Why The Bust Wasn't So Bad

from the looks-good-from-here dept

Here’s an opinion piece from Wired Magazine saying that, after all the doom and gloom talk about how terrible the dot com bubble (and subsequent bust) have been, it still created a bunch of very valuable things that have made the overall world a better place. The writer quotes Andy Grove saying, “the dotcoms threw themselves on the bonfire, but they created a bigger flame as a result.” So, while plenty of paper profits may have been erased, the overall social impact of the dot com bubble was still a net positive.

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Comments on “Why The Bust Wasn't So Bad”

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David says:

the bubble was good? bullshit

The bubble was not good.
It was bad three ways.
1) It wasted hundreds of billions of dollars — so much for efficient capital markets;
2) It blew the credibility of the financial system and the institutions that are supposed to aggregate capital and dispensse it efficiency: pension funds, wall street, vcs;
3) It has a lot of talented people not working, when there are porojects they could be doing that can’t be funded.
Let’s not lie to ourselves. We screwed-up. At leasxt nobody got killed.


Rick Colosimo (user link) says:

Re: Money never goes away - it just changes hands

The money you say was wasted really just changed hands. Advertising agencies and marketing companies made a lot of money on all those ads. Recruiters and employees made money from the tight labor market. Some investors bought low and sold high; they made money from the folks who bought high. Even some of the money made by investment banks has worked its way back to state coffers.

Unless there was actual destruction of real goods, I think you’d be hard-pressed to come up with an example of money “lost.”

As to point #2, maybe the bubble revealed the credibility of the financial system, and people might once again pay attention to how they invest their money. After all, it had been 80 years since everyone got royally burned (although the Nifty 50 didn’t pan out so well, either).

Point 3: if the projects can’t (and “won’t” is more precise) be funded, it must be because they’re not considered profitable or worthwhile by those who you expect to put up the money. There are deals getting done in Silicon Valley, even if they’re fewer than back in ’99.

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