...............Yesterday the ABS replied and confirmed our suspicions. Here?s what they said:
...the Modeller?s data only includes net debt owed to the rest of the world.
It doesn?t measure total foreign debt. And it doesn?t measure total household debt.
In other words, we have to say it?s a pretty pointless and misleading statistic.
To put it in simple terms. Let?s say you have a $200,000 debt. The loan is a $150,000 from your next door neighbour. And a $50,000 loan from your friend who lives in Santiago.
In any normal world you?d say you?re total debt was $200,000.
But in the world of the Modeller?s data your total debt is only $50,000.
How so? Because it doesn?t include the debt you owe to your neighbour.
But the data is potentially even more misleading. Because if you happened to have savings of $25,000 at a bank in Ulan Bator, your total debt under the Modeller?s data would only be $25,000 ($50,000 you owe to foreigners, minus $25,000 owed by foreigners to you).
In other words, the Modeller?s data would seem to create a far rosier picture than reality. Your debt ? in this example ? is actually $200,000 but according to the Modeller?s data it?s only $25,000.
Now, from a statistical analysis, maybe the Modeller?s data means something (we don?t know what). But just try telling your next door neighbour you don?t actually owe him or her anything. And also try telling your friend in Santiago you only owe him or her half of what they think they?re owed.
The real numbers
Numbers that show total debt, including securitisations is nearly $2 trillion. Where owner-occupied housing debt is $819 billion. Investor housing debt is $351 billion. Other personal lending is $142 billion. And business debt is $682 billion.
That?s a far cry from the total private sector debt claimed by Modeller?s and Mr. James of $518 billion.
(chart showing)Notice how debt levels continued to climb, despite the near collapse of the global economy.
All the talk about deleveraging and conservative household balance sheets is nonsense. As we?ve pointed out all along, households haven?t deleveraged, they?re just broke. They aren?t not spending at the retailers because they?re saving. They?re not spending because they?ve got no money left to spend!
Even the banks are wary about lending because they?re fearful of being left holding the delinquencies......
