BUSINESS OPINION: Just try to say this phrase without laughing: the New Economy. If you didn't laugh, you probably at least had to suppress a smirk. Has any economic concept in recent times been run up the pole and down again faster?

Nonetheless, more of us than will now admit to it were saluting the idea when it fluttered majestically on high. We left suddenly dull-seeming jobs to go work for silly internet companies; we believed that a degree in basket-weaving entitled us to six-figure salaries as Web designers; we got into day trading and believed we were able to judge whether a company would do well enough in the next 14 minutes for us to flip its shares at a 195 per cent profit; we worshipped at the Church of Telecommunications Profits.

All of this is easy to laugh about now (unless you lost a lot of money on the financial markets betting that pointless companies like Pets.com would fund your retirement). We can chatter indulgently, in our post-Tiger sobriety, of those loss-making firms and their market caps that could never, ever be justified by their P/E ratios.

Even now, so much entertainment value is vested in some of the more spectacular crashes - the suite of inflatable pink furniture of this dot-com start-up, the endless champagne-and-caviar routine of others, the stream of expensive Aeron office chairs, once de rigeur in every Silicon Valley start-up, being liquidated on eBay - that it's hard to get really, really angry.

But you should. Because these little tidbits, these micro-tales of the digital revolution, imply that somehow it's really our fault that we got sucked in by the tech hype, the possibility of the internet, the day trading, the jobs where chino trousers reigned and a king-sized fridge was always stocked with free Snapple.

We, the ones who believed and invested our comparatively modest sums and switched our jobs - we, for the most part, were acting in good faith. We listened to the people - the corporate bankers and financial analysts - who were supposed to understand the complexities of the money markets and the structured, tidal rise and fall of global economies. They told us about a New Economy in which initial public offerings guaranteed a profit; where the markets would never trough; where the new market was a miraculous market of turnarounds, resurrections, new, new things and 27-year-old millionaires.

Now it turns out that the big banks and analyst firms knew a lot more than we ever understood. The difference between what we knew and what they knew, the way we acted and the way they acted, lined their pockets. Only now, after threats and investigations from the US Securities Exchange Commission and Congressional committees, are we learning of how they strung us along on their own self-beneficial myth of a New Economy, a myth that ultimately hammered many of the companies and smaller shareholders they advised.

Consider articles recently in the New Yorker magazine and the Financial Times, which point out the perfectly legal favours that Wall Street icons like Goldman Sachs, Salomon Smith Barney and Credit Suisse First Boston, handed to top executives from New Economy companies such as Tyco, WorldCom, Enron, and eBay.

WorldCom's former chief executive Mr Bernie Ebbers, for example, received 200,000 shares of hotly-touted telecommunications company Qwest from Salomon. Like many other fortunate execs, Mr Ebbers quickly sold (or "spun") shares such as these within hours or days. According to the New Yorker, he made $11 million from Salomon on such gifts between 1996-2001.

Coincidentally, from 1997-2001, Mr Ebbers gave $210 million worth of corporate business to Salomon. The bank insists the two events are unconnected. Whatever. Massachusetts Secretary of State Mr William Galvin told journalists, "The problem with IPO spinning is that it's bribery." The New Yorker points out that analysts at these firms routinely advised companies to release their IPO shares into the market at a lower price than the market would actually value them. We, the small punters, believed rocketing IPO values were the norm - part of the New Economy that would place some of that wealth into our own pockets. But as we learned, IPO shares were generally snapped up in advance deals by big investment clients, leaving little for the average investor.

And that gap between the IPO price and the market value meant money that should have gone to help fund the young IPO companies - perhaps, helped more survive the current downturn - instead went to people like Mr Ebbers, the big investment houses and their favoured clients.

The New York Stock Exchange and the National Association of Securities Dealers have issued new rules to address problems with objectivity on Wall Street, in an effort to restore some shareholder confidence. And there's a new climate of corporate rectitude, after we have all watched the highest flyers of the New Economy crash to earth, their aggressive growth and spectacular success revealed as only so much image and tricky account manipulation.

But investors are suffering a lot of pain for having believed the hype. They're unlikely to rush back in just because Wall Street, in remorse, institutes changes it should have brought in long ago. They're showing Wall Street and the global markets that they've heard about enough New Economy waffle.

http://indigo.ie/~karlin weblog: http://radio.weblogs.com/0103966/