The tech sector had a crash (remember that one?!) and it was not based on decades of old technology. I fail to see how the banking sector is based on decades of old technology. If you ask my friends at GS or Citadel (who went to CMU for CS), I think they'd give you an earful for that line. It could be argued that the bubble was amplified by technology that made it easier to bundle and trade CDS's. Once we snip that bit, it becomes:
They lack transparency; they are overly complicated industries.
It should not be difficult to see how this encourages bubbles. In such industries, it'd be difficult to guess the real value being created, and we know from psychological research that people are apt to create speculative bubbles even without being given this nugget (see http://en.wikipedia.org/wiki/Herd_behavior).
"The tech sector had a crash (remember that one?!) and it was not based on decades of old technology."
Was it?
I've heard a rather compelling argument that the cause of the 2001 recession wasn't Sept 11 or the dot-com bubble, but the huge drop off in corporate IT spending after Y2K. The enterprise software market enjoyed a huge run-up from 1996-2000 as enormous companies replaced their aging COBOL mainframes with new Y2K-compliant enterprise Java systems. Most of the Indian IT consultancy market owes its existence to this, and many other domestic firms (notably Sun Microsystems) also benefited heavily from it. The consumer dot-com bubble was a relative sideshow compared to this. And enterprise software is about as price-opaque as you can get.
When Y2K rolled around and nothing much happened, all that spending evaporated. Suddenly, all these companies that had hired a bunch of mediocre Java-monkeys to do quick Y2K fixes found themselves without customers.
It does seem a bit different though; in the examples he cites, the industries themselves collapsed, perhaps because of outdated technology and lack of transparency. In the tech industry, the tech industry's replacement of its own outdated technology created a huge bubble, and then collapsed once that bubble was no longer necessary.
Tennessee was once considered to be "the West". Gives you an idea of how settled the country was at the time, and the difficulty of crossing the Appalachians in those times.
They lack transparency; they are overly complicated industries.
It should not be difficult to see how this encourages bubbles. In such industries, it'd be difficult to guess the real value being created, and we know from psychological research that people are apt to create speculative bubbles even without being given this nugget (see http://en.wikipedia.org/wiki/Herd_behavior).