Slashdot Mirror
Places Where the Silicon Valley Bubble Could Pop
waderoush writes: "If Silicon Valley is in a bubble — which it is – how will it finally burst? Where is the bubble's membrane being stretched so thin that it's in danger of tearing open and letting the real world rush in? This commentary from Xconomy picks real places around the San Francisco Bay Area embodying tensions, imbalances, injustices, or dangers that could escalate into a show-stopping crisis for the technology economy. One is Bank of America's former headquarters in the heart of San Francisco's Financial District; another is an elementary school in Oakland that happens to sit on the Hayward Fault. 'If we can identify the fractures that threaten to destroy the innovation machine, we might be able to patch them up and keep the system going for a while longer — and maybe even point it in a smarter direction,' the piece argues."
It was disjointed and didn't really seem to have any sort of point or theme. Now I can't get that time back. :(
No, no, you're not thinking; you're just being logical. --Niels Bohr
Honestly, I don't even take these kind of posts seriously anymore. At least the tech industry in general puts out products(as meaningless as some of them are). How about the real estate market, where houses are overvalued tremendously in most cities and real estate agents are making a living from something that can be done more efficiently by yourself online?
How about the stock market in general, where it's basically reduced to trying to make money from micro trades instead of long term investment? How about when that bubble pops?
How about any number of other sections of our economy(the over-regulated medical industry, the government protected entertainment industry, etc) that are propped up by things that are seemingly fragile and unstable?
Don't get me wrong, I'm worried about the tech industry(and silicon valley at it's heart), but not nearly as much as the many sections of our economy which are less productive.
Markets can remain irrational longer than you can remain solvent
- Keynes
The author states that Silicon Valley is a bubble. What does he mean by that? Does he mean that real estate prices in Silicon Valley are over-valued? Does he mean that the tech companies in Silicon Valley are over-valued? Does he mean that the advantages for a tech company, or a technology professional to be located in Silicon Valley are over-valued? Or does he mean something else? I did not read the article because the summary made me think that the author never defined what he meant by that statement. Without that meaning being defined there is no way to evaluate the soundness of his arguments about it (well, actually, there is. One concludes that the reason it is left poorly defined is to hide how unsound his arguments are).
He means, "please visit my site. I want more ad revenue. I don't have anything approaching interesting, coherent, relevant or even moderately useful to say, so I'll just string a bunch of random crap about the SF bay area together and see if I can get slashdotted.
No, no, you're not thinking; you're just being logical. --Niels Bohr
I mean, I've been seeing a lot of columns/op-eds/blogs lately about how California and/or SF & Silicon Valley sucks. This article is tame, but it hits on every single political talking point -- much like a back-handed compliment. When you have to bring up employer-sponsored shuttle buses (remember vanpools?) and a hypothetical future earthquake, you've got nothing.
California just raised $18 billion surplus in tax revenue from a booming economy and from raising taxes -- and they're arguing about how much debt to pay off. OTOH Kansas cut taxes and is getting close to $500 million in the hole with high unemployment -- and they're arguing about how much more taxes to cut. Missouri's governor just vetoed a plan similar to Kansas' basically saying KS is crazy -- now the legislature wants to impeach him.
Unemployment is down nationwide and 288,000 jobs were gained this month. If your state is still in a recession, it's your own state's leaders.
I guess there's a narrative that people have to tell themselves while watching success from the viewpoint of the bottom of the pit they dug themselves.
It's also campaign season.
He's still dead. Or are you looking for the Humanities at MIT article from yesterday?
If people still remember the current era of Silicon Valley over 3000 years from now, it would be a miracle. If people care about it so much they restore some of the monuments, it would be a greater miracle.
Yes, the statue of Ozymandias -- Ramses II -- that Shelley referred to has been restored and re-erected. Not bad for a king dead for millenia. And that's not the only surviving statue.
California has had surpluses before, it does not have a revenue problem. What California has is a spending problem. When surpluses occur the legislature usually goes wild with spending, and some of the governors join in. They act as if the current peak in the economic cycle is the new normal and spend accordingly.
Gov Gray Davis saw revenue increase by about 10% but he and the legislature increased spending by about 30%. Things were so out of control Davis was recalled and Schwarzenegger was voted in.
So seeing a budget surplus in California may simply be a precursor to the next budget disaster.
I don't know if I'd call it a tech bubble, it's more of a froth- lots of little bubbles. During the original tech bubble that started in the late '90s, pretty much everything was massively overvalued, and pretty much every shitty startup would go public and see its stock rocket up, even (especially) if they didn't make a profit and didn't have a business plan. It was widespread financial insanity, collective economic madness. The average stock on the S&P 500 traded at 40 times earnings, versus about 18.8 today. In other words, the average company costs about twice as much (relative to its earning potential) then as now.
Today, there are definitely some overvalued tech stocks. Facebook has a P/E of 76, Netflix has a P/E of 128, Amazon has a P/E of 428. Which means that at current earnings levels, a dollar invested in Facebook will pay off in 76 years, that same dollar invested in Netflix will pay off in 128 years, and Amazon stock will pay for itself in a little over four centuries. You're speculating (i.e. gambling) if you buy any of those companies. But other tech stocks are more reasonably priced. Google has a P/E of 28, Microsoft's P/E ratio is 15, Apple's is only 14. We are seeing bubble-like behavior in certain companies and in certain industries (social media, for example) but it's going a little far to say that the entire industry is in a bubble.