March 28, 2025 – Today, Financial Sense Newshour dives deep into the devastating LA fires and their broader implications, analyzing how California's mismanagement of forestry, water, and insurance policies has led to catastrophic consequences. Jim Puplava and guest Doomberg connect the dots between single-party rule, environmental policies, and economic mismanagement, warning that California's challenges could spread to other states—and possibly the nation—via political and regulatory influence. They discuss Gavin Newsom’s political ambitions, the exodus of key industries, and the risks of adopting California-like policies on a national scale. With sharp insights and real-world examples, this is a must-listen for financial professionals navigating political and economic trends.
Website: Doomberg – Intelligent Energy Analysis
To speak with any of our advisors or wealth managers, feel free to Contact Us online or give us a call at (888) 486-3939.
Stay ahead of the news! Subscribe to our premium weekday podcast
Key points discussed on today's show:
-
LA wildfires caused $54 billion in damages, burning 55,000 acres, worsened by poor forestry and water management.
-
California’s single-party rule blamed for incompetence, fraud, and environmental policy failures.
-
Restrictive regulations prevented proper fuel management, increasing fire risk.
-
Insurance companies, unable to raise premiums, exited, leaving homeowners uninsured.
-
Affluent residents and tech firms (e.g., Tesla, Oracle) are leaving, threatening California’s economy.
-
Gavin Newsom, a skilled politician, deflects blame to Big Oil, eyeing a 2028 presidential run.
-
Newsom’s radical environmentalism could nationalize California’s policies if elected, despite shifting stances.
-
State’s fiscal health, tied to stock market gains, faces risks from ongoing mismanagement.
Transcript
Jim Puplava:
Well, recently one of the top stories has been the fires in LA. And it’s been one of the most devastating fires the state has experienced in its history. Just to give you an idea of the damage that was done, anywhere from 28 to 30 billion on structures, a total of about 54 billion. There was almost 55,000 acres of land. And it’s not just the fires, it’s also the lost income for a lot of these homes. They were upper-income homes. They employed people like a pool service, housekeeper. Those people lost their jobs as these homes were burnt. Now, you might be thinking, what does this have to do with me? Well, you may not understand that California environmental laws are now being adopted in a lot of blue states. So a lot of what has been mismanaged in California may be coming to your state and, eventually, to the country with the possibility of a Newsom presidency in 2028. Well, let’s dive into this and its implications. Joining me on the program is Doomberg. Doomberg, you talked about the risk of any state where you have a single-party rule. And you talk about California, its bloated mess of waste, incompetence, and fraud, which is really exemplified by the LA fires. Now, you would think having gone through that, they would learn a lesson. Let’s take a look at what we did with water storage, what we’re doing with forestry management. Instead, they come up with a law that is going to allow homeowners and insurance companies to sue oil companies because of climate change, which is the reason we had the fires. Let’s begin with that.
Doomberg:
Yeah, Jim, you’re referencing a piece that we published a couple of weeks ago called "The Magician’s Trick," which of course is in reference to current governor and future presidential candidate Gavin Newsom’s attempt to pivot and to sort of lay the blame for what is an obvious failure of government at the feet of industry, using the ever-familiar and popular refrain that Big Oil is the root cause of all that ails us. As you correctly described in your introduction, the fires that destroyed so much of LA were first and foremost a human tragedy, and we should not forget that. But it is also a highly predictable, tragic outcome of single-party rule. By the way, this is not a Democrat or Republican issue. This is a human issue. Anytime you have one party which gains dominant control over the levers of power, be it in a state or a country or a city—look at the big cities in the US for further examples. And by the way, Texas is heading down this path with Republicans in control. There’s an awful lot of fraud in Texas that gets swept under the rug. California is a single-party state. The Democrats have locked down all the levers of power. When you are no longer held accountable to the voters, competency no longer matters. What matters is access to grift, access to funding. And competency falls to the wayside. Look at managing wildfire risk. It’s a solved problem. This is all widely known—what should have been done. It starts first and foremost with much, much better fuel management. And I don’t mean here, in this case, the fossil fuels that are being pinned for blame on this emergency and this fiasco and this crisis, but the fuel itself: the brush, the wood, dead trees. Look, anybody who’s been in and around Berkeley, for example, knows it’s impossible to get a tree trimmed or, heaven forbid, cut down. Environmentalists have leveraged the Democratic Party’s control over the levers of power in California to enact all manner of insane policies. And these policies occasionally come home to roost. That’s what we saw here. The total and complete failure of government requires a scapegoat, and none better than Big Oil.
