On 06 February 2009, Microsoft CEO Steve Ballmer delivered a speech at the U.S. House of Representatives Democratic Caucus Retreat. In his speech, he echoed the view that the problem with the economy is that it grew for 25 years on unrealistically cheap debt and that is over. For us, this meant "a fundamental economic reset".

Here is part of the speech:

For the past 25 years, the world has certainly enjoyed incredible, incredible global growth. Average incomes around the world grew at unprecedented rates, millions of people moved from out of poverty into the middle class for the very first time.

I think that expansion was built on three things: innovation, globalisation, and debt, increasing debt.

American technology was certainly at the heart of the innovation that played the central role in the process. The PC, the Internet, fiber optics: Those things were things that continue to keep America at the forefront of technology, and really at the lead of a growing global 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.

I gave a speech at Stanford Business School a few years back, and I was talking, we’re a company that has been conservative, per the yellow pieces of paper. We like to keep cash. And a very smart PhD in the audience puts his hand up and said, “Why don’t you borrow money?” I said, “I don’t like to borrow money”. He said, “But it’s so cheap; you’re depriving your shareholders”. I think it reminds us that essentially consumers and businesses alike have really borrowed too much money.

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.

What has gone wrong? And what does this mean for us? Listen to Father Robert Barron as he speaks of some economic fundamentals that need to be recovered: