Ad Deals Lacking Logic

Even more notable is the reaction of the rest of the market. Rather than being dismissed as a couple of impulsive purchases, these deals are taken as a rock-solid rationale for even more impulsive buying.

These acquisitions are being defended in terms that I haven't heard spoken with a straight face since the dot-com bubble: The high valuations are justified because they'll be a value in four or five years; the "synergies" of the combined companies are worth more than the targeted company alone, etc.

Both of these are classic speculative rationalizations. Take the "synergy" argument: aQuantive could take root and flower beautifully inside Microsoft -- as DoubleClick could in Google. But many a merger has been poisoned by the devil-in-the-details of integration. Both could just as easily suffocate in a bureaucratic or disorganized culture of its parent.

We've returned to a market where big deals are happening less because they make financial sense than because there is more than enough money to make them. That was a bad sign in the late 1990s -- it's just as clear a warning today, if anyone cares to listen.