelt, separate from that, I do find it interesting that they do surveys and they see how many. smelt or in this area. 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, it's kind of like a feeble, you know. Well, that's the thing.

Starting point is 01:17:38 If I'm just going to say, they live one year. One year. But that's a good point. That's a really good point. But that's how they become an indicator species for the entire area. Because of such a short lifespan, you know very quickly if something's up and that affects everything else. So it could balloon from that to other fish

Starting point is 01:17:55 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 decision at what point is hundreds of billions of dollars of harm to GDP which we could reinvest to saving more fish lives and

Starting point is 01:18:11 human lives and property right? And where's the balance there? It's just a prioritization. Well so far it seems like for California the balance is if something goes extinct because of human life. Yes. It's California's responsibility to at least keep the lineage going.

Starting point is 01:18:28 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 a paradise. Give them the bigliest, largest paradise pool reservoir ever all for the Delta smelt. They could have the greatest population ever in the world. build a museum around the Delta smelt.

Starting point is 01:18:54 There's so much that money can do to solve these issues. But unfortunately, I mean, look, regarding indicator species, it's very interesting. There's a reason we use mice for drug discovery and research, because obviously, they, 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. Or at least once you spread it out over population, a higher incidence of cancer. using a certain drug. So, yeah, the idea of something being an indicator species exists. It's, again, same reason we use mice. But that doesn't mean 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. It doesn't mean that all of the other ones are going to die.

Starting point is 01:19:42 Save the smell, put them in captivity, captivity, save Southern California. Jackson Indicator species, actually. Oh. For what? For plenty of things. Okay. Jack's the indicator. Okay.

Starting point is 01:19:54 I am an indicator. Like the pro indicator or the inverse indicator? Inverse. Yeah. Just let me know if you want something to go upward down and I'll just do the opposite. Yeah. Okay. Well, there you go.

Starting point is 01:20:03 The Jim Kramer effect. I've had my Jim Kramer moments. 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 a Jack that Jack bought into because it was like on the up and up.

Starting point is 01:20:25 Quantum. How is that doing? No. Yeah, it's completely plummeted. And this was maybe within the past few weeks. And this is a random. It wasn't a lot. Usually the heavier I buy, the more it goes down.

Starting point is 01:20:38 But this one, fortunate. I didn't put in a lot. It's still going down pretty heavily, though. It's okay. I mean. Jack, do you pass me a magic mind? Yeah. Kevin, have you tried these before?

Starting point is 01:20:46 Oh, no. that's why you got three. I am not an indicator. Have you had these? Is there alcohol in it? I don't drink anymore. Did you hear that? I'm at like three months of no drinking.

Starting point is 01:20:58 You don't drink, period? I haven't had a single drink since September 20th. Local news is in decline across Canada, and this is bad news for all of us. With less local news, noise, rumors, and misinformation fill the void, and it gets harder to separate truth from fiction. That's why CBC News is putting more. more journalists in more places across Canada, reporting on the ground from where you live,

Starting point is 01:21:22 telling the stories that matter to all of us, because local news is big news. Choose news, not noise. CBC News. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setter. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IG PrivateWealth.com. Yeah, I knew this.

Starting point is 01:22:05 I didn't know that. Yeah, I think it's fantastic. How do you feed? No, there's no alcohol. It's just, it's like a... It's like a... Graham loves it. these. They have like a tiny, tiny little, teeny tiny little burst of caffeine. I worked at

Starting point is 01:22:19 John Woodoo's. People come in for these macha shots. I always thought it was so disgusting. But I'll take it. I'll take your mystery 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 focus, attention. Fine. Cheers to your sponsor. I already. I love some people to say the taste is not their favorite. I love it. So 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. I take these on trips. He'll bring them and like try to slide me magic minds like throughout the day. It'll be like four or five p.m. will be like on some random flight going somewhere. He's like, hey man, take a magic mind.

