The Brits at the BBC checked in on the Silicon Valley economy, and found this horrific scene: People quitting perfectly good jobs and investing perfectly good money under the delusion that boom times are here again. Ouch.

"We are seeing... good people leaving their jobs and joining startups, which is always a sign of confidence," a partner at Redpoint Ventures told the Beeb. "We are entering a stage of new reality." Apparently, there's talk of a boom. A handful of medium-sized companies most people have never heard of were recently acquired —, OmniTure, SpringSource — and venture capitalists are dribbling out some cash from the oceans of money they are paid to invest. The Nasdaq has limped its way past the 2,000 mark again.

But enough of the selective evidence. Unemployment is still nearly 10 percent. The flow of capital outside the Valley startup bubble is still severely constrained. And even within the tech sector, the big paydays are few and far between. The IPO pipeline is dry, and startup buyers like Google and Yahoo have tightened their purse strings. This is why hot companies like Twitter, which is taking a fresh $50 million even with a reported $30 million in the bank, are stockpiling cash. Many are unprofitable, which also helps explain why, like Facebook, many have no plans to IPO any time soon.

This sort of brutal assessment is frowned upon in the Valley, where the hope of a big payday can get engineers working long hours for cheap, lawyers accepting scrip as payment and gullible investors pumping money into unworthy ventures. Hence, hype all too often prevails, despite an utter lack of profits or even, as is the case today, any big speculative infusions of cash from the equity markets. That's not a "new reality;" it's a cycle as old as the State of California.

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