What I Learned From Hurricane Milton

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact that we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Hurricanes and moral hazard. Okay, first and foremost, I gotta
thank the the litany of people that have been reaching
out all over the country checking in the fact that uh, yeah,
I'm I count myself extraordinarily. Let me say lucky, blessed,

(00:39):
whatever you want to call it, it is. It's ugly.
Uh in many places down here where in places where
you know, as a kid, I used to come to,
you know, down in Mannesota, Key Angle, would ses the key.
All of these places have been wrecked. People say they

(01:00):
were decimated. No, no, no, they weren't decimated. Decimated means you know,
one out of ten the Romans used to do. And no,
it's not decimated. It's much much worse than that. Still
haven't made my way back to living in my home.
Home is is fine, It's okay, we'll talk about a

(01:21):
little bit. Power has yet to be restored where I live.
But again, it's all well and good. Eventually being there,
everything is okay. I want to go through this hurricane
and experiences. As it turns out, moved out of the
way Tampa, went down to Sarasota, and that's where the

(01:43):
storm actually hit. But I was east of the interstate
and it would be okay. But I experienced the eye
wall both sides and the eye of the hurricane, which
was something to behold watching it, you know, right over
your head, just went outside and straordinary, quite frankly. But anyway,

(02:03):
neither here nor there. I something I've been talking about
for some time in regards to moral hazard, moral hazard
and hurricanes and government involvement in subsidies and where we're
at today. We have been subsidizing as a society. We've

(02:23):
been some subsidizing UH flood insurance that it is going
back to LBJ. If I'm not misake, it might be
have been a little bit earlier. And what we've what
we've had happened is is we've had well basically, when
the taxpayer subsidizes something or makes something cheaper, you cause

(02:47):
a price disconnect that again, it doesn't translate well, and
what happens is is that you end up the taxpayer
ends up footing the bill for things that quite frankly,
they shouldn't. I over the years of lament, I talked

(03:08):
about flood insurance and basically called it, for all intents
and purposes, welfare for wealthy people. Where the taxpayer subsidizing
the insurance on a beach front mansion, people end up

(03:30):
living in places where normally they wouldn't. They wouldn't live
if they couldn't get their hands on this mispriced insurance.
Was actually interesting. So John Stossels like twenty twenty, it
was about fifteen years ago, did a bit on his

(03:50):
beachfront house and it was talking about how twice the
house got inundated by water and both times the taxpayer
picked up the bill. Again, I don't like dealing with
anything like that. I live now in the state of
Floriesa the first time I've lived in this state, and

(04:12):
I've made choices saying, hey, you know what, I don't
want to be in a flood zone. I don't want
to be in one of those there's I don't want
to deal with any of that I saw. I took
a look at where the elevation of my current houses
in Tampa, Tampa was supposed to be hit and had
a massive storm surge, and I came in right underneath

(04:34):
the line. But with that being said, I still went
out there. I put sandbags out in a myriad of things,
just you know, I didn't think that the water was
going to get anywhere near there, and it didn't. But
you know, it was almost like a peace of mind
type of thing. People ask me. They asked me, I've
just got a lot of emails, asked me what I
pay in homeowners insurance, and they're blown away. I can't

(05:00):
believe how cheap it is. You're in Florida, you're in Tampa,
You're not far from the water. Yes, but I'm not
in a flood zone. I am not in a flood zone,
and I don't need to have any subsidized insurance. The
reason why. And you take a look at the news
media and they're always throwing out these numbers, and the

(05:22):
numbers are catastrophic. When you talk about the amount of
destruction that has taken place, the cost that's going to
be involved with rebuilding all of these areas, it's extraordinary.
And they compare it to the past. The difference is
there's a hell of a lot more people living in

(05:43):
these areas than there were in the past. Same thing
holds true. We have the same conversation. We're talking about
wildfires out in California talking, oh my god, the damage
that was done. People didn't always live there, now they do.
The reality is is that Sarasota hasn't been hit with

(06:05):
a hurricane. It's eighteen fifty. Tampa is the biggest they've
had in over one hundred years. And the reality is
nature happens, Mother, nature happens. Hurricanes are going to have me,
oh fooled by randomness. The fact that two hurricanes came
into Tampa all of a sudden. You listen to all

