Oct. 7--With financial Armageddon threatening to send us back to an economic Stone Age, sometimes you just have to stop and be thankful for the little things.

Here's what that means for Silicon Valley: Be grateful that the IPO never really made a comeback. Because if it had, it's likely that this crisis could be wreaking more havoc in the valley than it is right now.

I know this sounds almost heretical in a place where the initial public offering of stock is considered part of our DNA. Certainly, many folks in the valley have been hoping and praying for the IPO to return since the dust settled from the dot-com bust. And venture capital associations have been wailing and gnashing their teeth over the IPO drought.

But the scarcity of IPOs these past few years has kept a strong local economy from becoming deranged. Expectations did not become unhinged. And while the valley needs Wall Street, it also has managed to keep a reasonable distance.

Imagine how things might look had the start-up economy once again been built around the IPO, as it was from 1998 to 2000.

Imagine if all these Web 2.0 companies were going public, generating quick returns for investors. They would have become bloated disasters, rather than running sleek and failing cheap. They would have hired huge staffs, sucking even more people into Silicon Valley. And they would all be collapsing right about now, sending everyone scurrying back to U-Haul.

The

lack of IPOs pushed a lot of action into mergers and acquisitions. Even here, though, things never got completely out of hand. But imagine if even more companies had been able to use their stock to overpay for companies with no business model. We would have had even more deals like Google's $1.65 billion all-stock purchase of YouTube in 2006, a deal that looks even nuttier in hindsight than it did at the time.

If there was a tech bubble, it was tiny.

The lack of IPOs doesn't mean we're immune from the growing crisis. In fact, it has become clear that after enjoying a kind of Teflon economy for many months, the economic crisis is finally catching up to Silicon Valley. A year ago, economists kept telling me that as long as the recession remained short and shallow, the valley would probably skate through relatively unharmed.

Well, that prognosis is out the window. The economy still hasn't hit bottom and may have a way to go. Now we see eBay laying off 1,000 people. Netflix reporting slow subscriber growth. Apple being weighed down by falling spending on consumer devices. Unemployment bubbling up. And, of course, the housing market falling deep into the pit of despair.

So it's bad.