New study: Almost 50% of Americans live in a state of financial fragility.

A new paper from the National Bureau of Economic Research reports that almost 50% of Americans would be unable to come up with $2000 in 30 days to cover an unseen emergency.  This shouldn't come as a surprise as more than any other country in the world, the US population is bombarded day in day out with propaganda and ads designed to get them to consume, to buy things we don't need and to borrow money to do it.

Then there is the 30 million or so that are unemployed or underemployed and those that have lost homes, or already in severe debt through medical costs or other expenses. The findings raise "concerns about the financial fragility of many households" the Wall Street Journal writes.

"The survey asked a simple question" the Journal adds, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies."
 The research found that this insecurity is not limited to "low income" groups but more affluent middle class families also, "...a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile, reflecting either a substantially weaker financial position than one would expect, or a very high level of anxiety or pessimism. Both are important in terms of behavior and for public policy.” the study claims.

The research included other countries finding that, "The highest levels of coping capacity are found in Canada (28% certainly or probably unable), Netherlands (27.9%), and Italy (20%).”

Like all such studies and statistics there will be critics I'm sure but one thing that I know from is experience is true is the level of insecurity and pessimism that exists here in the US.  We live in a very fast society where success can turn in to failure very quickly.  We have very limited social services compared to other nations and many Americans fall in to bankruptcy due  medical expenses which I think are the number one cause of bankruptcies here. The ideology that success is out there if you want it is very strong here.  Consequently, when people fail they are often consumed with self blame. 

Debt is very high and I think the UK is higher since the Thatcher years so its no surprise that the research found that Britain was at about the same level of fragility or coping capacity as the US. In the US, most Americans are very aware that if you can't pay you can't play.  The heart of capitalism is a brutal landlord if you hit hard times and can't come up with the cash; "If you have no money here" a friend said to me, "You die.  Whether your a Vietnam war hero or not doesn't matter one bit."

It says a lot about the free enterprise system that in the wealthiest and most powerful economic system in the history of human society almost 50% of the population live on the edge, in a state of permanent insecurity. It's no wonder we kill each other at a far greater rate than any other population not engaged in open warfare.