Seems to me the problem in the startup financing world isn't on the supply side - most people think there is too many VC dollars out there. It's on the demand side - virtually no M&A or IPOs.

Seems to me the problem is defining "the demand side" as "M&A and IPOs." What's wrong with making an innovative widget and selling it to users of outdated, less efficient widgets? As an industry analyst I've always looked for engineering-led software companies which get by on revenues without a VC dime. They may not be the most glamourous companies in IT but they are some of the most robust.

True. Thinking about this for only a minute, I am unable to come up with any way to stimulate M&A and IPOs using the Stimulus Package Toolbox.

I agree with @Chris - as I just twittered, the limiting factor in the startup equation usually isn't money (or ideas, for that matter): it's skilled people with time who can execute. I think the agenda should absolutely include trying to make more of those, and that means long-term investment in society (education at all levels, broadband, etc.). But that's going to take a while.

In the short term, I'm mostly interested in anything that can start to unglue people a bit from their day jobs: universal health care and a standard four day work week would both be a great start. At least the first one is on the agenda.

Another thing that really glues people to their day jobs is the insane cost of housing in idea generating/wealth creating urban areas like SV & SF. That's a tougher problem. (and you have to love how the market hasn't really crashed or even come down much here despite the massive problems everywhere else)

I feel like the Obama agenda as it's coming together is going to be very helpful for startups. I just wish it would happen faster. We're eight years behind on getting this century started!

One way to think about this recession is that we are witnessing the end of the era of "things" - both in consumption/production as basis for further economic growth. Once people get used not buying a bigger plasma TV, bigger cars, more of everything and make do with less, the only way to GROW the economy is that we start to consume and pay for more services, knowledge, spiritual/psychological satisfaction. And startups - especially in the valley who can create these new models - need some room for experimentation & failure - which VC or stimulus funding can provide - without it being a Small Business Administration loan with lots of bureacracy.

You are all basically correct in your market analysis. However, you have failed to see that BO is assailing so many obstacles at any given time, that it is almost like slight of hand, and when he gets finished, we are all going to say "what happened?" There are going to be so many "unfriendly corrections" to the system that it will take years to unravel it all, and by that time the damage will be done.