Comments on: Bubble redux?

perspective CNET News.com's Charles Cooper says it's time to ask whether the tech industry is approaching another dot-com disaster.

[ghostofitpast]

Another "New Economy?"

My own opinion is that the last bubble was inflated by a promotion of a "new economy" that, to borrow shamelessly from the title of Duncan Foley's new book, can best be called theological. For better or worse the "religion" of the "new economy" attracted enough of a congregation to keep the bubble inflating. Nevertheless, it did not take long for some "old economy" thinking, like the need to address supply and demand, kicked back; and my personal feeling is that the "revival" (to continue the theological metaphor) of that thinking put the pin in the bubble.

So where are we today? Well, I know where *I* am. I am sitting at my desk trying to recover from a presentation I heard yesterday afternoon at which I would be happy for a nickel for each time I heard the phrase "value proposition!" If the first bubble was inflated by playing fast and loose with the concept of value and then founding an economic theology that sanctioned those games, then I would say that the history is repeating itself; and the best thing we can do is get our heads around economic basics before we lose the farm again.

In this respect I was very glad to see Robert Solow take on the task of reviewing Foley's "economic theology" book, because Solow has a clear head for basics and knows how to talk about them to non-economists. The most important sentence in his review is the following: "Modern economics dispenses with the notion of 'value' altogether, and deals only with ordinary, observable market price." In other words "value" is too abstract a concept to mess with the nuts-and-bolts practices of economics; so stick to the concrete phenomena you can observe.

Now I remember during the first bubble inflation having to sit through presentations about "price points;" but these were little more than "fictions of convenience:" PowerPoint slides that you had to prepare to convince the VCs that you had done your homework diligently. What was missing was even a remote speculation on the relationship of what you would actually be delivering and what your expectations were for compensation for delivering it. I do not see much of that kind of talk in the Web 2.0 world; and, since the VCs are probably still operating on a one-out-of-ten success model, it would not surprise me to learn that they are not particularly interested in that talk. So my guess is that the bubble will continue to inflate until there is a critical mass of concrete demand that bumps into not-so-concrete supply; and that will be when the pin bumps into the bubble!

[Hoser McMoose]

And the "Worst Buzzword of the Year" award goes to...

"Web 2.0"

[timoteo21]

Wealth has to go somewhere

Now that the run up in real estate prices is over, another tech
bubble is what to expect, given the increasing concentration of
wealth in the hands of a few. Google will profit in the short
term, as more investment dollars are spent advertising new
products. Overpaying for YouTube was a brilliant move, to
stimulate exactly the kind of environment where Google will
thrive: a vast smorgasboard of sites competing to attract
enough eyeballs to be bought by Google. So investors will
shuffle dollars among themselves for a few more years until it
becomes clear that there are not enough dollars in the hands of
consumers to generate real returns.

[Kenschr]

Google & Bubble!!! No way...

What are you talking about.. the intristic value of Goog as calulated by classical DCF financial methods..re Warren Buffet.....and value investing guru..is $906 per share..(see valuepro.net).it's not even close to that yet

VCs may in general be throwing money at deals without any chance of making it but don't confuse that with a real business GOOGLE....It's just an investing model which is over subscribed and VCs know it..only the good ones should & will survive..the system will work this out..