Whiskers
It's a small world
- Joined
- 21 August 2007
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I wonder about expressions like these sometimes. Often a bit ambiguous and easy to presume too much into them like some of the other numbers splashed about in the press such as the trillions of 'estimated' debts that jurno's don't specify whether it's 'provisons' for debt or just some arbitary figure conjured up from somewhere that they usually don't specify.
Do they mean debt to income ratio (DTI) as a percentage of gross or disposable monthly income that goes toward paying debts?
The Aus case specifies 'disposable' income. Is the US case talking about gross or disposable income?
The US case implies a number specific to 'middle class' America. The Aus numbers refer to 'household' debt. So you have single income households and dual or multiple income households which obviously can carry more debt, but when you bundle them all together it gives a distorted picture of 'household' finances. A relatively small number of reckless, irrisponsible people can run up quite a large amount of debt that reflects badly on a lot of others when they are aggregated.
Are they talking about total debt, regular debt repayments or regular debt repayments plus outstanding repayments.
Or are they some other ratio, ie total debt to annual gross income?
Are they an aggregate of total national debt to total national personal income... again gross or net, including those who have no debt?
It's all very confusing and unreliable data unless they specify better what they are talking about. Can be like a fishmonger talking about 'fish' without specifing whether he is talking about salmon or sardines.
In any event, debt to income is a bit of a dubious ratio when an increasing number of people have other assets and or periodic capital gains income of various sorts these days to supplememt their day job.
I would place more emphasis on debt to equity ratio's, net worth anytime.
Sure a few bad apples can spoil the barrel. That's why I much prefer to know more about each apple so that you can root out the source of the bad ones quickly without loosing the whole barrel... throwing the baby out with the bath water so to speak.
In the Agriculture industry there is technology to track all the inputs and production from individual blocks, sub-blocks down to individual trees, ie to be able to track a case of bad apples back to a specific block, often sub-block and sometimes individual trees so a poorly performing tree or small part of the block can be remied or removed as the case may warrant.
You would think economists and or economic jurno's could do a much better job of inentifying there apples and oranges!