According to the venture capitalists and angels in Silicon Valley, the capital that is the life blood of our digital future, especially Web 2.0, has stopped flowing. Seems the business models of Web 2.0 were being questioned at the same time that Wall Street and the US Government screwed up our financial system big time.

Michael Arrington, the founder of TechCrunch has written an obituary on Web 2.0. And posted Sequoia Capital’s 56 Slide Presentation Of Doom.

An obit was also carried on Om Malik’s blog GigaOm and in the LA Times. This was in an article in the Financial Times –

Many of the companies that emerged in the recent start-up boom will end up “spattered on windshields and radiator grills and be forgotten”, said Michael Moritz, a partner at Sequoia Capital and an early backer of Google and Yahoo.

And a bit of irony appears as layoffs are being reported first on blogs before companies have informed their employees. Some companies unfortunately are now forced to twitter first, layoff second, according to the New York Times.

If you want to keep track of the layoffs see the gloomy ‘Layoff Tracker’ at TechCrunch, and another Scorecard at CNET.

It’s a sad day. Especially when you realize that it didn’t have to happen.

One concern for those who don’t participate in Web 2.0 is the awareness that the future will hold much more permanent, and public, information about each of us. And those who participate in the new social media will be forever searchable. The younger you are, the less likely you are to care, and the more interested you are in fame, popularity, and being connected 24/7.

For businesses it’s another story. This article on BusinessWeek.com starts out –

“When Jonathan Fields spotted William Shatner waiting to board a JetBlue flight at New York’s JFK in May, he did what any other self-respecting blogger would do. He popped open his Apple (AAPL) Mac, connected to the Web using the free Wi-Fi provided by JetBlue, and used Twitter to share the sighting with pals. “JetBlue terminal,” Fields wrote on the blog service that lets users send short messages of 140 characters with status updates to groups of friends. “William Shatner waiting in pinstripe suit and shades to board flight to Burbank. Why’s he flying JetBlue? Free, maybe?”

But he was caught off guard by what happened next. Within 10 seconds he got an e-mail informing him that JetBlue (JBLU) was following him on Twitter.

“It totally startled me,” says the 42-year-old author, who initially worried that JetBlue might be monitoring his use of the Wi-Fi connection. JetBlue employee Morgan Johnston quickly explained that wasn’t the case. JetBlue keeps tabs on what Twitter users say about it, using a scanning tool, to find customers who might need information, say, on flight delays or cancellations, Johnston said.”

Businesses can instantly respond to negative chat about their brands and correct any problem they perceive. The goal is to establish an ongoing positive relationship with their customers.

Those who use Twitter, and other social media, are more likely to view this as a positive, and not a creepy event. And businesses can benefit.