Jim Puplava:
It’s interesting because you talk about one issue here: failure of forestry management—from debris clearing, selective logging, creating firebreaks, executing controlled burns. And it’s amazing, Doomberg. I live up in the hills. There’s a lot of brush and trees. And on the side of part of my property, I have a creek with eucalyptus trees. And these eucalyptus trees are just highly flammable. And they were getting so large they were hanging over my wall, over my roof. So I called the fire department, they come out, and they go, “This is a big fire hazard.” I said, “Well, how do I remove them?” Because this is in kind of protected land next to my property. And he said, “Well, just call the city.” The city comes out, they look at it, and they said, “No, you can’t touch that.” I go, “Why? It’s a fire hazard. It’s hanging over my roof.” And he goes, “No, that’s protected land.” They wouldn’t let me cut it. Well, I hope they’re not listening because I just called a guy and topped the trees, went down into the creek, cleared out all the brush, the saplings, and all the stuff that proper forestry management isn’t being done in this country. And this was a perfect example in my own home.
Doomberg:
Yeah, I would correct you slightly. It isn’t being done in some parts of the country. It is successfully being done in many parts of the country, which is proof of the feasibility of it all. And your story is all too familiar to anybody who tries to do the right thing, operate by the book, call the proper authorities, find out what the rules are, and do your best to follow them. But the rules just make no sense. And so I think you should proudly brag about what you did. What are they going to do? Come and arrest you for preventing too much fuel building up around your residence? If you can’t protect your residence, are you really a free person? Do we have any rights in this country? When do the rights of tree branches take priority over the rights of the humans who live in and around them and for whom overgrowth and debris piling up is a serious risk, as we saw? I mean, this was a devastating, tragic, lethal fire. It has uprooted and destroyed countless lives. The property losses are just the beginning of the full toll of consequences that will be felt in the region. Now we get to the fun part where it’s going to be impossible to rebuild, and all manner of corruption and grift will find its way into that. And on it goes. And again, whenever you have an unaccountable set of bureaucrats whose ascension up the ranks of political power has more to do with their willingness to grift and their connections to others similarly inclined than it does with their competence, this is the inevitable end state. And Gavin Newsom, as the head of the Democratic Party in California, is actively, you know, pivoting, and it’s going to fuel his way forward, he hopes. Classic example of the Peter Principle.
Jim Puplava:
A second dimension you talk about is our water management. You know, California goes between drought and floods, and there was a three-year period just a couple years ago where we got an inordinate amount of rain. So instead of storing that rain in water reservoirs, Newsom got rid of four dams and bragged about it. So all that rain, instead of saving it, went out to the ocean. So we’re not managing our water resources as well.
Doomberg:
Yeah. In a piece, we said one of the most damaging aspects of the radical environmentalist movement is they have this relentless, myopic focus on, quote, “letting nature be nature.” So any and all human intervention in ecological systems is considered a priori bad, evil, and something to be fought. So your tiny story of trimming trees over your own property—by the way, in the state that I live in, the property line defines who can cut what. And so if a branch from a neighbor is encroaching onto my yard, I have the full right to take my chainsaw and take care of it. These are choices. These are political choices that states and regions make. To your point about water management, any intervention that stops the natural flows of floodwater back to the ocean is considered an affront. Of course, we’re not surprised to read that once firefighters showed up on the scene at the peak of the inferno, you know, tapping into fire hydrants, they found there was no water—reservoirs laid bare, empty, dry, when they could have been filled. To your point, the boom-bust water cycle of California long predates any concept of climate change. It’s an inherent attribute of the climate. Now, California is a wonderful place to live in many ways, and probably more people have chosen to live there than the ecology could support, left to its own devices. But humans have always altered the land to make room for themselves and their communities. That California has been allowing its population to grow—although it’s since reversing because of these policies—to the extent that it has, in the absence of proactive management like forestry management we talked about earlier, or here, water management, again, it just created a predictable outcome. And look, the best proof that something was predictable is that it was widely predicted, and people had been warning of this exact scenario for many, many years.