Starting point is 01:22:57 They're local. I mean, yeah. 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 of 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 good. It's actually not that bad. But yeah, I mean, you were, you're asking. And they sponsor the podcast, so thank you, Magic Mind.

Starting point is 01:23:21 Yeah, man. I mean, I'd rather have this than shots of tequila. I always used to be two shots of tequila. Always. It was crazy. It was like, it was like daily. And I thought that was normal. When? When? Yeah. Like when the day? Throughout the day. Four. Four o'clock. And what would that do for you? All my anxiety would go away. What were you anxious about?

Starting point is 01:23:40 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 o'clock, I'd get anxious because I was waiting for my medicine. I don't know if that's true. But 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. Okay, this is, would you enjoy it or is, hell yeah. Oh, no, I looked forward to it. Do you like the flavor? No, it tastes like ass. No, tequila sucks, but I didn't care because to me, it was like my medicine was what I thought. And it just made you feel like emotionally, like more mental clarity. No, it just took the anxiety away.

Starting point is 01:24:32 Less mental clarity, actually. Yeah, probably, because it's become an idiot. Two shots for you wouldn't like, like two shots for me, I'd be on the. the floor. Oh. But I'm guessing for you is just like enough to take the edge off.

Starting point is 01:24:42 So I could do two shots and then we would we would always play games like oh, who would breathalize the most? It'd be like 2.5. What is it? 0.025. Yeah, yeah.

Starting point is 01:24:55 Yeah, yeah. Dead. That's dead. Yeah. See, I don't even remember the measures anymore. Who could breathalize them? Yeah. No, I'm telling it was bad.

Starting point is 01:25:05 It would probably be like, I think to hit the limit, I'd probably be five or six. I mean, then you're pooped. It was just bad, but it became so normal for me. It was normalized for me. And it all started with anxiety, which I started

Starting point is 01:25:18 having anxiety when I went to college. I'd get like lumps in my throat and pain in my chest and went to cardiologist, ear, nose and throat specialist. Like, I thought it was dying of cancer. And like, I said, no, man, you're just, you're just stressed out, you're anxious. I'm like,

Starting point is 01:25:34 okay, got it. Stressed, anxious. Oh, alcohol. Cure. And it started as early as that, as early as college where you'd start 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 age. So then what made you then realize that you should wean off of alcohol and that that could actually like be the solution? Well, I didn't. I was just, I think what happened is you get enough 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

Starting point is 01:26:13 like you're going around to the people you were. I was, was I okay last night? Did I say something stupid? You get enough moments like that. We're like, oh, man, this is dumb. And so then, yeah, 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, but yeah, the whole trip. I mean, like, I guess the what I remember of it is like, you know those memes where people like, they're like, oh, look at my kids. And they open up this like book of it and all the pictures come out of their wallet, the dad

Starting point is 01:26:54 wallet, which I have a dad wallet now too, which is kind of funny. But that's kind of what it feels like for, like somebody's playing a slideshow. That's kind of a slide show of the trip. Well, I appreciate your transparency. That's cool to hear. I'm happy 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.

Starting point is 01:27:12 Oh, yeah, he says he's never going to die. Well, as long, you know, he's a smart guy. Like, 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. Oh, I didn't know that. It's like a poison. Yeah. They just say, like, it only ever does bad things.

Starting point is 01:27:28 And some people argue that one glass of red wine per night is like, you know, that's a good thing. I think the data now shows that it's not, you know, 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 valetrol very 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 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

Starting point is 01:28:06 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 seen good benefits from it. And I feel more productive, too, because I'm not, like,

Starting point is 01:28:15 crashing with anxiety at 4 anymore. I actually feel like I can get more stuff done. So kind of crazy. Yeah. I could learn more about Delta Smelt. Yeah. How to beat Gavin Newsome. In terms of Rick Caruso,

Starting point is 01:28:28 why do you think he lost? Republican. You think that was the only reason? You don't think people were just like anti-rich guy? Oh, sure, they were that too, but Republican. California is, it just votes Democrat. That's just the way it is.

