Louisiana Prepares For Climate-Linked Flooding, Moving Thousands: Flavelle

its real world implications. Christopher Flavel is our climate policy reporter for Bloomberg, and Christopher, thank you for being with me. Tell us the story about those people who live in certain areas of Louisiana. They're packing up because of the changes wrought by climate change. Yeah, and thanks for me on the show. Pin. Louise Ana has for a few years been the leader in the US in terms of dealing with climate change, not because it wants to, because

it has to. It's land is sinking faster than anywhere else in the country, and so their force with these really in some cases radical ideas. There's a huge swath of Louisiana around the delta of the Mississippi River where land is sinking so fast and the sea is rising so fast that people have to struggle with flooding almost

all the time. As a result, the state is trying to figure out how and when to move people out of those areas, and even more radical, and no one else doing this, how to figure out to ensure that no one else moves back in. No one, no other state that I'm aware of, is trying anything like this. Tell us about the money that's involved, because so we'll get to the individual stories in a second. But this costs money to do, and where does the money come from?

So I think I think the approach in Louisiana is figure out their strategy first and then worry about money because it's a long term problem. And I think their idea is the cost of inaction would be huge as well, So the assumptions they'll find the money, I think that's probably true. There'll be a mix of federal funding. It's federal funding that that started the program that I was writing about, the l A Safe program. They're also getting

money still from the BP oil spill. And look, Luisa's an argument is is they get so much federal disaster money from FEMA after hurricanes and from HUD that instead of using that money to keep on trying to rebuild people's lives where they are, it makes more sense to move them out of harm's way. That's a that's sort of a cliche. You hear that all around the country, especially after this year's hurricane season. Louisiana is really trying to make good on that, and say, what would it

mean on a broad scale? Uh, not just rebuilding in different parts of the neighborhood, but really rebuilding miles away from where you were and emptying out entire swaths of the state. How many people would uh this effect? You have any idea? Yeah, I put that question to the state officials behind this program. The amount of land they're looking at is is enormous. It's it's bigger than Delaware and Rhode Island. Uh. And the number of people who live on that land, they guess is about sixty people.

Now they are only looking, at least right now, at trying to move those who live outside of the levee system. And they don't know what share of that wouldn't be in that category will be outside of the levees. It could be it could be a few thousand, it could be tens of thousands. Um, but you know what, no one has tried anything on that scale. So even if it's just a thousand people, that would be just a

groundbreaking idea. And the big question is going to be how much pushback will they get where But they get the pushback from the individuals, the people who are actually going to be displaced. To my great surprise, being down there a few days this week and talking to people in these areas, I got a pretty strong sense the people who who the state is trying to help, they realize what's going on. They are not in denial. They know that the flooding risk is so bad they're going

to have to move eventually. Hate the pushback might come from developers who probably are aware likewise that in Louisiana's is real, but might be concerned about a precedent. It's one thing if Louisiana does this. If other states facing similar flood risk and is a lot of them start saying which parts of our geography should we declare off limits to new development, that could be a real issue for developers, for realtors, for for commercial industries that want

to locate here. So I think they'll be wondering, like the rest of us. How far will this go? Christopher is the is the unintended consequence of hurricanes and flooding that people become more aware of whatever the reason for these catastrophes, their catastrophies that are going to ruin their lives, their property, and as a result, they are more inclined to go along with the idea to move out. Yeah.

I think definitely there's a there's some sort of relationship between people being repeatedly hit by these disasters and being open to more and more um far reaching solutions. It's not a straight line. Often after one big event, people will say it happened once, it probably won't happen again. But after enough repeated disasters, my reporting says there's a real shift and what people are willing to accept and

in what local officials are willing to endorse. A plan that might work in Louisiana would for the moment, be a really really tough sell in California or Maryland, or Virginia or New York State. But as time goes on and Louisiana looks less like an outlier uh and more like our future, I think there'll be more appetite to say, is it working there? In Louisiana, and if it is,

should we try it where we are? Christopher, isn't there a federal designation that would allow people to apply for federal assistance if there was some kind of natural disaster, and that if that's taken away, that's just another push in the direction of leaving. Yeah, there's there. There's a designation um called the Under the Coastal Barrier Resources Act that was meant to protect areas that haven't been developed

along the coast and keep them undeveloped. Louisiana saying let's apply that to areas that already have homes on them, which is a really radical idea, and it would say we are not going to help you if you're in trouble, so you better leave because if you don't, you'll be on your own. It's it's a really a very strong push for people to get out of these areas. Thanks very much, Christopher Flavelle, our climate policy reporter for Bloomberg, on how Louisiana is moving people out of areas that

are ravaged by climate change. We've got something perhaps more were important, which is food. You can't exist without that. And Alan Stillman knows a lot about food and serving people. He is a restaurateur, is also the founder of Quality Branded Partners, and he may be better known as the founder of Smith and Wilenski, but he's also the founder of t G I. Friday's. Alan, thank you very much for coming into the studio. Let I want you to begin by telling the story of how you started in

the business with t G I Friday's. Yeah. My relationship to the restaurant business walls exactly zero. But my relationship to having a beer on the way home was at least once a week. And us called our First Avenue in sixty three Street in Manhattan, had a bullet hole in the window, typical first avenue bar, And while drinking about beer, I said to the bartender, you know, there's an awful lot of young people that live in this area. You've got stewardess as, you've got models, you've got pilots.

