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"[V]enture investors have been trying to solve the mystery of how they could possibly threaten the financial system." Couldn't a case be made that venture capi

by garply 17y ago

"[V]enture investors have been trying to solve the mystery of how they could possibly threaten the financial system." Couldn't a case be made that venture capital helped fuel the dot-com bust?

anamax 17y ago
> Couldn't a case be made that venture capital helped fuel the dot-com bust? Even if we assume that's true, it doesn't tell us that regulating VC would have done anything to avoid the dot-com bust. Note that the dot-com bust occurred in the market that the SEC regulates directly. The SEC let pets.com go public....
nradov 17y ago
The dot.com bust didn't create systemic risk for the whole financial system. Some foolish investors lost a lot of money, but that was about all.
- netsp 17y ago
  In defence of the dotcom bust, it had very little time to embed it's make believe assets into other parts of the economy. Perhaps if it had inflated slightly slower, it would have managed to affect non internety investments.
- tptacek 17y ago
  The dotcom bubble created a bear market for equities that dragged down mutual fund performance and cost general investors --- the "smart" ones, who weren't picking stocks, or even verticals --- hundreds of billions of dollars.
  - jhancock 17y ago
    Hundreds of billions is tiny compared to what's at risk this time. I witnessed massive fraud in the dot-com bubble. Very little went punished. I have no idea what the new regulations need to look like. But they need to have real teeth and need a reasonable sized army of experts overseeing the regulations. The SEC of the last 10 years was woefully understaffed to deal with our financial industry's activity.
sachinag 17y ago
The dot-com bust, while perhaps having something to do with the wealth effect that jacked up asset prices, neither posed a systemic risk to the financial sector nor affected non-participants in the market (housing excepted, as always). To blame VCs for the dot-com bust is akin to blaming Jose Canseco for Barry Bonds.

by garply 17y ago

"[V]enture investors have been trying to solve the mystery of how they could possibly threaten the financial system." Couldn't a case be made that venture capital helped fuel the dot-com bust?

anamax 17y ago

> Couldn't a case be made that venture capital helped fuel the dot-com bust? Even if we assume that's true, it doesn't tell us that regulating VC would have done anything to avoid the dot-com bust. Note that the dot-com bust occurred in the market that the SEC regulates directly. The SEC let pets.com go public....

nradov 17y ago

The dot.com bust didn't create systemic risk for the whole financial system. Some foolish investors lost a lot of money, but that was about all.

netsp 17y ago
In defence of the dotcom bust, it had very little time to embed it's make believe assets into other parts of the economy. Perhaps if it had inflated slightly slower, it would have managed to affect non internety investments.
tptacek 17y ago
The dotcom bubble created a bear market for equities that dragged down mutual fund performance and cost general investors --- the "smart" ones, who weren't picking stocks, or even verticals --- hundreds of billions of dollars.
- jhancock 17y ago
  Hundreds of billions is tiny compared to what's at risk this time. I witnessed massive fraud in the dot-com bubble. Very little went punished. I have no idea what the new regulations need to look like. But they need to have real teeth and need a reasonable sized army of experts overseeing the regulations. The SEC of the last 10 years was woefully understaffed to deal with our financial industry's activity.

sachinag 17y ago

The dot-com bust, while perhaps having something to do with the wealth effect that jacked up asset prices, neither posed a systemic risk to the financial sector nor affected non-participants in the market (housing excepted, as always). To blame VCs for the dot-com bust is akin to blaming Jose Canseco for Barry Bonds.