Ballmer Gets “It”

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Ordi­nar­i­ly I’d sim­ply post a link to a media report in either my Gems or Brick­bats page. But this quote from Microsoft CEO Steve Ballmer shows that he real­ly under­stands what is going on now, in a way that no oth­er per­son in author­i­ty seems to have done as yet. The full report can be found at:

Microsoft resorts to first lay­offs, cut­ting 5,000

Ballmer’s per­cep­tive analy­sis of what is going on is:

We’re cer­tain­ly in the midst of a once-in-a-life­time set of eco­nom­ic con­di­tions. The per­spec­tive I would bring is not one of reces­sion. Rather, the econ­o­my is reset­ting to low­er lev­el of busi­ness and con­sumer spend­ing based large­ly on the reduced lever­age in econ­o­my,” said Chief Exec­u­tive Steve Ballmer dur­ing a con­fer­ence call. For con­sumers, that may mean less dis­cre­tionary income to spend on a sec­ond or third home com­put­er, he said.

Bra­vo. That is pre­cise­ly what is hap­pen­ing. It is also why, though gov­ern­ment action might slow down the decline, ulti­mate­ly it can’t pre­vent a seri­ous decline in eco­nom­ic activ­i­ty. That can hap­pen only grad­u­al­ly as we slow­ly replace debt-gen­er­at­ed spend­ing capac­i­ty with income-gen­er­at­ed capac­i­ty. What the gov­ern­ment can do is remove the log­jam stand­ing in the way of that process, which is the crip­pling moun­tain of debt accu­mu­lat­ed by the Ponzi financ­ing behav­iour of the last 4 decades (and in par­tic­u­lar the last one). But that will require much more dras­tic action than sim­ply bailouts: giv­en the scale of debt accu­mu­lat­ed, either the debt has to be deval­ued by infla­tion, or writ­ten down via gov­ern­ment decree.

We’re still a long way from any gov­ern­ment offi­cial or politi­cian real­is­ing that. But the fact that some­one as influ­en­tial as Ballmer has put his fin­ger on the prob­lem implies that maybe that day of real­i­sa­tion is approach­ing.

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.