Starting point is 01:28:47 Why is that? California has just, after the 70s, it's, you know, California went through the 70s and 80s, this golden era. It just had so much money. So it just had so much to give. And it actually ran a good budget in the past. So what's happened is after generation, of having basically the riches,

Starting point is 01:29:09 they just got really bad with managing everything from infrastructure to water. We 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.

Starting point is 01:29:26 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 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. I'll say it. Okay. So yeah, which does that sort of like enhances this conspiracies. I know the conspiracies that I've seen. Tell me about. Facebook, oh gosh, there's one that this entire thing was the doings of Rick Caruso to be able to buy a bland.

Starting point is 01:30:10 I've also heard the same thing that Black Rock was behind this, 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. I believe metal roofs. He didn't have shrubbery that was touching his buildings either. Everything was very well manicured, very well watered. Disneyland. Right. And now other people were saying, too, 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 a hundred year old building burned down, whereas the newer construction. Correct. Right. I mean, and this goes to like what you were saying, which is, hey, 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 this anymore. I think in the future,

Starting point is 01:31:06 for any homes that are going to be constructed in that area, probably have to have metal roofs. Oh, yeah. They're going to be really strict on 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 in Vegas, they have that now. That's interesting. Oh, wow. Yeah, I mean, I think probably plant life is the biggest, Which is unfortunate because plants make everything kind of lush and pretty, right? I mean, I think at your Santa Monica, one of your Santa Monica members, you got one of the most beautiful lush gardens, right? Dreading tearing that up.

Starting point is 01:31:44 Because 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 gorgeous. It sucks because that's what attracted me to that home. I was walking in and just like it felt like a tropical. forest. Beautiful. Yeah, that is the definition of problem for fires. They should just put your house up.

Starting point is 01:32:10 This is what we don't want. But it's beautiful. It was built in like the 20s. It was so beautiful. It's very picturesque. You know, just a 1920s Spanish phone surrounded by greenery. Still, the Salterio Thailand.

Starting point is 01:32:24 Everything. Yeah. It's nice. I loved it. I loved it. But yeah, in terms of that or a fire, I mean, it's fire's dream. Yeah. That's what it is. Well, I mean, I think you could look at a lot of actually, look at newer construction in Vegas.

Starting point is 01:32:37 It's a lot of glass and metal and stucco. And they look good. But they're much more fire resistant. Yeah. Yeah. The other thing that I am shocked about is that L.A. is not as strict about plants touching fire lines. Like when they really look at the cause of this thing,

Starting point is 01:32:55 they say it's, 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. It snaps falls down. Sure.

Starting point is 01:33:22 And I've seen a lot of real estate in Los Angeles where, I mean, this is obviously overgrown. 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 that's one of the things. And it's very expensive to put the power lines underground. Oh, God. I think it was like four million dollars 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 200 200 mile an hour gusts, 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

Starting point is 01:34:02 Water and Power. Now, Karen Bass promised affordable housing. Oh, God. How could you promise cheaper housing? That's the biggest political lie. The only way you can increase housing affordability is just by building much more housing. 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 simply exacerbates.

Starting point is 01:34:27 the housing shortage. So I'm a big fan of just build more and let the market decide. But the idea of affordable housing restrictions, they're complicated to get through planning, they become a negotiation contention for developers, they slow down the building process. And quite frankly, from an economic point of view, they do the opposite. Affordable housing actually makes housing less affordable, because you've massive wait 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 mean, price gouging already exists, policies for that.

Starting point is 01:35:12 So those are probably, you don't even need to pass a law for that that probably already exists. 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 townhouse, for example. The townhouse was renting for, it's a two-bedroom one bath, a townhouse, let's just say. Let's say it's renting for 3,500 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.

Starting point is 01:35:47 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's 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 the real loss. Is that sort of culture and diversity that once was and the character or whatever 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.