I wonder if you put some sort of on the floor and hung some Tiffany lights, would all those people come in here? And he said yeah, hey, yeah, and I walked away and walked out. I came back about ten days later and he said, hey, aren't you the guy that wanted to hang tipp and I said, I don't want to hang anything. I suggested it to you and he said, well, you ought to do it. I said, what do you mean. He said, well, why don't you do it? And I said, yeah, it's not a bad idea.

I said, who was the owner of this corner place? He said, that's me, And fifteen minutes later I owned the bar and it was called the Good Tavern, and I immediately said, in my mind, I now need a name. And the name turned out to be t g I Fridays. And the rest of the story is as it is

for about twelve units around the world today. And it's not as if this particular venture was your last, obviously, because you sold t g I Fridays and you decided you liked the business so much you're gonna expand even more. Tell us about how that went, like, actually expanded it while it was around in New York City, and I built uh ten or twelve of them around the country. But I also built Sundays, Monday's, Tuesdays, Wednesday. I was gonna say, you have an affinity for days of the week,

and yeah. Then then I got out of the business for a while and left those I still owned it, but I wanted I lived over the South France and that was great. Six months I had gotten married and I had our four year old with us, and we had a very good time. But I also then learned about food and wine, and coming back to New York City, I put the two together because I didn't know that much about the food end of it, but I did

learn a lot about wine. And I discovered that all the steakhouses in New York City were terrific steakhouses, and they were the best in the world, but none of them had wine lists. You'd walk in and they'd say, what would you like red or white? And it would come into tumbler and I said, you know, it doesn't really fit for a glass of great red wine they had. Don't change that. So I just I was going to open up baby steakhouse, and luckily enough, there was a

big recession. I bought the corner of forty nine Street and Third Avenue, and we still in the corner of forty nine and third Avenue and Smith. Wilenski is now forty years old this year. Happy birthday, congratulators. Much forty year old restaurants don't exist very often it's a good thing to have and went from there. What do you believe to be one of the biggest differences from when

you started Smith of Wilenski's and the way it operates now. Well, certainly wine, because almost every great steakhouse has a good to great wine list, and I believe that people associate great red wine with great red meat, and that never happened. Forty years ago, there was no such thing. So I think that's a very very big difference. And I didn't

you start National Wine Week? Yes? I did National And I remember there was a story about you actually transporting something like a million dollars worth of line in a Brinx armored truck. Yes, we did that too. Well, we we We kind of have a lot of fun with this stuff. I mean, the restaurant business is one of the most difficult businesses in the world, and it's not only difficult to make money, but it's difficult just to

stay open. So you need to come out with ideas and with all sorts of public relation and marketing gimmicks, if you will, in order to keep people interested in who you are what you are. And about a year

after we opened, uh Smith of Lensky. We discovered somebody who was trying to sell a wine collection, which we bought, and after we've spent the billion dollars on the wine collection, we decided, well, why don't we transported by Brinks truck to the front of Smith and Lensky, which worked, and we got a couple of million dollars worth of publicity for it, along with the million dollars worth of wine.

That whole idea of being a showman and an entertainer and a host that has become a much more important factor, it seems in the restaurant industry. I'm not sure that that's true anymore. It was going back before all of

the new technology. The new technology has taken away a lot from the showmanship of the restaurant business, because the methodology of putting it together a restaurant, to making a reservation, to how you get a reservation, to getting into restaurants has taken away quite a bit from the showmanship of restaurateuring. It hasn't taken away from the showmanship of cheffing. The chefs still rule the market, and that is quite interesting

there sort of the artists of the food world. Tell us about your son Michael, and why did he decide to follow in your footsteps or did you not not able to dissuade him from entering. No, it's actually the opposite. There was no there was no persuasion involved. Michael graduated from Brown University and is looking around for something autistic to do, and he was definitely not interested in the

restaurant business. And a couple of years later he came to me and he said, you don't beginning to think maybe there's a little bit of art form in the restaurant business. And I said, well, if you don't have any art form, the restaurant business will not be in it, because we're in the high end of the restaurant business. And Michael decided he wanted to come on in. I then turned to my good friend Danny Myers and said, Danny put him to work for a year or so,

