Ballmer Gets “It”

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.

Originally published at Steve Keen’s Oz Debtwatch blog and reproduced here with the author’s permission.

2 Responses to "Ballmer Gets “It”"

  1. steveballmer   January 23, 2009 at 3:40 pm

    Thank you very much, I do my best.

  2. Anonymous   January 23, 2009 at 6:14 pm

    No argument with either Steves’ analysis.I have 2 additional perspectives going forward:1)The amount of leverage destroyed is so vast that a few trillion dollars introduced by the Fed will not create future inflation. I’m frustrated that the inflation hounds are forgetting the additional ingredients necessary for inflation to evolve.2)Leverage in and of itself is not harmful. The missuse of it has caused our current situation. The architects have been clearly identified as the Wall Street Bankers. My concern is that these “Madov cowboys” are still in the saddle and are in control of TARP distribution. Sweden has provided us with their 1990 solution. We need to act quickly or nothing changes.