The Lessons We Learn, or Not

January 17, 2025

Leyendecker Executive Search

Welcome to This Week’s Leyendecker View

Everyone thinks of changing the world, but no one thinks of changing himself.
– Leo Tolstoy

THINKING OUT LOUD

The Lessons We Learn, Or Not

One of my friends raised her kids in the Altadena neighborhood of Los Angeles. She has been gone from that house for many years, but a couple days ago we found the house on the internet. I got a look at it when the house was still standing. Today it is in ashes.

My friend moved from Altadena to Ojai, a hamlet not far from Santa Barbara. She describes life out there as idyllic. The weather is perfect. The ocean views are amazing. “Who wouldn’t want to live there?”

But in Ojai, residents have to conserve their water. “California is a desert, you know,” my friend would say. One of the ways they conserve water is to recycle it, reclaim it. This reclaimed water is used to keep their gardens lush and beautiful.

The weather is perfect. The views are spectacular. But there really isn’t enough water in Ojai to serve the population.

Human ingenuity and the human spirit built California, but now Mother Nature is teaching California a lesson: Be careful where you build. Be careful where you live.

Many might be having a “couldn’t happen to a better state” moment.

The state surely has its challenges, but we must remember all the wonderful things we get from California: lovely fruits, nuts and vegetables, technological innovation that leads the world, the magic of film and television, more military armaments than we know and those amazing beaches on the coast and mystical redwoods on the interior. Not to mention what is probably the world’s most famous coastal drive, the Pacific Coast Highway.

One of the challenges with life is that there will always be challenges. Sure, we get a few days, weeks, months or years of steady-eddy, but eventually there’s some circumstance that brings chaos or distraction. As I’m fond of saying…

Life is part what you make of it and part what it makes out of you. Free will and chance don’t often share the same agenda.

Plenty of folks are suggesting the California fires and destruction are not chance, but more the fault of a government whose focus has been not on meeting basic needs but on pushing a woke agenda. There’s some truth to that, but governments do not have control of the weather. As Joan Didion wrote in 1969, everyone in LA knows the weather risks that come with it. The Santa Ana winds feature prominently in the minds of Angelenos.

Did state and local governments focus too much on imaginary issues and not enough on real-life issues? Yes. Given all its wonders, natural beauty, ideal weather, massive economic successes, California’s government and citizens likely became complacent. Maybe they felt they could afford mythical ideas and luxury beliefs. Remember, they are living in La La Land.

California is getting the event that many feared and expected but never wanted.

Be assured, they will adapt. And the whole country will benefit.

Odds seem good that California’s collective consciousness is about to undergo a shift, maybe a big shift.

For one, the odds of everyone who lost a home rebuilding in LA or even California seem pretty low, given the lack of adequate insurance, the enduring threat of those Santa Ana winds, the endless state and local regulations around the building process and those that have driven up the costs of materials and labor.

The lesson? Build and live where there is severe weather risk or not enough fresh water at your peril.

Expect more Californians to move to Texas, Arizona, Oregon, Utah, Idaho, Colorado and Montana.

There’s an old saying: It’s easier to ask for forgiveness than permission.

Rather than spend more taxpayer money on fire suppression and reservoir efforts that could have prevented the extent of this calamity, the state will now ask for forgiveness and likely appeal to the federal government, errr…us taxpayers, to bail them out.

And round and round and round we go. One “experience” after another keeps humanity on a path to improving the places we live and the lives we live. Let’s see if California learns from this experience, or not.

If we do see a spike in an already ongoing exodus from the state, it may provide some of us with a buying opportunity. California is still home to some amazing natural beauty.

THE RANDOMS

A week from now, after Trump signs what could be a large number of executive orders, we should have a clearer view of what to expect over the next four years.

Mark Zuckerberg says he was pressured by the Biden administration to curb free speech, now he’s changing his tune. Elon Musk bought Twitter to cancel its free speech curbs. Which of these guys would you trust to do the right thing?

How amazing it seems that so many Democrats are going MAGA. Even the owner of the LA Times is joining the trend. Hear why in his own words here.

What does it tell us when the stock market fears the job market’s strength?

Cheap Chinese autos are putting western automakers on the ropes. Expect we’ll see more consolidation as well as more legacy brands being abandoned.

The recent rise in European stocks kind of tells us that Europe’s economic cornerstone is luxury goods. Imagine if the world went into recession.

Someone just clued me in to the Overton window. Thought some of you readers might want to check it out. It’s an interesting perspective on how the median of collective consciousness changes.

The Overton Window might explain how woke lost its momentum: The Overton window shifted on what was sayable, and people who had quietly gone along to get along felt comfortable sharing their misgivings about woke.

Given the massive destruction from the LA fires, it seems obvious that inflation in home insurance is coming, and building costs will rise.

Are ever larger insurance claims from natural disasters like the fires in Los Angeles going to reduce the amount of capital insurance companies have to invest in private equity?

Should we be afraid of AI, or should we be afraid of the people who control AI?

ECONOMIC NEWS

Economy
Is our economy strengthening or weakening?

America’s rich got richer under Biden
Empire Survey Index looks recessionary
Yet Philly Fed Index points to a boom
Small business optimism surges
How tariffs can help America

Labor
MBA value may have peaked.

Tougher job world for brand name MBAs
How Americans view the morality of professions
Is HR really your friend?
Fake job postings are becoming a problem

Inflation, deflation or both
Which will it be?

We still have an inflation problem
Not much change in inflation
Producer Price Index is subdued
Home insurance costs spiraling out of control

BUSINESS NEWS

Finance
The rich get richer!

We need an IPO boom
Big banks making big profits
Is a bubble bust coming for private credit?
PE-owned hospital chain goes bankrupt
Bond yields surge across the globe

Real Estate
Is consumer wealth at risk?