The System Hits a Glitch

Ventro and Kabel New Media are but two of literally hundreds of examples showing what happened to entrepreneurs and investors during the great bubble of the turn of the 21st century. A vast amount of wealth was apparently created, then disappeared. How did it happen, and why? And what are the consequences?

Significantly, the bubble was similar in Germany and America, but the impact on small investors was not, as we'll see later.

The bubble was the consequence of interaction between capital markets and the innovation process. That this interaction took the form of a bubble raises important questions regarding the role of the capital markets in the innovation and investment processes in Western economies.

In the recent bubble, the system which links technological innovation to the investor via capital markets seems to have hit a glitch. Instead of investor's financial support providing the basis for the long-term growth of new companies, many start-up companies ended bankrupt. Instead of their investments appreciating, many small investors (though not only they) lost large portions of their savings and of their pension assets.