People that still have a job in New York aren't going to quit them to join startups in large numbers. It costs a lot of money to live in New York. Most developers on Wall St. could afford to move there only after they got the job offer. To join a startup, they'd have to completely downgrade their standard of living, which is a hard thing to do - take it from someone that left banking to go back to grad school for a CS degree.
Look on the bright side. This is actually good news for startups overall as it usually means less competition and survival of the leanest.
If you are bootstrapping, you should be particularly happy because you'll be seeing less competitors who are better-connected than you and have more funding. This very much levels the playing field between the davids and the goliaths.
If you're in NYC joining a startup is a bad move, unless you've just been laid off from Lehmans or something similar.
Any startup that gets series A funding right now is going to have problems if they don't make it last or make a profit in at least 2-3 years, maybe more, bailout or none.
The lack of liquidity in the markets might get a temporary reprieve from the bailout, but they'll dry up again unless the root of the problems are addressed.
I'm not saying startups can't succeed in the US right now, it's just that it's a lot harder and will get harder still.
The whole argument is predicated on the assumption that capital will continue to flow to "start-ups." This is a questionable assumption. The stream of financing for start-ups will probably be shrinking.
The opportunity lies in having a lot of savings or having special access to capital through relatives to finance yourself. The shortage of capital and credit means a much less competitive landscape. The financing hurdle will knock many of your competitors out of the field. You'll be up shit creek if you're broke, though.
