I doubt that it's going to be anything like 2008's financial market crash. VC-funded startups just aren't that important. Housing prices and interest rates affe

I doubt that it's going to be anything like 2008's financial market crash. VC-funded startups just aren't that important. Housing prices and interest rates affect everyone; VC is just a game for rich people playing with other peoples' money by taking bets on young narcissists with big ideas. So far, when VC flips its products on to the public markets, the markets react fairly rationally and the bad companies tank. Look at Zynga. The market may be overvaluing it still, but it's nothing like the 1990s. Public markets seem to be recognizing shitty tech stocks as what they are. So, we're not at the 1999 level of bubble. Furthermore, the 2001 crash didn't have a major effect on the economy (although it was bad for the Bay Area, and for many engineers). It wasn't the crash, or even 9/11, but the sluggish ("jobless") recovery in 2002-4 that made the 2000s (except for people on Wall Street or in the slowly recovering Valley) a shit decade. So, let's assume that the VC bubble ends. Some people will get hurt. The celebrity engineers who make $500,000 and aren't any good will get beefed. Run-of-the-mill engineers, if they're any good, might drop from $140k to $125k; not such a big deal. The ScrumDrone engineers will have a hard time finding work. Unfortunately, this will also hurt self-taught (meaning "no college degree") engineers even if they are good; the ones who are talented are still in a position of low leverage because "everyone knows" (well, employers know) they're more sensitive to a dry-up. The short answer is that some people will take painful hits-- you're going to have a lot of 25-year-olds who thought they were millionaires, find out that they worked overtime for nothing-- but average people of average-or-better talent will mostly be fine. Bay Area salaries for good engineers might go down 10 to 20 percent at worst. The bad news: housing in San Francisco's not going to become more affordable. First, the people who actually have money (not a half-million from options) are already diversified and less exposed to dot-com/VC, and the foreign money-launderers aren't exposed to it at all. Second, people hoard rather than sell (a steep positive volume/price correlation) when the market "should" soften. The stupid competitiveness around getting rentals (e.g. competitive open-houses, people cutting checks for a whole year's rent) will go away, but rents and prices will stay about where they are.