Fiscal darkness is gathering in California, where as many as three crises could converge in mere months — all while Democrats have put “affordability” at the top of a mythical agenda.
It’s so potentially bad that Gov. Gavin Newsom has been in Washington sucking up to President Donald Trump, playing down that he ordered the legislature to “Trump proof” California and dismissing his 2024 election criticism of the president as “noise.” The governor’s sudden change in rhetoric is because he and California have never been so dependent on Trump as they are now.
Federal money controlled by a malevolent president who could and already has done California real harm may be all that is standing between our state and converging troubles that seem more likely by the day. But that’s only the beginning of our potential problems.
An Edison crisis?
Evidence is mounting that the equipment of Southern California Edison, the region’s largest electricity provider, may have caused the Eaton Fire. This is the blaze named after the canyon behind the foothills community of Altadena in the San Gabriel Mountains. Even the utility has conceded the existence of potential evidence in a filing with regulators at the Public Utilities Commission.
The worth of Edison’s parent company is about $20 billion based on today’s stock price, which is already down a third since the start of the fire. The Eaton fire caused about $10 billion in damage, according to a preliminary estimate. If authorities were to formally attribute the cause of this fire to Edison and the company’s stock price were to continue to tank, the market value of the company would be a fraction of its financial exposure.
Sacramento would then have one of two ugly choices, both beginning with a “b.” Newsom and the pro-affordability Democrats could bail out the company in one way or another. Or they could look the other way and let Edison go bankrupt. But if the history of Pacific Gas & Electric is an example, which went bankrupt after Paradise burned to the ground in 2017, the state went along with a bailout of sorts two years later. Either path will hit the pocketbooks of millions of Californians one way or the other.
An insurance crisis?
Analysts at the University of California at Los Angeles have estimated the total insured losses of the region’s fires in the range of $75 billion. To put that in perspective, that is nine times the claims from the Camp Fire that led to PG&E’s bankruptcy. That is about $2,000 in unpaid insurance claims for every man, woman and child in California.
