The Valley's Deadly Financial Ripples

Watching the Nasdaq drop the most points since May 2000, it's clear Silicon Valley isn't immune from the bank meltdown on Wall Street. Even the mighty Google and Apple weren't safe: Google fell more than 11% today to under 400 for the first time in two years and Apple fell nearly 18%.

There is plenty for tech investors to worry about:

-    The financial sector could slash IT budgets, impacting enterprise players like Oralce, IBM and Hewlett-Packard. At a minimum there are fewer banks to buy up software, hardware and services thanks to the forced consolidation.

-    A worsening economy will very likely hurt every consumer play from Research in Motion to Apple to gaming companies. Already, RBC Capital Markets says 40% of people plan on spending less money on electronics in the next 90 days, the weakest outlook the bank has ever seen. That doesn't bode well for a strong Christmas season.

-    Web companies grappling with a continued deterioration in advertising spending now that the Olympic boost is over and the presidential election has just a little over a month left.

-    The impact a shut down IPO and acquisition market has on an already abysmal year for venture capital returns. Sure, the public markets don't immediately affect startups; that's the advantage of being private. But investors need a return at some point. In sectors that have been overheated in recent years like the Web or clean tech, expect second and third rounds of funding to get tighter if companies aren't showing any progress on revenues. With ad markets shut off and the general economy in turmoil, that's a lot harder to do. Entrepreneur Jason Calcanis recently said the collapsing economy would kill some 50%-80% of startups. You can argue that's just the odds to the early stage startup game, but this economy and its lack of liquidity and confidence certainly doesn't help.

We'll keep an eye on all of these ripples, as shoes continue to drop in this crisis and the Valley picks its jaw up off the floor and actually starts to react. But it's important to realize so far it's a story of ripples in the Valley-a long list of potentially deadly ripples to be sure-but ripples nonetheless. For people who've been in the Valley more than ten years, there's none of the hand-wringing of the last bust when more than 450,000 Valley workers lost their jobs in a little more than a year and the Nasdaq lost three-quarters of its value in just a few years.