Mary Meeker, partner at Kleiner Perkins Caufield & Byers, speaks at the Web 2.0 Summit in San Francisco, California, U.S., on Tuesday, Oct. 18, 2011. (Tony Avelar/BLOOMBERG)

Mary Meeker’s Internet trends presentation at the Web 2.0 conference in San Francisco on Oct. 18 was generally lauded for highlighting two key trends in the technology space: the rapid growth of mobile platforms and the increasingly global nature of the Internet. However, largely ignored were Meeker’s distressing predictions about the future course of the U.S. economy.

At the end of her presentation (starting with slide 53), Meeker outlines a financial scenario in which the U.S. debt crisis, stock market volatility and economic slowdown could conceivably act as a significant brake on American innovation.

At a time when global rivals such as China are threatening to catch up and surpass the U.S., the increasingly unstable financial underpinnings of the American economy have become a ticking time bomb that could eventually derail our best and brightest innovators in Silicon Valley. It’s hard to ignore the warning signs, such as the biggest peacetime budget gap in U.S. history (slide 60) and the alarmingly high level of U.S. government debt compared to other countries (slide 62). Meeker — the “Queen of the Internet” during the first Web boom — lays out a scenario that could eventually lead to financial stagnation.

The scenario goes like this: Higher stock market volatility leads to a drop in consumer confidence, which leads to greater uncertainty, which leads to U.S. corporations cutting their capital budgets, which, in turn, leads to a decline in U.S. GDP growth for the foreseeable future.

Lather, rinse, and repeat.

In short, the markets don’t like it when sovereign governments can’t get their acts together. U.S. gross government debt is now 94 percent of GDP, 10th-highest in the world, a level high enough that it wedges the U.S. nicely between the troubled nations of Ireland and Portugal, according to Meeker’s presentation. Greece, by comparison, ranks third worldwide with gross government debt that is 143 percent of GDP (slide 62).

This is not the first time that Meeker has warned about the economic perils ahead. Back in February, Meeker and Kleiner Perkins put together a controversial, tome-like report called “USA, Inc.” that compared the workings of the U.S. government to a financially troubled corporation. If the USA were a corporation, shareholders would be clamoring for a radical restructuring. “The USA is max-ing out its credit card,” she argues. It gets worse — she compares the USA to GM before it filed for bankruptcy. In order to turn things around, the U.S. would need to take radical steps, such as cutting Medicare benefits by 53 percent or cutting Social Security benefits by 12 percent. Signing off on the report were the likes of Paul Volcker and Michael Bloomberg.

The silver lining, if there is one, is that the U.S. technology sector may be strong enough make it through relatively unscathed. In fact, in her presentation, Meeker points to only three sectors worth investing in : tech, education and infrastructure. She lauds Silicon Valley for its forward thinking about smart phone platforms and mobile operating systems. She compliments tech heavyweights like Amazon, Google, Apple, and Facebook for their “unprecedented” pace of innovation. In fact, nowhere within the 66 slides of her presentation does Meeker actually mention the word “tech bubble.” This isn’t surprising, given that her venture capital firm, Kleiner Perkins, would lose out if a tech bubble slammed the IPO window shut for Internet start-ups.

Yet, the writing is on the wall. Or, if you prefer a more mobile-oriented analogy, the finger is starting to swipe the tablet. Some of the findings within Meeker's presentation were absolutely head-scratching, such as the fact that Iran actually leads the U.S. in terms of new Internet users added between 2007-2010 (slide 7) or that our neighbors to the south — Venezuela, Colombia, Mexico, Argentina and Peru — are more active on social networking sites than Internet users in the U.S. (slide 8). Are these seeming statistical aberrations just part of our collective denial?

No start-up — no matter how innovative — can sell products and services when stock markets are volatile, consumer confidence evaporates and corporations are afraid to increase their capital spending. Meeker reminds us that the bullish case for tech only makes sense when there is a bullish case for the economy.

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