We all agree that the bubble burst with the Nasdaq crashing from its March 2000 high. We all also agree that the nuclear winter of 2001-03 was a great period in hindsight. Tough, but great. In fact, most of the best all time M&A deals and financing deals of all time were done then.

But after that period we saw a return to the buoyant ways. I think we can all agree that when News Corp. bought MySpace’s parent for $580M, many people said: “oh-oh, here we go again.”

Ironically, much like some of the initial dot com plays were actually worth the hype (Yahoo!, Netscape, Amazon, eBay) and followed by wannabe’s (Webvan, Pets.com, etc.) I would argue that the companies that launched Bubble 2.0 were definitely worthy of the hype (Skype, MySpace, etc.) who were in turn following up with wannabe’s (pick ‘em).

But I’d be lying to you if I said 2008 hasn’t burst the bubble.  It has.  Look all around you.

All of a sudden we care about the fact that social networks are horrible at generating revenue. Too bad VCs wasted a boatload of investors’ money in many of these ill-fated toilets passing off as business plans.

In 2006 and 2007, I argued that we were not in a bubble, rather, we were seeing pockets of bubbles. Moreover, since these valuations were not driven by public shareholders, I argued that the outcome would not be so negative. Furthermore, since the very mention of a bubble implies that we’re unaware of it being a bubble, I argued that we’re probably not in a bubble.

This did not mean that we were not living in and seeing bubble tendencies. The endless barrage of MySpace clones and social network drones suggested that something was off. YouTube’s $1.65B acquisition - 3x MySpace’s exit - followed the next year with a gargantuan $15B paper valuation for Facebook… coinciding with eBay’s writedown of its eBay investment (whose founders went on to inflate the bubble further with a $45M round for the yet-to-be-proven Joost) suggested that we were definitely in a 2000 mindset.

Then 2007 hit: the excess of loose money made the housing market crash. That knocked off the financing sector which was a guilty accomplice of the housing bubble… and with the financial market squeeze out went the easy money of private capital that funded startups, buyouts, and what not.

Incidentally, much like we saw one last whimper of excess in late 2000… 2008 brought a crazy deal too: Slide raising $50M on a $500M pre-money deal, that some tried to pass off as “prescient” was, let’s face it, lunacy.

Undeterred, many continued to argue that Google and Yahoo! were there to buy out startups (and as such, “this time it was different”), no matter how lame the model of the acquired company.

But as we ushered 2008, all of a sudden, Google’s trio at the top have lost $15B of their value as Google tumbled from $747/share to $495/share.

And, what to make of Yahoo! - the poster boy for Bubble 1.0 - who is about to become acquired by Microsoft for a fraction of its Bubble-era price.

Because of the above-mentioned reasons, the landing is soft for tech companies and new media businesses (unlike the housing market, basically, where foreclosures and bankruptcies have soared).

But if you look around, we’re starting to see some common sense: yesterday Rupert Murdoch confirmed once and for all that Wall Street Journal will remain paid-for, because, well, he’s not crazy. He also confirmed that MySpace was making money because he had positioned it as a media company and locked in revenues from others.

Lastly, he nixed the idea that he would get into a crazy bidding war for either Yahoo! or AOL because he saw someone else do so.

Obviously, the bigger picture remains as healthy as ever. Online advertising is not a gimmick. Online ads will surpass TV advertising, yes. The world has gone digital and I bet that traditional media companies are far more doomed than most new media companies. But even on the new media front: all is not well. CNET, Yahoo! and IAC are all facing shareholder revolts. Meanwhile, old stalwarts like NYT are in the same boat.  Yahoo! is being taken over in a hostile bid by MSFT.

Despite the fact that the big picture remains great, the short term landscape has changed: something tells me that 2008 is the equivalent of the 2001-03 era where some of the appetite for nutty decisions will be sucked out of the market.

I suspect that the cycle has shrunk, so within months we’ll get out of this because even though the macro reality will affect advertising, net-net, it’s a plus for digital advertising and interactive marketing.

But, the fact remains: all I can say is THANK YOU GOOD GOD.

From 2001-03, I put my head down and played my part to build an actual business, one who returned 27x the invested capital by 2005. In many ways, I welcome this injection of common sense.

Hopefully cooler heads - and common sense - will prevail.