Steve Ballmer Talks About The Economy

Steve Ballmer delivered an interesting speech to the Congressional Democratic Caucus yesterday. A lot of it was pumping technology and government support for research and education, apple pie sorts of issues, but he did make some interesting comments about the current and prospective state of the economy.

But over time, over the last period of time, the balance has really shifted. Instead of innovation and productivity driving growth, it’s really been unsustainable levels, particularly of private debt, that have been a key driver of economic growth.

The hard truth is this, in my opinion: The private sector of our economy has borrowed too much money, businesses and consumers alike, fueled by the a lot of different things, some notion that housing prices would go up forever, that you could borrow money cheaply.

The bubble has burst. We can no longer rely on consumption by refinancing our homes or inexpensive money to fuel economic growth, and that’s certainly had a huge impact.

At our own place, what we think about PC sales, they are discretionary in most home budgets, the second, the third PC. Consumer electronics has that characteristic. Fifty percent of capital spending in this country is on information technology. Less capital, less spend on information technology. No sector will be immune.

I’m sure there have been others but precious few business leaders I’ve noticed have stood up like this and spoken the truth to the political class. It’s refreshing to see Balmer lay it on the line like this.

The question, of course, is did it fall on deaf ears. I suspect that it did for the actions of Congress in producing the stimulus bill reflect a mindset that believes it can recreate the glory days. The goal, if there is one, seems to be the stimulus of consumer spending fueled by a return to aggressive bank lending. Heeding Ballmer’s words would seem to be the farthest thing from their minds.

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