Jim Puplava:
Another issue, too, that really caused a lot of damage—and unfortunately for a lot of the people that lost their homes—California waged a war with insurance companies. They would not allow insurance companies to properly raise premiums to assess the damages of this poor management of our forests and things like that nature. So a lot of these people that lost their homes didn’t have fire insurance. Let’s talk about that, because it doesn’t seem their only way to correct this is rather than allow these companies to raise their premiums. And by the way, I just got an insurance premium on the building that I own, and it was raised 24% by the insurer, because obviously the insurers are paying out some of these damages from the fire, and so they need to recoup to stay in business. But let’s talk about the insurance companies.
Doomberg:
Yeah. In fact, predating the insurance companies are a couple of factors. One, California’s notoriously poor management of its housing stock, where it’s almost impossible to build new. And that drove the price of existing homes through the roof, as you probably are intimately familiar with, which is great if you got in early, not so great if you had to buy a home and you paid such exorbitant prices. And then, as you mentioned, insurance companies were not allowed to pass on the costs of the state’s poor risk management to consumers. So this isn’t the first wildfire in California. And actuaries are pretty good at assessing risk. And if they’re not allowed to charge for that risk, then they pull out of the market. And so many people did. And many people in California were forced into this state-run program, which is now effectively bankrupt absent a federal bailout. But then the third thing is people keep moving into these high-risk areas. But again, one of the big canards of the climate change movement is the total cost of damages from these types of catastrophes. Well, if the housing prices are wildly inflated because of an artificial shortage and people are still crowding into the highest-risk areas and then you take away their insurance, well, then you have the perfect storm, which is quite literally what happened here. It truly is one of those freak events where everything converged, and catastrophe emerged.
Jim Puplava:
Yeah. So, you know, people listening to this might say, “Well, that’s California. California’s, you know, land of fruits and nuts. And that’s just California.” Let’s talk about the implications, because California plays a key environmental role for many states in this country that are adopting the same policies.
Doomberg:
Yeah, so there’s about 10 or 12 blue-leaning states that have sort of voluntarily decided to implement, predominantly, environmental regulations from the likes of CARB, the California Air Resources Board, and this is most pronounced in the management of the automotive fleet and the emissions associated with it. But nonetheless, the trend is there. There’s a power struggle between the EPA in Washington and California, and many of the other blue-aligned states are falling in line behind California and adopting the crazy principles that California thinks are going to save the world from climate change. And some of these states are having second thoughts, which is only sensible. But nonetheless, all of this sort of derives from a congressional carve-out in the Clean Air Act that allowed California to apply for waivers—unique to California, by the way. It’s the only named state in that part of the law that allows this. And then these other states, as you correctly mentioned, have outsourced their own state-level regulations to try to get a critical mass of people behind the craziest ideas. And why does that matter? Well, if you’re a manufacturer, California is such a big and important state. You don’t like to make multiple products for multiple states. And if 10 states all decide that they want to march in solidarity to whatever’s coming out of Sacramento, then in a way, it’s a backdoor way to force upon the entire country wildly radical environmental regulations that very few people in the country would actually support. And ultimately, manufacturers are stuck. If you’re an automotive manufacturer, for example, you’re not going to build a model just for California. The whole gasoline situation in California is another example of this, another tragedy waiting to happen, by the way, which we’ve written about multiple times. Yes, it is a bit of groupthink, extremist groupthink, and it’s real. There are certain states in the country that just have the beginnings of one-party rule, and they’re all sort of marching in line behind California, right over the cliff. It’s really amazing. No matter how large the pile of empirical evidence is that these policies won’t and can’t work, they nonetheless continue to press forward with them.
