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I'm not sure I agree with the conclusion of the article: "When Wall Street screws up, the country is plunged into recession and poor families lose their homes.

I'm not sure I agree with the conclusion of the article: "When Wall Street screws up, the country is plunged into recession and poor families lose their homes. When Silicon Valley screws up, people who want a pointless Wi-Fi enabled juicer get a pointless Wi-Fi enabled juicer." Silicon valley tech is funded by VC money. A substantial portion of that VC money comes from institutional investors (i.e. pension funds). The investors need to see a return at some point. If they don't, the taxpayer will eventually pick up the bill via pension fund bailouts. The chain of causality isn't as clear as with the financial crisis, but all that money has to come from somewhere. If it's squandered, there will be a reckoning eventually.

dullgiulio 9y ago
Most probably, a fall of Silicon Valley would make Wall Street tumble. Then, the government would have to save the "evil banksters." Of course, all is fine when the money keeps rolling in, no questions asked. Greedy lending needs greedy borrowers.
bko 9y ago
$58.8 Billion in Venture Capital Invested Across U.S. in 2015 [0] For comparison, the largest us bank, JP Morgan had a market value of 300b and about double that in debt I doubt enough people would be hurt in a SV bubble to have enough political pressure for a bailout. Far from too big to fail http://nvca.org/pressreleases/58-8-billion-in-venture-capital-invested-across-u-s-in-2015-according-to-the-moneytree-report-2/ http://nvca.org/pressreleases/58-8-billion-in-venture-capita...
potato_mOWX2EVX 9y ago
> institutional investors (i.e. pension funds) I don't pensions funds would invest in Start-UPs since they have a low risk threshold.
- smeyer 9y ago
  >I don't pensions funds would invest in Start-UPs since they have a low risk threshold. You seem to be mistaken. Here's a 2014 article titled "Behind the Venture Capital Boom: Public Pensions" from Bloomberg. Specifically, the article claims (sourcing a Dow Jones report) that "In 2014, they contributed 20 percent of the sector’s overall haul, down slightly from a 25 percent contribution in 2013." It's not that a massive fraction of each pension fund is in venture capital, but a sizable chunk of the money in venture capital is from pensions. https://www.bloomberg.com/news/articles/2014-09-23/are-public-pensions-inflating-a-venture-capital-bubble https://www.bloomberg.com/news/articles/2014-09-23/are-publi...
Terr_ 9y ago
That comparison -- Wall Street versus Silicon Valley VCs -- reminds me of a Michael Church observation/complaint on how SV is really a tiny colony, a tail that likes to believe it wags the dog. [Direct link is gone, following text copied from other sources.] > Zed has a strong point. The startup scene has the feeling of academic politics: vicious intrigue, because the stakes are so small. The complete lack of ethics seen in current-day technology executives is also a result of this. It’s the False Poverty Effect. When people feel poor, despite objective privilege and power, they’re more inclined to do unethical things because, goddammit, life owes them a break. > That startup CEO whose investor buddies allowed him to pay himself $200,000 per year is probably the poorest person in his Harvard Business School class, and feels deeply inferior to the hedge-fund guys and MD-level bankers he drank with in MBA school.

dullgiulio 9y ago

Most probably, a fall of Silicon Valley would make Wall Street tumble. Then, the government would have to save the "evil banksters." Of course, all is fine when the money keeps rolling in, no questions asked. Greedy lending needs greedy borrowers.

bko 9y ago

$58.8 Billion in Venture Capital Invested Across U.S. in 2015 [0] For comparison, the largest us bank, JP Morgan had a market value of 300b and about double that in debt I doubt enough people would be hurt in a SV bubble to have enough political pressure for a bailout. Far from too big to fail http://nvca.org/pressreleases/58-8-billion-in-venture-capital-invested-across-u-s-in-2015-according-to-the-moneytree-report-2/ http://nvca.org/pressreleases/58-8-billion-in-venture-capita...

potato_mOWX2EVX 9y ago

> institutional investors (i.e. pension funds) I don't pensions funds would invest in Start-UPs since they have a low risk threshold.

smeyer 9y ago
>I don't pensions funds would invest in Start-UPs since they have a low risk threshold. You seem to be mistaken. Here's a 2014 article titled "Behind the Venture Capital Boom: Public Pensions" from Bloomberg. Specifically, the article claims (sourcing a Dow Jones report) that "In 2014, they contributed 20 percent of the sector’s overall haul, down slightly from a 25 percent contribution in 2013." It's not that a massive fraction of each pension fund is in venture capital, but a sizable chunk of the money in venture capital is from pensions. https://www.bloomberg.com/news/articles/2014-09-23/are-public-pensions-inflating-a-venture-capital-bubble https://www.bloomberg.com/news/articles/2014-09-23/are-publi...

Terr_ 9y ago

That comparison -- Wall Street versus Silicon Valley VCs -- reminds me of a Michael Church observation/complaint on how SV is really a tiny colony, a tail that likes to believe it wags the dog. [Direct link is gone, following text copied from other sources.] > Zed has a strong point. The startup scene has the feeling of academic politics: vicious intrigue, because the stakes are so small. The complete lack of ethics seen in current-day technology executives is also a result of this. It’s the False Poverty Effect. When people feel poor, despite objective privilege and power, they’re more inclined to do unethical things because, goddammit, life owes them a break. > That startup CEO whose investor buddies allowed him to pay himself $200,000 per year is probably the poorest person in his Harvard Business School class, and feels deeply inferior to the hedge-fund guys and MD-level bankers he drank with in MBA school.