The “Safety Net” – A Few Comments

On December 14, The Wall Street Journal had a story titled “Fewer Homes ‘Underwater’ as Foreclosures Increase.”

In the article, I found a quote by Matt Dobler as especially notable:  “It just kind of leaves you wondering what the safety net is for my generation, because it’s obviously not our home.”

Although I typically don’t mention the term “safety net,” I do believe the concept deserves contemplation, especially given our current economic situation.

There are various definitions of “safety net”;  perhaps the most straightforward is “anything that provides security against adversity or misfortune.”

Is the “safety net” growing or shrinking?  Is it getting higher or lower?  What can one do to insure against financial adversity?  To what extent should/can the government create a “safety net”?

The concept is particularly relevant now, as it seems as if an increasing number of people are experiencing hardship and adverse economic volatility.

Measuring, as well as predicting, trends in people’s changing economic fortunes is difficult.  One effort that has been made is the creation of the “Economic Security Index” that I discussed in the August 6 post.

Recent research related to this “Economic Security Index” is seen in a December report titled “Standing On Shaky Ground” (pdf), subtitled “Americans’ Experiences With Economic Insecurity.”  An excerpt from page 3:

“As suggested by the title of this report, many Americans are—and see
themselves to be—standing on shaky ground. The recent economic downturn represented an especially powerful quake, emanating from two distinctive epicenters: declining employment and disrupted financial markets. Yet Americans faced jarring economic shocks even before the downturn, and continue to do so today. The SERPI and related evidence suggest that economic insecurity has become the rule, not the exception, for many Americans—even in good times.”

I’ll likely comment further on the topics of the “safety net” and “economic security” in future posts…

A Special Note concerning our economic situation is found here

SPX at 1271.89 as this post is written