It was a great time with money being thrown around to design and develop all of this, but it wasn't going to last. Once the servers were in place, the web sites were up, and the older mainframes knew the difference between 1900 and 2000, the developers were let go, the tech bubble burst, and that was the end of that.
It needed the money generated by the low oil prices to bid up the stock prices. And it wasn’t just the dot coms. The whole stock market blew a gasket. The dot coms got more than their share because they were new. But the auto industry, for example, was in high gear, and when the auto industry is in high gear, the economy is good. High paying jobs are plentiful, and money is flowing freely. It was mainly the free-flowing money that gave the stock market its boost.
But the dot com bubble wasn’t enough to fuel that economy. The dot coms were a small part of the economy. And it wasn’t just the dot coms that boomed. It was everything—except oil, which was in a depression because of low oil prices.
If you want to have a handle on what the dot com bubble did, compare the CA economy to other states. CA was booming because of the dot coms, and because of techs in general. But the rest of the economy, based in other states, was also booming. Detroit, for example, was in one of its greatest expansions, even though the dot coms were far away. I am in Florida. Florida’s economy was bonkers even though our connection to the dot coms was primarily just that we owned stock in them. Tourists were swarming down here, though, and it was largely because of the low oil prices which made Florida vacations a great deal.
When you have cheap oil, that covers up a lot of warts on your economy, and it even provided the money that drove up the dot com stocks in the first place. The dot coms certainly did not generate that cash themselves.
Most of them were losing money hand over fist. They had IPO’s at inflated prices and paid their staff from the proceeds. Absent the IPOs, there would have been no money, and no staff. And absent the money from other sectors of the economy, there would have been no inflated stock offerings.
The proof is that as soon as oil prices began to rise, the dot com bubble burst.