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What makes you think they won't be bailed out by creating a national subsidized insurance program? The national flood insurance program only exists because insu

What makes you think they won't be bailed out by creating a national subsidized insurance program? The national flood insurance program only exists because insurance companies didn't consider insuring properties that are destroyed by flood all the time a good idea and stopped doing it altogether.

jillesvangurp 1y ago
Maybe that's a thing the first few times this happens. But it won't be happening just once or twice. Using public funding to keep on bailing people out is going to get expensive for everyone and won't be that popular the more often it happens. Expensive bailouts make them a natural cutting target. The way this works out financially is that insurance prices go first. Then banks do the obvious thing which is to be reluctant to provide mortgages on property likely to suffer damage within the mortgage period. That probably is already a thing. That in turn makes existing property a harder sell and affects property prices negatively. And as a result, some property mortgages might be under water before the property is under water. A natural disaster would wipe out the uninsured property and then the mortgage. Any banks with lots of exposure to that might be facing issues if that happens. Any public funding used mitigate that is more likely to go to these banks than the people affected. Which won't be popular. Easy to spell this out, because minus the root cause (natural disasters), this is more or less what happened around 2009 when banks had to be bailed out because of the subprime loans. Loads of foreclosures and misery. But it was the banks that got the bailout. The predictable end result is that after a few disasters, certain areas just won't be rebuilt again because nobody is willing to fund that. Some people might move out before the worst happens. Banks and insurers will be the first to move out. Probably sooner rather than later. That probably won't be great for people that remain since investments in public infrastructure and maintenance of things like roads will also drop off for the same reason.

jillesvangurp 1y ago

Maybe that's a thing the first few times this happens. But it won't be happening just once or twice. Using public funding to keep on bailing people out is going to get expensive for everyone and won't be that popular the more often it happens. Expensive bailouts make them a natural cutting target. The way this works out financially is that insurance prices go first. Then banks do the obvious thing which is to be reluctant to provide mortgages on property likely to suffer damage within the mortgage period. That probably is already a thing. That in turn makes existing property a harder sell and affects property prices negatively. And as a result, some property mortgages might be under water before the property is under water. A natural disaster would wipe out the uninsured property and then the mortgage. Any banks with lots of exposure to that might be facing issues if that happens. Any public funding used mitigate that is more likely to go to these banks than the people affected. Which won't be popular. Easy to spell this out, because minus the root cause (natural disasters), this is more or less what happened around 2009 when banks had to be bailed out because of the subprime loans. Loads of foreclosures and misery. But it was the banks that got the bailout. The predictable end result is that after a few disasters, certain areas just won't be rebuilt again because nobody is willing to fund that. Some people might move out before the worst happens. Banks and insurers will be the first to move out. Probably sooner rather than later. That probably won't be great for people that remain since investments in public infrastructure and maintenance of things like roads will also drop off for the same reason.