(06:27):
these wizards are smart out. Oh my god, it must
be climate change. Really really, that is ridiculous, quite frankly,
Inevitably they are going to happen. And what happens quite again,
sometimes people get complacent, get complacent and ah, that could

(06:51):
never happen here. Well it did, it did. And you know,
many of these place again, you're going to be very
very difficult now for anyone. Uh, they're going to be
writing insurance policy. I mean, are you going to get insurance?
You know, not many. I'm getting loans to rebuild some

(07:12):
of these places on the water. The difference is and
when we talk about the amount of damage as far
as costs are concerned, yes, the skyrider because the population
has increased. But you know what's fascinating is the amount
of deaths due to these storms have gone down incredibly

(07:34):
simply because of again the various different uh you know,
building codes that are being put forward, you know, the
the ability to evacuate, the prediction models, all these various
different things that has come way down. You can build
a house now down here, it's going to cost you

(07:55):
a brand new house to build because again the codes
are that in that high again make any difference. You're
going to get a storm surge that's gonna come in.
It's gonna do damage no matter what, depending on your elevation.
That The point is, the point is is that if
you want that, why should the tax payer, Why should

(08:17):
the tax payer have to absorb that risk? Why it's
become part and parcel here in the United States. It's
not just it's not just if you think about it,
it's not just with flood insurances, with health insurance. But again,
it's it's becoming a popular topic and I've talked about

(08:40):
it for years here on the program. We subsidize people's
health insurance in the sense that, again you can't even
call it health insurance. You're basically pre paying in many
respects for what medical expenses that you're gonna come. They don't.
They don't when you, you know, sign up for health
insurance was part of Obamacare. Pre existing conditions, pre existing colored,

(09:05):
pre existing conditions. Well, not only that, you know, you
also cover people the same price. You could be in
a you could be overweight, alcoholic, drug addicted person and
you're going to be paying the same exact rate at
your company or whatever under Obamacare. Is someone that's completely healthy?

(09:26):
Is that reasonable? Is that fair? Is that right? Shouldn't
there be you know, tremendous incentives if you take care
of oneself. Again, this is what happens. This is what
causes disconnects when you subsidize certain areas. This is the
moral hazard part that we have taken out of the
equation with some of these things. I really wish we

(09:49):
would get away from that. Again, if you want to,
if you have the money, and if you want to
go ahead, you want to build a house on the water, fine,
I don't even care if you want to build a
house on the water. You want to to you want
to put it up on stilts. Okay, And if the
storm comes and you know, knocks your house down, well,
guess what that's on you that that's your choice. Okay,

(10:16):
that's the trade off that you are accepting to live
in Paradise. And it's again, now, people don't like hearing
this too soon, Markowski. No, it's not too soon. Okay.
There is a risk that you take. There's risk when
you get out of bed in the morning for crying
out loud, but there's certainly a hell of a lot

(10:37):
more risk if you want to live on the water.
Now again, I'll my neighborhood, old neighborhood in Tampa. Many
of my neighbor's homes are very old, very old, and

(10:59):
they were graded well. When they were graded, it was
there wasn't much attention being played to any sort of water.
They do that now, whereas when I went back to
my house. And this is not gloating or anything like that.
This is just showing you how things have changed and
the designs are different. I didn't have any flooding in

(11:21):
my yard. Many of my neighbors their yards were swamps underwater.
I mean, you keep dealing with, you know, fifteen inches
of water in a short period of time. How is
it that certain homes were able to deal with Again,
it's the modern design of these things. Again, you had

(11:42):
many places, you know, it was an incredible run for
a period of time where you weren't dealing with any
of that. But nature happens. Now this is where it's
going to be an issue, and this is where people
are going to be clamoring to rebuild and repair many
of these homes. It is going to it's costly, it's

(12:03):
a hell of a lot more expensive. You know. How
we're going to go about dealing with that, I don't know.
I don't know. We're going to have to decide as
a society. But again, when when taxpayers subsidize government insurance

(12:23):
policies protect people, protect people against damage from storms, from floods,
more people are going to be willing to live in
places where there is greater danger of this happening. That
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