A special edition of TPM’s Morning Memo, where I test your willingness to put up with me writing about the glittering world of property insurance – but it’s really about climate change, if that helps. Sign up for the email version.
‘A Change Is Gonna Come’
It’s not surprising that the initial pinch of climate change for property owners as a group would come not in the real estate market but in the property insurance market. It’s just surprising that it’s taken this long to begin to show up … except has it really?
When I bought my first house back in 1996 in Louisiana, memories of Hurricane Andrew were still fresh, and major insurers had started to pull back from underwriting, as I recall it, south of I-10, which is where I was. It put me in a real bind at the time. While the bigs were recalibrating and limiting their coastal exposure, other insurers were willing to issue policies, but if memory serves they were crappy and expensive.
As it turned out, even the big insurers apparently had some discretion. I was 26 and had no idea what I was doing. So my first editor and first publisher went to bat for me with the State Farm agent they used and after a brief but nerve-wracking scramble that threatened to hold up the closing, I obtained a proper policy at a suitable rate and completed the home purchase.
I don’t have a great sense of how the ebb and flow of underwriting along the immediate coast has gone in the 27 years since then, but there are signs we’ve turned a corner. I suspect your initial reaction is: “Wow, this is bad!” But pricing in climate change impacts is actually an important step towards confronting the current reality, so there’s a way in which this is really a good thing.
We have a property value bubble right now, especially along the coasts, and insurers tightening up will be the kind of thing that takes the air out the bubble. That will be a painful readjustment financially for millions of Americans, especially if the collapse comes all at once, but that’s not the fault of whatever or whoever comes along and pops the bubble. It reminds me of the movie version of The Big Short, when mortgage default rates had gone through the roof but the pricing on even the crappiest mortgage bonds was impervious to the erosion – at least initially. The main characters were pulling their hair out at the incongruity (and fraud) of it all. Bubbles can be stubborn and persistent things, until suddenly they’re not.
But is this really a good thing? Maybe focusing not on current property owners but prospective ones will help make it clearer. We’ve all marveled at the unceasing pace of coastal development over the last 10-20 years despite the obvious and ever-plainer risks. Even in the immediate aftermath of devastating hurricanes, out come the hammers, plywood decking, and 2 x 4s. We do it all over again. But as this particular story shows, if developers can’t get insurance on their investments, they don’t build, at least not there.
I was warily looking at coastal property last year in a particularly vulnerable part of the country. Clearly, climate risk wasn’t being priced in yet. I asked one real estate agent how he talked to clients about the climate change risk. “Well, it depends on your time horizon. Is this your forever home?” I was not reassured.
Part of what got us into the climate change mess (at least in the 40 some odd years since the public became generally aware of the inexorable physics of global warming) has been externalizing the costs of carbon emissions. Until we begin to capture those costs, the incentives for decarbonizing won’t be lined up. This is a painful but important step in that direction, but it will need to be managed, regulated, and tackled as a public policy matter, not just a market correction. Not much good news to report on that front, I’m afraid.
McCarthy Catches His Impeachment White Whale
The eventual impeachment of Joe Biden was assured before he took the oath of office, so long as Republicans could recapture the House. There’s no one motivation behind this power play, but revenge for Donald Trump’s two impeachments is a major driving force.
It is of course laughable and a disgraceful abuse of power while also being potentially effective, so long as the D.C. press corps lives up to GOP’s quite-low expectations. So far so good on that front. Political journalism still isn’t up to this task. More on that in the coming days at Morning Memo.
In the meantime, not everyone in the press corps is a gullible dope:
The Silliest Of Impeachments
- NYT: Trump Has Been Privately Encouraging G.O.P. Lawmakers to Impeach Biden
- Politico: How Donald Trump’s DOJ gave Biden a major assist in the coming impeachment probe
Disqualification Clause Watch
- TPM: New Lawsuit Seeks To Use Disqualification Clause To Keep Trump Off Minnesota Primary Ballot
- WaPo: GOP lawyer with ties to three Trump rivals enters 14th Amendment fray
Georgia RICO Miscellany
- Rudy Giuliani wants no part of the speedy trial some defendants are seeking.
- Fani Willis wants to make sure defendants who are getting off the speedy trial train now aren’t allowed to get back on it later.
- The 11th Circuit added a wrinkle to Mark Meadows’ effort to remove his case to federal court.
Wisconsin GOP Floats A New Redistricting Con Job
Wisconsin Democratic Gov. Tony Evers shot down as ‘bogus’ a surprise plan Republicans floated Tuesday that would have the Legislature approve new maps drawn by nonpartisan staff, preempting the state Supreme Court from tossing the current GOP-drawn boundaries.
Josh Marshall: The End of The Pro-Life Movement
Comic Book Villainy
Semafor: Elon Musk’s X/Twitter appears to throttle New York Times
Colin Woodard applies his study of America’s regional cultures to life expectancy: America’s Surprising Partisan Divide on Life Expectancy
Take It Down A Notch
WSJ: Try Hard, but Not That Hard. 85% Is the Magic Number for Productivity.
A Proper Reaction 😂
Do you like Morning Memo? Let us know!