The discussion dives into the intersection of the LA wildfires and the finance, insurance, and real estate industries. It reveals how landlords exploit crises to hike rents and investors seize damaged properties at bargain prices. The podcast critiques the insurance industry's victim narrative while raising rates and denying claims. It also sheds light on systemic inequalities that facilitate gentrification and predation post-disaster, all while offering humorous takes on cultural misunderstandings and the tech trends in learning Mandarin.
The LA wildfires expose a grim reality where investors exploit crisis situations, buying properties at depreciated prices and marginalizing affected communities.
In the aftermath of wildfires, landlords increase rents sharply, revealing a pattern of disaster economics that prioritizes profit over community welfare.
The insurance industry manipulates narratives post-disaster while altering policies and raising rates, leading to increased reliance on state-supported plans for vulnerable individuals.
Deep dives
The Impact of LA Wildfires on Local Communities
The LA wildfires have caused devastating destruction, particularly in neighborhoods like Altadena, which has historically been home to many Black families. These wildfires have resulted in severe loss of property and community heritage, with many family homes reduced to ashes. As residents sift through the remains of their homes, real estate speculators see an opportunity to purchase the land at significantly reduced prices, further threatening the stability of these communities. This situation reflects the broader trend where natural disasters disproportionately impact marginalized groups while offering lucrative opportunities for wealthier investors and developers.
Predatory Practices in Real Estate Following Disasters
The aftermath of the wildfires reveals a troubling cycle where private equity firms and investors attempt to capitalize on the misfortunes of affected homeowners. Reports show that these investors are proactively reaching out to financially distressed families, often offering prices well below the property's true value. This opportunistic behavior mirrors past instances, such as post-Katrina New Orleans, where real estate vultures capitalized on the vulnerabilities of displaced individuals. As homeowners are forced to consider selling out of desperation, they risk losing generational wealth and community bonds to faceless corporations.
The Exploitative Nature of Rental Markets Post-Disaster
Following the wildfires in LA, landlords have begun raising rents exponentially, taking advantage of desperate demands for housing. Historical parallels can be drawn to New Orleans after Hurricane Katrina, where rental prices surged by significant margins. This price gouging reflects a larger trend in disaster economics, where urgent needs of the affected population are exploited for profit. The situation raises ethical questions about the responsibilities of landlords and real estate companies in disaster recovery, highlighting a systemic issue where profit motives often override community needs.
The Insurance Industry's Crisis Narrative
The insurance industry faces a significant crisis following the LA wildfires, with estimates of economic loss soaring into the billions. Although insurance companies have raised premiums and altered policies significantly, they are simultaneously structuring the narrative to portray themselves as victims of unpredictable natural disasters. This narrative obscures the fact that many insurers had low loss ratios, indicating they profit significantly while managing risks. As the public grapples with these changes, it leads to an increasing reliance on state-supported insurance plans for those unable to secure private coverage, ultimately reflecting an unjust system of risk management.
Regulatory Failures and Their Consequences
Recent regulatory changes in California have allowed insurers to modify their pricing strategies and policy offerings in ways that raise concerns about affordability and coverage access. As insurers seek to tighten criteria in response to wildfires, many individuals find themselves at the mercy of the market, with inadequate or no options for disaster relief. This complicity between the insurance industry and regulation showcases a failure to protect vulnerable communities by prioritizing profitable business models over equitable insurance practices. Understanding this failure reveals the deeper systemic issues resulting from a deregulated market growing in the context of climate change.
[Due to the relevance of this episode — and requests from listeners in LA — we decided to make this week the free episode.]
We get into the crossover between the LA wildfires and the FIRE industry – finance, insurance, real estate. Where most people see a hellscape of risk and loss, the FIRE industry also sees a landscape of opportunity and profit. First are reports of landlords and investors never letting a good crisis go to waste as the latter jack up rents for people who need places to stay after losing everything, while the former snatch up burnt homes using the discounts code “devastation.” Second we then get into the simple narratives and material dynamics of how the insurance industry is dealing with the wildfire’s aftermath by leaning into their victim complex while also hiking rates, restricting policies, denying claims, and agitating for regulatory changes.
••• We All Live in the Firestorm: Infinite Crisis and the LA Wildfires https://thetechbubble.substack.com/p/we-all-live-in-the-firestorm-infinite
••• Real Estate Vultures Eye Middle-Class Enclave of Ravaged LA https://www.bloomberg.com/news/articles/2025-01-15/fire-ravaged-altadena-attracts-real-estate-vultures-eyeing-deals
••• Experts say Los Angeles rental prices will ‘inevitably’ spike post-wildfires https://fortune.com/2025/01/11/los-angeles-rental-prices-will-inevitably-spike-post-wildfires-experts/
••• The costly calamity in Los Angeles https://www.ft.com/content/1ada4ad5-d992-42a2-89d9-99063883f91d
••• L.A. Is Burning. Will Insurance Companies Take Advantage? https://newrepublic.com/article/190048/california-insurance-los-angeles-fires
••• We Will All Be Paying For L.A.’s Wildfires https://www.levernews.com/we-will-all-be-paying-for-l-a-s-wildfires/
Standing Plugs:
••• Order Jathan’s new book: https://www.ucpress.edu/book/9780520398078/the-mechanic-and-the-luddite
••• Subscribe to Ed’s substack: https://substack.com/@thetechbubble
••• Subscribe to TMK on patreon for premium episodes: https://www.patreon.com/thismachinekills
Hosted by Jathan Sadowski (bsky.app/profile/jathansadowski.com) and Edward Ongweso Jr. (www.x.com/bigblackjacobin). Production / Music by Jereme Brown (bsky.app/profile/jebr.bsky.social)
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