which he did. Michael then came with us. He traveled around the United States opening up Smith of Wilenski's, and for the last ten years he has run a restaurant company that he sort of transferred from what we had into the Quality Restaurant Group and he's opening his own take on high end restaurants Quality meets quality Italian and he is also running around the country. He's opened in Denver, He's about to open up in Chicago. So uh, he did it by mistake, as I did it by mistake,

and so far it's worked out wonderfully. He loves what he's doing and he's fantastic at it. Well, you're getting us ready for lunch, thanks very much. Alan Stillman is a restaurants whore, of course, a founder, Quality branded partner, founder of Smith and Wilinski's, founder of t g I Friday's. He knows all about the restaurant industry. Well, we want to know the real intentions of Bowing and whether they

will be acquiring Ember Air. Here to help us understand the situation is George Ferguson, our senior Aerospace and Defense and Airlines analyst for Bloomberg Intelligence. George always a pleasure. Why would Boeing be interested in acquiring this Brazilian manufacturer of aircraft? Hey, Pam, Yeah, So as we look at it, we think that the Bombardier air bus uh sort of tie up with the C series earlier this year would

be the reason. You know, So if you recall Bombardier face with tariffs and bringing the C series into into the US. Basically, you know, gave the program to Airbus, and now Airbus can go out and market airplanes to airlines from about a hundred forty to just over two hundred seats. That's there, and they can offer the C series, which which an airline can use for a hundred forty seats. We think that you know, what what Boeing might be doing here is looking to blunt Airbus' ability to market

two airplanes like that. You know, if they had to tie up with embry Are, they could they can market two airlines and airplanes, two airplanes, one two families, I should say, one that would go from to about a hundred and ten fifteen seats and another that could go from a hundred and thirty up to you know, two hundreds. So we think it gives them sort of the same

product palette as as Airbus. Okay, we would that be like the in terms of products we're talking about what the ember air one, the different variants of that, and then maybe even the smaller the one s. Yeah, I mean any thing about embry Are is that Embry's um their primary airplane, the E jet has the one seventy five, like you said to the one in the middle of refreshing it. So they're putting new engines on it and making it slightly larger. And yeah, that that airplane can

can operate from seats two hundred and thirty. The other really neat thing about it is that one seventy five is very very successful selling into regional airlines in the United States. They buy the majority of airplanes I would say that are less than a hundred and thirty seats.

They can only operate airplanes that are seventy six seats are less due to clauses in the pilot contracts that the main airlines that they fly four and so that airplane the one that is very successful because of its its product placement, and that would be potentially in Boeing lineup to market the airlines well Air Canada Express, I think they all they fly as just one example, the

ember Air one seventy five. Does Boeing really need this deal because I thought that Boeing was putting a lot of effort behind the new seven three seven, the Max and the focus has been on not just the aircraft but on making it more fuel efficient and reducing the cost of operating the actual aircraft. Agreed, you know, agreed on that's what the focus has been. It's interesting. I

wouldn't think this would have been this interesting to Boeing. So, you know, really what we've seen demand in the marketplace has been that airlines have been looking to fly larger airplanes. Pilot salary salaries have been going up, and they'd like to you know, um, expense it over more seats in the airplane. That's one of the ways they're sort of combating rising expenses. And so we've seen airlines again moving

to larger and larger airplanes. We haven't seen a lot of orders for airplanes from a hundred to a hundred and thirty seats, So it kind of looks like a

market to us that is betwixt and between. It's not there yet maybe yeah, And you know, but they keep stretching the size of the seven and eight three twenties, right, the latest iterations of those two narrow bodies that Boeing and Airbus are larger than their predecessors, and therefore the efficiency um, you know, the efficiency point gets pushed higher. So this might be a response to sort of that continuing increase of seven thirty seven and eight three twenty airlines.

May you know if they're if they're running to less dense markets, they may really need something more efficient underneath that hundred and fifty seat point and in the Embry air and the C Series one three hundred could be that answer. So I think Boeing might be looking a little further down the road than you know. We we see evidence in order is at you know, the ability

to compete in that space and offer a product. Okay, you gotta give me your thoughts though on the fact that the Brazilian government is still involved in ember Air. It started as a government financed company military contracts. For example, the government of Brazil is said already, at least according to one Brazilian newspaper, that majority control from Boeing not

necessarily going to happen. Yeah, I think this is going to be a really hard deal to put together, and it's not going to look like a wholesale takeover by anybody. It's if it gets done, it will look like a venture. And that's exactly that. The reason you know it's uh Embry is Brazil's most important defense contractor they're they're aerospace

