back to article EMEA server market struggles to find its footing

The austerity in Europe over the past several years is taking its toll on the server makers of the world and the companies in the region that most assuredly would love to be spending lots of dough on new software projects and the iron to support it. But they're not – and it's not just Western Europe that's putting a drag on the …

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Holmes

Let's hold it right there!

"The austerity in Europe"

Been reading too much NYT Krugman and his platitudinal lies, again?

Austerity is nowhere to be seen. Govs are spending, spending, spending.

The Myth of Austerity

"First of all, is there really austerity in the eurozone? One would think that a person is austere when she saves, i.e., if she spends less than she earns. Well, there exists not one country in the eurozone that is austere. They all spend more than they receive in revenues. In fact, government deficits are extremely high, at unsustainable levels, as can been seen in the following chart that portrays government deficits in percentage of GDP. Note that the figures for 2012 are what governments wish for...."

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Anonymous Coward

Re: Let's hold it right there!

Well, it is a relative measure, Euro governments are spending far less than they did a few years ago.

I would say Krugman and company are making the opposite of platitudinous arguments. They evaluate each country of their individual circumstances. Greece was just promising more than they could ever hope to deliver and, in their particular case, it was government malfesence and spending run amok. Spain, Ireland, Italy, and the rest of Europe were largely just caught up in a global economic recession which destroyed their revenue base and capital inflows. It is basically a current accounts problem being mistaken for a fiscal problem. For instance, take Spain which everyone is talking about. Prior to the 2008 crisis, they were running government budget surpluses with low debt to GDP. The government was not at fault because of huge spending or anything of that nature. What happened? Well, they had a huge housing/capital bubble brought on by massive inflows of cash from Germany, Britain and the US. When the music stopped, all of that cash, which had increased prices and wages, went away. In classical economic theory, not a problem because wages and prices will magically reset at a lower level to keep full employment and production. As Keynes pointed out years ago, however, that is not what happens in practice. Wages and prices do not drop in half overnight, they are "sticky"... due to contract law, business inertia, etc. It takes years for them to reset to equilibrium where price meets offer. In the mean time, you have mass unemployment, political turmoil, etc.

The Mises institute and the like are dealing in the platitudes, i.e. when you have a debt imbalance, they think the answer is always just cutting and saving. Macroeconomics, however, do not work the same way as your personal checkbook because my spending is your income and your spending is my income. Depressions do not work the same way as normal economic environments because everyone is trying to save and no one is trying to spend. If everyone tries to save and not spend at the same time, everyones' income falls. As peoples/countries' incomes fall, they decide to try to save even more... which causes revenues to decrease even more. It is a vicious circle. It is not intuitive, but it is a pretty simple premise. If we have a bunch of people/organizations that all say, at the same time, we are going to save and not spend, then business activity screeches to a halt (no one is buying, they are trying to save) and they have less incoming revenues from which to save. That is how the Great Depression happened. A huge decline in aggregate demand, which we didn't get out of until a huge government spending project called WWII.... The Mises institute and the rest are just a front for the ultra wealthy's own interests. Think about it. A government goes way into debt to put people back to work building roads or whatever. There are two ways they can cover those costs. 1) Increase taxes on those with money sitting around, not a good thing for the billionaires. 2) "Print money", increase the circulatory base, which will inflate those costs away. If you are a working class person, you are probably not too concerned about your non-existent fortune being inflated away... you would rather have a job. If you are a billionaire, you don't need a job and are very concerned about inflation, even mild inflation. Because of the austerity programs and the global depression, deflation, not inflation, is occurring... which makes all the neverousness over inflation absurd. Of course the right wing says that huge inflation is just around the corner, wait and see, government borrowing rates in the US are going to the moon, wait and see.... we have been waiting for five years, the opposite is happening. The first world countries, the US in particular (which supposed to have large future debt concerns), have never had such low borrowing rates. On a 1 year treasury after inflation, people are actually paying the US government to hold their cash.

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The 'V' word

Might the reason actually be virtualisation? With consolidation ratios of 20:1, and even up to 60:1, this must have a impact on physical server deployments.

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