Jim Puplava:
You know, it’s absolutely amazing because in the election, the Democrats talked about climate change as one of the major risks, which was probably on the bottom of the list for most voters. But it’s a top policy within the party. And why that could become important is because Newsom looks like right now he’s probably one of the frontrunners for the Democratic Party in 2028, and he’s a radical environmentalist. So let’s say things don’t go well in the Trump administration, and Newsom’s our next president in 2028. He would begin adopting these policies for the country that he did in California. And that could be a major risk.
Doomberg:
So we have a slightly different view of Newsom. He is first and foremost—and it should be stated as often as necessary for people to not underestimate him—a very talented politician. He’s a gifted orator. He’s good on his feet. He looks good on camera. He’s a strong debater. He will be a formidable candidate. And in fact, we believe that if he had replaced Biden on the ticket, there was a far better chance that he might have won the most recent election. For a variety of reasons, he was not afforded that opportunity. We believe at his core, Gavin Newsom has no real principles and is merely playing the California political system for his own political advancement and recognizes that this is what the people who voted him into office want him to do. And he’s already executing a phase shift in his own sort of image and policies, denying things that he had said previously. And look, all politicians do this to a degree. Trump does this. Everybody who runs for office has done it or will do it in the future. But he is a shapeshifter who will adapt to the necessities of the next election. And since he’s not going to be running again in California, you’re starting to see a not-so-subtle progression of policy changes and policy stance changes that he intends to run on in 2028. So he’s a very talented politician, one who should not be underestimated. And we give him much more than a fair-to-middling chance of actually winning.
Jim Puplava:
Yeah. So some of this could be national policy. Who knows? So it doesn’t look like it’s going to get any better for California because already I’m hearing things about corruption, about rebuilding. And the sad thing about it is the amount of revenues that are lost—not only tax revenues for the state; obviously, you can’t collect property taxes on a house that’s burnt in the same way it was when the house was standing—but more importantly, at least I’ve been seeing a lot of the areas that were hit were very affluent. You had a lot of movie stars, a lot of pop stars, very wealthy people. And from the interviews I’ve seen, they’re saying, “That’s it, we’re out of here. This is just too crazy for us.” And it’s not just that these people that had these homes employed—you know, you had a pool cleaner that came to the pool, you had a landscaper, you might have had a housekeeper. So it’s not only just the lost tax revenues to the state, but the lost jobs of the people that were employed in domestic service.
Doomberg:
Yeah, well, I mean, in a way it’s a complete destruction of the local economy, and that’s going to have second- and third- and fourth-order effects, as you articulated. And ultimately, the fiscal state of California is probably the most heavily dependent on the performance of the stock market. Its receipts are wildly volatile. And if we go through a recession and market correction just as Newsom is leaving office, I think California’s fiscal situation could deteriorate rapidly, which would only make the outflow of those who can afford to leave—which is, as you indicated, what we’re seeing—all the more painful. So you have sort of a perfect storm brewing in California, much like the LA fire risk just before the match was lit. I think we’re one significant market correction away from California being in a real spot of bother from a fiscal perspective because no state depends more on things like capital gains tax in order to drive its internal revenues.
Jim Puplava:
Yeah. And one of the big problems for California is we’re losing a lot of our tech companies. We’ve lost Tesla, we’ve lost Oracle, we’ve lost Hewlett Packard, now we’re losing Chevron leaving the state. So as these states leave, the employees that were paid—so I mean, what’s left in Silicon Valley? You got Meta, you got Google, and you have Apple.
Doomberg:
Yeah, and also almost as important—because, you know, most of the gains of those big companies have already been booked—you’re beginning to see an outflow of the venture capital startup community out of the San Francisco area into places like Boston, which has its own issues, and Austin, Texas, and other sort of innovative places like the Research Triangle in North Carolina. It used to be that if you were an enterprising startup entrepreneur, you needed to be in San Francisco, you needed to tap the big Silicon Valley VC firms. That’s no longer the case. Remote work and the outflow of people from California and the degradation of San Francisco to a really—I mean, just a really tragic state—has all sort of conspired to take the one great moat that California had, aside from the wonderful weather, which is this sort of history, this legacy, this culture of huge risk-taking in the startup community, unicorns born left and right. That’s starting to crack too. And it wouldn’t take much in the way of a few more generations of entrepreneurs replicating the success of the Apples and the Facebooks in other states and other communities for that to go away permanently. I mean, capital goes where capital is respected and treated well, full stop.
