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I think that this article is basically right, but would add that bubbles are generally dangerous based on what they represent, financially and culturally. If Bi

I think that this article is basically right, but would add that bubbles are generally dangerous based on what they represent, financially and culturally. If Bitcoin hits $1,000 again, it's not innately dangerous (unlike housing, no one needs Bitcoins to live). It might represent a bad thing, like the collapse of a currency. We're still in a housing bubble (although not as much as one, and one with a sharper geographic profile) but what's propping it up now is industrial decline and extremely lopsided job availability. Much of the country is starved of economic activity while a few metropolitan areas (e.g. New York and the Bay Area) have healthy job markets but extreme real estate costs. All of that said, I have no way of predicting how that bubble will resolve or when it will crash. We could see it happen in 2 years or in 25, and it will probably vary with geography (just as Vegas and Florida got hit hard in the last one, but the Bay Area and Manhattan remained unscathed). Housing bubbles are weird because there's so much corruption (foreign money, NIMBY regulations) involved that makes them political and therefore unpredictable. The 2001 tech crash didn't do a lot of damage to the rest of the world (9/11 did far more). The 2008 crash is still being felt in Southern Europe. I can't predict how much of an effect the ~2017 VC-land crash will have. To be honest, the numbers don't look that bad; when Silicon Valley drops a turd like ZNGA on Wall Street, the Street usually reacts with proper skepticism. So I think that this one's going to be relatively limited in terms of its impact on the rest of the world. I don't like what it represents about our society, and what it may continue to represent, because that is corrosive. The truth about VC-funded startups in the Bay Area is that 98% of that stuff has nothing to do with creating new value, but with devising ways to profit from widespread organizational decline.

omarchowdhury 11y ago
Good comment.
iambvk 11y ago
What is ~2017 VC-land crash in your opinion? Specifically, who loses money? How would it effect common-man who is not involved in stock market directly?
- S4M 11y ago
  People whose pensions are invested in VC funds would lose money. Don't forget that VC money comes in a large part from pension funds.
  - saryant 11y ago
    But do pension funds actually have that much invested in that asset class? Around $48 billion went into VC in 2014 but in the US alone there is $18 trillion in pension assets.
    - stillsut 11y ago
      Good point. But, a crash will lower the historical experience thus lowering future expectations for market yields. For pensions that need to hit a defined amount in the future, this means that have to come up with more capital in the present to hit the future target.
- michaelochurch 11y ago
  I think that it will be local in its impact. We're probably not going to see it hurt the wider market. Bankers will have a laugh at Sand Hill's expense. The few pension funds that got substantially invested in VC will be hurt, but I think most Vanguard accounts will be fine. Sand Hill Road will lose money. The leading VCs will still be rich, just less so. Very high-end California real estate will crash. Unfortunately, it probably won't do much for SF apartments; what we see in real estate is that people hoard (even at significant financial loss) rather than selling when real estate demand drops, because of emotional attachment. What made Silicon Valley great in the 1970s-90s will reconstitute itself somewhere else in the 2020s: possibly the Pacific Northwest, possibly the North (Midwest and New England) again, and possibly another country. 2017 is a very approximate date. That could easily be off by five years, or even more.
onedev 11y ago
Mind expanding on what exactly you mean by "widespread organizational decline."?
- michaelochurch 11y ago
  What I mean is that the accelerated birth-and-death cycle of American organizations isn't entirely the result of technology or widespread access to capital. We've also lost much of our ability to form organizations worth caring about. Google is not even 20 years old and it already has stack ranking, which is a telling sign that an organization has ceased to be a genuine institution and is now just a pile of resources and a crowd of people fighting over them.

omarchowdhury 11y ago

Good comment.

iambvk 11y ago

What is ~2017 VC-land crash in your opinion? Specifically, who loses money? How would it effect common-man who is not involved in stock market directly?

S4M 11y ago
People whose pensions are invested in VC funds would lose money. Don't forget that VC money comes in a large part from pension funds.
- saryant 11y ago
  But do pension funds actually have that much invested in that asset class? Around $48 billion went into VC in 2014 but in the US alone there is $18 trillion in pension assets.
  - stillsut 11y ago
    Good point. But, a crash will lower the historical experience thus lowering future expectations for market yields. For pensions that need to hit a defined amount in the future, this means that have to come up with more capital in the present to hit the future target.
michaelochurch 11y ago
I think that it will be local in its impact. We're probably not going to see it hurt the wider market. Bankers will have a laugh at Sand Hill's expense. The few pension funds that got substantially invested in VC will be hurt, but I think most Vanguard accounts will be fine. Sand Hill Road will lose money. The leading VCs will still be rich, just less so. Very high-end California real estate will crash. Unfortunately, it probably won't do much for SF apartments; what we see in real estate is that people hoard (even at significant financial loss) rather than selling when real estate demand drops, because of emotional attachment. What made Silicon Valley great in the 1970s-90s will reconstitute itself somewhere else in the 2020s: possibly the Pacific Northwest, possibly the North (Midwest and New England) again, and possibly another country. 2017 is a very approximate date. That could easily be off by five years, or even more.

onedev 11y ago

Mind expanding on what exactly you mean by "widespread organizational decline."?

michaelochurch 11y ago
What I mean is that the accelerated birth-and-death cycle of American organizations isn't entirely the result of technology or widespread access to capital. We've also lost much of our ability to form organizations worth caring about. Google is not even 20 years old and it already has stack ranking, which is a telling sign that an organization has ceased to be a genuine institution and is now just a pile of resources and a crowd of people fighting over them.