By Michael J. Herman ©2025 Michael J. Herman

In the wake of the colossal catastrophes of the Southern California Wild Fires that have ravaged Los Angeles and its surroundings, a sea change has just occurred in the US Financial landscape which may be being overlooked by many economists.

Financial devastation has hit millions of individuals. As a result, the same can be said about tens of thousands, perhaps hundreds of thousands of businesses, as well. How will California survive and will the effects be felt nationwide?

The question is Insurance. Are you covered? And if so, can you collect? If so, then how quickly and how much?

Many are insured, but many are not, and the insured may find themselves without protection by the sheer enormity of the financial burden of the claims avalanche about to hit the Insurance Industry.

Foregoing for a brief moment the question of was this an Act of God, releasing many policies from being made whole, what was the cause of the loss? Was it fire? Was it wind? Was it as the result of a neighbor’s house on fire? Was it the responsibility of a utility? Was it arson? Have you proof of losses? On will go the questions. And on will go the insurance claims dance as it has entertained since its inception.

However, here’s the underlying problem. Early estimations by Morgan Stanley and representatives of the California Dept of Insurance have losses at roughly six hundred billion dollars and that figure is likely to double.

No insurer in the world has almost a trillion dollars in liquid Assets. Not even the UAE who keeps it underground.

So here’s a sobering prediction:

*Some claims will be processed and made whole. These will be few and the biggest insured policies. Banks, corporations, lending institutions, governments, and the biggest of asset holders will be first, followed by other Wall Street and Washington special interests, and so on, until finally, way down the line the individual loss.

*The rest will be delayed and most likely not paid. Period.

*Many insurers will be patently incapable of meeting their financial obligations and within 120-360 days or less will file for Chapter 7 bankruptcy. This event will leave all remaining policy claims out in the cold.

An ethical question then becomes, is it fair to make renters, non-homeowners, and people from other states pay for the losses of insureds?

*FEMA will be incapable of meeting all its demands.

*The State of California and the Federal Government will step in with programs, but unless the Fed starts printing tons of new currency, there will not be enough liquid or credit to sustain the onslaught of financial needs.

Just when the economy has been showing strong signs of sustained recovery, the worst fire loss if not in American History, than certainly in California’s has hit it.

*And finally, the incoming administration will find itself in a peculiar situation. Having harangued for years about the immigration problem, workers will be needed to rebuild a region and recover the eleven percent of the American lifestyle in California that has just been hobbled at the knees.

WHERE TO LOOK FORWARD?

It’s clear that there is work to be done. If handled properly, this could call forth a new Renaissance of American Ingenuity.

A New-New Deal, a reinvention of The American Spirit if allowed can rise from the ashes. But who will call it forward?

*Building.

The building of homes, commercial, government, and communal infrastructure is immediately needed. The renewal of things such as water, power, phones, sewage, and Internet are a top priority. After all, in today’s world these are necessities and rebuilding cannot be started without it.

*Waste & Toxic Material Removal

A specialized sector for sure, but one that in the processes outlined above will be as crucial as the removal of what is left standing or crumbled in the path of the fires and wind. The volume of sanitation and material needed to be disposed of has created a massive demand and immediate need for a niche industry that heretofore has not widely existed in California.

*Manufacturers of materials and the distribution of them.

In order to meet this demand many old guard as well as soon to launch new players will have to be involved.

Companies from US Steel, Nucor, 3M, Dow Chemical, United Technologies, and DuPont will become key players. But also will be Home Depot, Lowes Home Improvement, Costco, Wal-Mart, Target, and others.

*And of course Telecom.

From the time of the invention of the telephone in 1876 until present day the need to be connected has grown exponentially with each decade. While now we find ourselves in an era of wireless communication, with the sudden elimination of power and cable lines, cell towers, telephone poles, irrigation, and the delivery of badly needed services and commodities, Telecom may experience a resurgence the likes of which have never before been seen.

Franklyn D. Roosevelt has just turned in his grave and sent his inspirations to anyone who will listen. This is not a time for sorrow and regret of what has been lost, but rather an opportunity to build something new, something wonderful, and something special that will last more than just another hundred years, but launch California and America into a new age of creativity, industry, and enlightenment. But only with the right leadership.

So when you think about growing your net worth, Social media is a safe bet, Tech is usually a winner, but you can’t go wrong with the New-New Deal coming our way.

Michael J. Herman is Editor-In-Chief at Luxury-Media Group and writes the blog TheCritiucAtLarge.com

©2025 Michael J. Herman