Jim Puplava:
And it’s not just Silicon Valley. There’s talk now of moving Hollywood out of California where it’d be less expensive to shoot a TV show or make a movie. And they’re seriously talking about maybe moving to Texas and other locations. That would be devastating if we were to lose Hollywood in addition to losing Silicon Valley.
Doomberg:
Yeah, and in many respects, that trend is already well underway. A lot of film projects are filmed in places like Australia, Canada—you know, tax-friendly places that have actively tried to court filmmakers and production studios to do their work in their state. This is sort of a competitive bid for everything, right? And so California is losing its moats. Now again, California is a wonderful place to live. There’s lots of great things about California and lots of reasons to be optimistic. One of them is that which can’t go on forever usually doesn’t. And so there will be a rebound. I’m shocked that the mayor of Los Angeles has kept her job. She seems to be digging in. But nonetheless, this just can’t go on forever. Like, there’s only so much pain the populace will be willing to suffer before it actually affects political change. And ultimately, California, like the US, is what chemists would call a buffered system. There’s only so far out of whack it can get before politics intervenes and order is restored. And I think California in the post-Newsom era—because it’ll take a politician of his skill to keep things, you know, together—I think there’s very little chance that whoever replaces Newsom has his charisma and his, you know, political survival instincts, and that that person will probably be the last of the sort of big blue Democrat governors in the state. And then we’ll see a wipeout of the party like we inevitably see after decades of single-party rule.
Jim Puplava:
Well, hopefully that will happen because, I mean, there’s so much, you know, when you think, Doomberg, about any state—I think, what are—California is probably the sixth or seventh largest economy in the world. I mean, we have everything. We have industry, we have tech, we have entertainment, we have the military, we have resources, we have agriculture. I mean, it’s a complete state. We have just about everything you could have in a perfect economy. So they used to call it the Golden State, and it was the Golden State. So hopefully someday it’ll become golden again.
Doomberg:
I couldn’t agree more with that sentiment, and I share that hope as a regular visitor to the state. I mean, I’m always struck by its beauty and the niceness of most of the people you interact with. And as you mentioned, it truly is spoiled in its resource base, in its inherent advantages. Look, California could be Texas today, just from an oil and gas perspective. It’s proactively choosing to keep enormous fuel and mineral wealth in the ground. And those choices are political choices. They can, and they inevitably will, be undone. And so, you know, maybe you and I can mark the bottom in California here today. And maybe we’re just a couple of good contrarians, and we should all get long on California’s future prospects.
Jim Puplava:
All right, well listen, Doomberg, as we close, tell our listeners how they can find you. You’re on Substack, one of the fastest-growing newsletters on Substack, so tell us about it.
Doomberg:
Yeah, Jim, thanks for the opportunity. All of our work can be found at doomberg.com—d-o-o-m-b-e-r-g.com—all of our newsletters, our pro-tier webinars, our podcast appearances like this are also linked up there. So always a pleasure to talk with you, Jim. Looking forward to the next time.
If you’re not already a subscriber to our weekday FS Insider podcast, click here to subscribe. For a link to our full podcast archive, see Financial Sense Newshour (All) and don't forget to subscribe on Apple Podcasts, Spotify, or YouTube Podcasts!
To learn more about Financial Sense® Wealth Management, give us a call at (888) 486-3939 or click here to contact us.
Content is for informational purposes only and does not constitute financial, investment, legal, or other advice.
There are risks involved in investing, including the potential for loss of principal.
Forward-looking statements are based on assumptions that may not materialize and are subject to risks and uncertainties.
Any mention of specific securities or investment strategies is not an endorsement or recommendation.
Advisory services offered through Financial Sense® Advisors, Inc., a registered investment adviser. Securities offered through Financial Sense® Securities, Inc., Member FINRA/SIPC. DBA Financial Sense® Wealth Management. Investing involves risk, including the loss of principle. Past performance is not indicative of future results.