Starting point is 01:36:21 Oh, you pass by it all the time. Wildlife, what? Yeah. It's built an overpass over the freeway. It's for, I think, mountain lions, right? It's for mountain lions and deer, to be able to cross from one side to the other. Beautiful looking. If I'm not mistaken, it brings it from, like, the mountainous region to the residential.

Starting point is 01:36:39 So it also makes me wonder like, okay, why do the mountain lions need to be over in the residential region? Well, my understanding they're crossing anyway. So it's like either they get hit by a car. Right. And somebody maybe crashes into them or they just pass safely. 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.

Starting point is 01:36:59 It's a beautiful overpassing. You pass 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 gold. Golden Eagle to be able to cross a freeway. I'm joking.

Starting point is 01:37:21 That's obviously being a little bit exaggerating right there. But there is, you know, bobcats and other things. But still, I mean, that is $90 million. Would you rather be spent on that or homeless? Well, like, if it actually went to solve the homeless issue, that.

Starting point is 01:37:35 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. It's a disaster. While they're still paying like the lease. I think one of the things

Starting point is 01:37:48 you find in California is California is very much about feel-good policies. In fact, Germany did this as well. Germany was building, you can look this up, German spent over $20 million dollars building bike paths in Ecuador for climate change. So these are, I just call them like the feel-good pet projects that politicians get to put their names on. But again, they do that so they could get re-elected. The whole premise of, look at this beautiful park I built or whatever, this is why when you see those 1,500-page bills and they have a little pet projects in them, politicians put their names on it so they can get reelected. It's always to get reelected.

Starting point is 01:38:23 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, Vivek always tells 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 it's, it's.

Starting point is 01:38:48 I was looking at the budget of San Francisco. And 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 can 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. And so the prioritization of the government budget in California is what the ultimate problem is of all of it. But it's not even the prioritization, but it's also just how effective they use their dollar.

Starting point is 01:39:38 Oh, of course. Like one dollar for that library. I'm sure they could do both at the same time. Yeah, that's if they just like were a little bit more conservative with their, with their wallet. Sure. I mean, it's the, it's the argument. of the, oh, what was it? It was the $150

Starting point is 01:39:52 Boeing military contractor soap dispenser. Why is the U.S. 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? There's a $2 million public bathroom that was put, I think, in like San Francisco and New York, something like that. It's endless. It is endless waste and 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, you know, whatever.

Starting point is 01:40:33 Their wife gets tickets to whatever the Broadway show or whatever. And we're going to write them in because we're going to do them a favor. Did you get approached by any lobbyists when you were running for governor? Oh, no. No. And why is that because they didn't want to like seem like traders to the incumbent? it? Well, I think there are a few potential reasons. I think that's probably the biggest reason. It's like, okay, nobody support the competing Dems against Newsome. That's probably the biggest reason. But there's also a chance that they're like, oh, man, if we go talk to Kevin, she can make a YouTube video about us. That's fine. That's fine. Which I would do.

Starting point is 01:41:09 They were right. They were right. Got it. Okay. I think that's pretty good. I mean, we kind of hit everything. Yeah, we were kind of spitballing with this one, guys, so forgive us, obviously. If any of the information's inaccurate, I'm going to do my best in fact-checking. 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. Yeah, you appreciate it. You know, we'll have community notes in the

Starting point is 01:41:40 comment section where people can community know everything we said. I'm curious to read it because I profess to know everything and I don't think anybody knows everything. But it's healthy to have that discussion about it. And so the comment section will be very entertaining. Yeah. Well, thank you guys so much. Yeah. Please. Let us know what you think. Let us down below. Make sure to hit the like button, subscribe. Kevin, we'll 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 leaving, leave. leaving those links down below, top lines of the description.

Starting point is 01:42:13 If you're interested in helping, that would be absolutely incredible. Thank you guys for watching. Till next time. See up.

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