Are we in a bubble? Far too late to be asking that question, says Chris Nolan, a former Valley newspaper gossip who now runs a startup, Spot-On. She weighs in on the current market crisis and its effects on the tech business. Her thesis: New regulations will on investment banks will bring an end to the tech-stock bubbles on which Valley VCs have feasted. (I asked if this meant she was back in the tech-gossip game; Nolan's column served as one of this website's inspirations. "I'm writing about business and politics," she demurred.) Nolan compares sketchy mortgages approved by banks to the wafer-thin startups taken public by stockbrokers a decade ago. A brief version of her 887-word argument, followed by my take on where Nolan goes wrong:

Investment portfolios of universities, pension funds and charities expanded in value as Americans put their savings into stocks. As a result, stock prices rose. Richer, these institutions put money into venture capital funds. The funds spent like drunken sailors. As long as the stock market stayed up, they could reap the rewards of their investments. Venture capitalists, like mortgage companies, relied on investment bankers to lay off some risk by selling their wares to someone else — in this case, IPO stock to the public.

If all this reminds you of the U.S. mortgage crisis, a time where anyone could get a loan because it was assumed that the price of real estate would go up, up, up, you are not alone. During the stock bubble, the SEC made no bones about its inability to keep up with the number of filings it had to process, review and approve. Something similar happened at the mortgage banks. As long as everyone signed a piece of paper saying they knew risk was involved, the loans got written. Can you imagine a Netscape public offering — the company's main product was given away — sponsored by a financial institution supervised by the Federal Deposit Insurance Corp.? Me neither.

A brilliant comparison. But Nolan puts too much stock in the powers of regulators. "Money goes where it is wanted, and stays where it is well treated," former Citibank CEO Walter Wriston once told Wired . Already, U.S. regulations have driven some public stock offerings to new markets like London's AIM. No regulatory scheme is airtight; indeed, the U.S.'s regime, relying too heavily on rules rather than principles, makes it all too easy to find loopholes. New regulations, while hard to argue against, will simply generate new ways of avoiding them. And psychology tells us people will always fall prey to bubbles. Will VCs will be among the profiteers? Perhaps not. And few among the Valley's entrepreneurs will shed a tear for them. They'll be too busy finding something new to inflate, with someone else's money.

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