4 ms·

My thoughts on this right now are, "so what"? How much money is actually on the line? Yes, yes, there are a lot of crazy valuations going on right now into the

by hacknat 11y ago

My thoughts on this right now are, "so what"? How much money is actually on the line? Yes, yes, there are a lot of crazy valuations going on right now into the billions of dollars, but that's off of equity purchases that rarely clock above $200 million, and are usually lower than that. We may be in a bit of tech bubble right now, and it would suck if a lot of people lost their jobs (although firms are a lot smaller than they were in the last one), but there is barely any public money on the line these days. Yes VC backed firms supposedly generate 21% of US GDP right now (although I find that number to be a tad suspicious), but we have to allow that a huge chunk of that number is for new-tech companies (someone at MIT invented a new type of concrete, or a robot), biotech (someone at Johns Hopkins invented an artificial heart), and other niche businesses where the goal is definitely not to be a unicorn, but to hit a definable market. Certainly it would be sad to see some of these unicorns die, but as an overall percentage of where a lot of VC money goes (and I mean the whole world of VC, not just the SV VCs that are interested in the next billion dollar companies), they don't make up a huge percentage of the employment or income in this country. We might be in a bubble and it might pop, but the assumption that it will hurt the economy like it did in 2000 needs to be backed up by a stricter line of thought than, "the last bubble did".

bcg1 11y ago
"The Citigroup chief executive told the Financial Times that the party would end at some point but there was so much liquidity it would not be disrupted by the turmoil in the US subprime mortgage market. He denied that Citigroup, one of the biggest providers of finance to private equity deals, was pulling back. 'When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,' he said in an interview with the FT in Japan." http://business.time.com/2007/07/10/citigroups_chuck_prince_wants/ http://business.time.com/2007/07/10/citigroups_chuck_prince_... (emphasis mine)
- hacknat 11y ago
  I'm not being facetious, but are you backing me up? This bolsters my point. Equating the US subprime crisis and the vast entanglements that existed therein to the current situation in SV is exactly the kind of monomaniacal thinking that that SV engages in all the time. My point was that there aren't any entanglements, there isn't any exposure. Prince was making the point that there was complicated entanglements that existed at Citigroup so it would be hard to predict what would happen, but hopefully their lack of exposure would help (which, by the way, it did). There simply isn't enough public exposure to SV to make a bubble popping important to the overall economy.
  - bcg1 11y ago
    You could be right, and frankly I hope you are. If the current mini-mania slows down at all or a couple of big names hit some bumps in the road... the financiers' portfolios also are also affected, and if there a GSIFI's that can't afford to take that hit and can't find the liquidity to paper over the losses... yikes
7Figures2Commas 11y ago
If the only "bubble" was in the market for private investment in tech companies, your analysis might be correct. Unfortunately, global monetary policy has created lots of markets with worrisome dynamics. The bursting of the current tech bubble will come when other, larger bubbles burst. You should be concerned about those other bubbles.
foobarqux 11y ago
You need to define what a bubble means before you can establish whether one exists. I think Uber and AirBnB suddenly going to zero would be described by many people as a bubble pop and that may have dramatic effects on the sector, particularly financing going forward, regardless of its impact on the broader economy.
- deleted 11y ago
  [deleted]

by hacknat 11y ago

bcg1 11y ago

"The Citigroup chief executive told the Financial Times that the party would end at some point but there was so much liquidity it would not be disrupted by the turmoil in the US subprime mortgage market. He denied that Citigroup, one of the biggest providers of finance to private equity deals, was pulling back. 'When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,' he said in an interview with the FT in Japan." http://business.time.com/2007/07/10/citigroups_chuck_prince_wants/ http://business.time.com/2007/07/10/citigroups_chuck_prince_... (emphasis mine)

hacknat 11y ago
I'm not being facetious, but are you backing me up? This bolsters my point. Equating the US subprime crisis and the vast entanglements that existed therein to the current situation in SV is exactly the kind of monomaniacal thinking that that SV engages in all the time. My point was that there aren't any entanglements, there isn't any exposure. Prince was making the point that there was complicated entanglements that existed at Citigroup so it would be hard to predict what would happen, but hopefully their lack of exposure would help (which, by the way, it did). There simply isn't enough public exposure to SV to make a bubble popping important to the overall economy.
- bcg1 11y ago
  You could be right, and frankly I hope you are. If the current mini-mania slows down at all or a couple of big names hit some bumps in the road... the financiers' portfolios also are also affected, and if there a GSIFI's that can't afford to take that hit and can't find the liquidity to paper over the losses... yikes

7Figures2Commas 11y ago

If the only "bubble" was in the market for private investment in tech companies, your analysis might be correct. Unfortunately, global monetary policy has created lots of markets with worrisome dynamics. The bursting of the current tech bubble will come when other, larger bubbles burst. You should be concerned about those other bubbles.

foobarqux 11y ago

You need to define what a bubble means before you can establish whether one exists. I think Uber and AirBnB suddenly going to zero would be described by many people as a bubble pop and that may have dramatic effects on the sector, particularly financing going forward, regardless of its impact on the broader economy.

deleted 11y ago
[deleted]