national champion. The Brazilian government does have a golden share in it, so they can decide, you know, what the fate of the company is, and you know, they want it for high tech aerospace jobs. They want to foster high tech aerospace jobs in Brazil. Obviously, letting Boeing buy the whole thing and take it home isn't going to help them much. I don't think Bowing wants to take it home anyways. Um, I think it's going to be you know, there's always a lot of politics around defense

contractors and things like that. The defense business doesn't make a lot of money, and Embry are also as a bust business that doesn't make a lot of money, and I don't think Bowing really wants those businesses. So I think this has to become sort of some sort of complex structure that might get the Brazilian government the aims they want out of this company and give Boeing the

opportunity to market the Embry air you know aircraft. Well, thanks very much, it makes a lot of sense, and thanks for keeping an eye on this topic, and we know we're going to come to you in the future about it. Much appreciated. George Ferguson is our senior Aerospace, Defense and Airlines analyst for Bloomberg Intelligence. Well, here to help us understand what's going on in the housing market as it relates to the tax overhaul bill that the

President has just signed is Jonathan Miller. He is the president and chief executive of Miller Samuel Jonathan. Great to have you with us. What do you make what do you make of the future for the UH? Well, let's start with the high end, high cost markets such as Manhattan, Westchester County and also other areas around the country, whether they be in Connecticut or in the state of Massachusetts or California high cost property. What's going to happen as

a result of this tax overhaul plan? So I think they'll be downward pressure on housing prices, UH, as you stew higher in price across the US. The basic theme of this bill as it relates to housing favors being a landlord over HOMEO worship in general. And you know, I think I think the way to think of it is that, um, you know, someone that's buying a home has a certain safe financial footprint in terms of that

they can afford as a payment. And so if you could just think of it is that you're adding some additional costs, meaning reduced UM deductions in the context of mortgage interest of seven hundred fifty thousand dollars of ten thousand dollar cap on real pay taxes, those sort of creep into that payment as a share, and we reduces

principle and interest. UM. I don't think it's catastrophic in terms of I don't mean to exaggerate it, but it certainly applies downward pressure to these higher end housing markets far more than it would say in the middle in the Midwest, where you know a home price might be a hundred seventy five thousand dollars Jonathan, Will that pressure actually turn into lower prices or will it just be

a argaining chip when it comes to negotiations. So it's interesting because one of the things that came out of the discussions on the tax bill was at the yet, you know, the higher cost markets, you know that the higher cost of housing would be offset by the uh, the bigger tax cuts and UM. And you know, human beings or homeowners don't think that way in the sense that they don't look at all their their net worth in one bucket and say, you know, because I'm getting

a tax cut, I can overpay for my home. Because what's going to happen is, you know, there's a saying that housing prices are sticky on the downside, and and what happens is there's some sort of change, the prices draw declined slowly simply because transactions, uh slow down because sellers, um uh, you know, buyers are immediately adaptable to changes that favor them. Sellers tend to take a year or two.

So I think what we're really looking at over the next year, year and a half is this sort of figuring out between buyer and seller what the actual new value is in these markets. So this puts the buyer in a better position. It absolutely does, because it's just that they may not their demand may not be satiated initially simply because the sellers, you know, you know, this is a you know, a hundred years of homeownership as sort of the federal um, the federal push in this

whole American dream concept. High cost housing markets on the East and West Coast are more impacted by this, and it's going to take a year or two for the two parties to sort of figure it out. Um. You know, this is this is sort of like literally what we just went through. The last couple of years we've had at the high end of the market or higher cost markets, sellers have had a phenomenon that I've called aspirational pricing, where that they're asking way more than what the buyers

are willing to come up with. And just only in two thousand seventeen we've started to see equilibery in between expectations. Now we have this new factor that will you know, undergo a period of a couple of years of testing out before it settles in. Could this be a positive in the for the long term that people will not be burdened with mortgages that they cannot afford that would be so linked to their income. Hey, I absolutely in

the law in the long term certainly. Uh, you know, there's a lot that made of sort of runaway high end housing prices. We did see some reining in of that I called two thousand fourteen nationally peak luxury and uh, you know, and and since then we've seen a correction at the very high end of the market generally overall affordability. You know, one small benefit in the New York metro area that whose economy is heavily dependent on Wall Street

accounting for about of the wages. Is higher. Bonus comp with tax cuts is a is you know, maybe a modest improvement or help for the high end, but I don't really see it as anywhere is significant with the regulatory overlay that we didn't when you compare it against sort of pre financial crisis. Got it. Thank you very much. Jonathan Miller is the president and the chief executive of Miller Samuel talking about how it is going to be, at least for now, going to be a buyer's market.

Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio.