LA Fires and Hollywood

California, if it was its own country, would be the fifth largest economy in the world; and by GDP per capita, the richest country in the world. But, the state is facing many challenges, with an exodus to places such as Texas. 

The recent fires in the Los Angeles area have cost approximately $250 billion all told. Areas like the Pacific Palisades and Malibu have been devastated. These areas contain some of the most expensive real estate in the world. Then again, areas such as Altadena have also been devastated, and by most people's standard these houses are also valuable; the average house price being in the $1.3-1.5 million range, with median household incomes of $130k. So, if I'm reading this right, the wealthy elites are severely impacted, along with small business owners providing valuable services. 

Given the above two groups are critical to creating employment, Los Angeles is likely to experience a serious slowdown in its economy. This will have an immediate effect as spending will simply stop. And then people will leave the state. 

Where am I going with this? The federal government must step in. I am not aware what levers are available to the incoming administration, but they need to use all of them; including sacking the Governor, Gavin Newsom, and the Los Angeles city government. Given the importance of LA to the global economy, this one series of events could result in a global slowdown, bank runs, and a crisis amongst insurers. I don't want to sound like a panic merchant, but this could end up being worse than the thing in 2020, simply because the damage will take even longer to repair.

I recently looked at annual box office figures, and found that last year was the worst since 2001. The worst in 23 years (not counting the dreaded plandemic years as they're outliers). Does anyone think Hollywood's output will now improve? Err...if you think that then I've got a bridge in Brooklyn for sale, real cheap too. 

Now, I realise Hollywood is not all of what California is about, it has minerals, manufacturing, agriculture, finance, high tech etc., but the entertainment industry is a large part of the state economy, and it underpins the consumption of large parts of the developed world. With it already failing and about to go terminal - possibly - I'd say this must precipitate some kind of intervention. If the federal government do not, intervene that is, we are talking about millions of people losing their livelihoods worldwide.