Pop! Welcome to the 'Mentos Economy'

SUNNYVALE, Calif., Sept. 19, 2008 — -- The events of this week on Wall Street and across the world's financial markets hit with a sickening thud out here in Silicon Valley.

Like everyone else, we are worried about bank closings, foreclosures, the bankruptcies of major investment banks, a falling stock market and, closer to home, losses to our own investments and 401Ks.

But here there was something else as well: In many important ways we are still recovering from the bursting, in 2000, of the last great bubble -- the dot-com boom. Certainly, we recovered more quickly from that crash than we ever thought we would -- and indeed, we've had good times here in the Valley over the last four years.

But whatever success we've enjoyed has been tempered by the fear that it could all disappear overnight -- just as it did when several thousand new Internet companies (and hundreds of thousands of jobs) evaporated in March of that year.

This has been a nervous decade in Silicon Valley. For all of the successes of both the established giants like HP and Intel and of the hot new Web 2.0 companies like Facebook, we still tread lightly, as if on thin ice. For a community famous for only looking forward, we nevertheless find ourselves constantly glancing back at those terrifying and depressing first years of the century. And you see that nervousness reflected in everything from venture capital investments to the construction of new facilities. For all of the billions in fortunes made around here in the last four years, Silicon Valley still seems gun-shy.

Needless to say, since the dot-com bust, the U.S. has seen several other overheated industries that could best be described as economic bubbles, from housing prices to, in our own backyard, social networking companies. In fact, it's hard to remember a time in this decade when we haven't been experiencing either overexuberance or collapse in one industry sector or another, or when some massive fad -- "American Idol," anyone? -- has held the country in its thrall.

I'm old enough to remember when economic bubbles were something you read about in history books, an indelible experience -- like the Roaring Twenties -- recounted by old folks from their own childhoods; an event that came along every couple of generations and led to international catastrophes and war.