Red versus blue. Ruben versus Clay. Tastes great versus less filling.

And now, the West Coast tech industry versus East Coast hedge funds.

This is business in America in the autumn of 2007. The nation endures a strange, deep cleavage in the economic conversation. Two equally powerful centers of commerce haven’t squared off like this since the steam-powered North faced the agricultural South. And that didn’t end so well.

If you go to a party in Silicon Valley—probably outdoors, probably sponsored by a tech company—there are drinks such as Yahootinis, which taste like Juicy Juice. Almost no one talks about hedge funds or private equity firms. They talk about Google and skyrocketing startups with names that could be those of Teletubbies: Twitter, Orgoo, Jajah, Ning. They speak of venture capital, initial public offerings, innovation, and whether Steve Jobs will go to jail. Most try to disguise their wealth by dressing down in styles straight from Target. Attendees at this sort of party rarely mix with the private equity kingpins who are lobbying Washington to keep taxes low on their secretive partnerships. “I have golfed with some of them,” Sun Microsystems chairman Scott McNealy says dryly. “They play too much golf.”

At a party in New York or Greenwich, Connecticut, the men wear suit jackets and no one talks about any other business except hedge funds and private equity—mostly about the ­unholy gobs of money people make managing, working on, or investing in deals. They gossip about who bid $400,000 at the Robin Hood Foundation dinner to sing with Aerosmith and, to McNealy's point, who’s paying $500,000 for a membership to Liberty National Golf Club. Business conversations turn to under­performing assets, decrepit industries, and Chrysler—which fits both categories. Though hedge fund types couldn’t survive two seconds without computers, few of them care what’s going on in Silicon Valley, especially at any entity named Orgoo.

Both coasts are hot at the same time, which is weird. In the mid-1980s, business-minded people across the country obsessed over Wall Street traders and corporate raiders, who were centered in New York. In the mid-1990s, the internet took flight and everybody looked to California. After the dotcom bubble burst in 2000, hedge funds took center stage, and the attention and money whipped back East. To people in Kansas, it’s probably been like watching tennis.

Hedge fund assets have quadrupled in 10 years, to about $1.6 tril­lion in 2007, according to Hedge Fund Research, an organization that tracks the funds’ performances. Meanwhile, Silicon Valley has rallied since bottoming out in 2003. The tech-heavy Nasdaq composite index has nearly doubled since then, with the amount of venture capital invested in tech hitting $27 billion in 2006. We now have two towers of business, one on each coast—both from different planets.

This bipolar alignment might hold on for a while. In fact, a kind of symbiosis seems to be emerging.

“The hedgies are mostly buying yesterday’s economy, helping yesterday have its last gasp,” says management author Tom Peters. He applauds the hedgies and their private equity brethren, both of whom tend to invest for the short term, for “cleaning up unwieldy company asset portfolios.” So it’s good to have Pirate Capital picking up Pep Boys, or ESL Investments buying companies like Sears and trying to fix them—all part of the circle of life, as they’d say in The Lion King.

What about techies? They invest in tomorrow. They're idealists, builders. While hedgies exploit opportunities, the techies create them, at least until their bubbles burst.

“What motivates Silicon Valley C.E.O.’s is typically not making money but making a difference,” says Zach Nelson, chief exec­utive of the software company NetSuite, which registered for an initial public offer­ing in July. “What motivates hedge fund managers is making money—and not just for themselves but for their clients.” In a Seinfeld-esque moment, he adds, “Personally, I don’t find anything wrong with it.”

Nelson’s statement is telling. Talking to tech types, you get the sense that they are increasingly awed by East Coast private money. There might even be a hint of fear.

“The hedge fund structure is an unstoppable force in the market,” says Roger ­McNamee, co-founder of Elevation Partners, a Silicon Valley investment firm divided between tech and private equity. “Possible analogies might include Sherman’s march to the sea or the spread of kudzu.”

Marc Andreessen, co-founder of Net­scape, has made a point of getting to know the hedgies. During one trip East, he visited hedge fund managers to persuade them to invest in his latest company, Ning. Such pilgrimages are likely to become more common, he says. The tech industry needs hedge fund money. The names of hedge funds are starting to be murmured at those Silicon Valley parties.

The hedgies don’t seem to have quite the same sense of wonder about Silicon Valley. “If anything, the hedge fund infatuation with tech is much smaller today than it was five years ago,” says Jeff Matthews, who runs the hedge fund Ram Partners.

What if these investors wind up in the driver’s seat of the U.S. economy? What if they are America’s new face to the world—not General Motors, Disney, Microsoft, or Google, but Steve Cohen and his SAC Capital Advisors? In other words, instead of cars, entertainment, or information, this nation’s best-known product would be a financial dark art. Gordon Gekko meets Lord Voldemort. Greed is magic.

For citizens of Tehran, Caracas, or, God knows, Paris, such dominance by U.S. hedge funds should prove to be as uplifting as it is for Americans to hear about Exxon’s profit windfall while filling their cars with $3-per-gallon gas. McNamee has concerns too. “The hedge fund phenomenon has further shortened time horizons on Wall Street,” he says, forcing C.E.O.’s to focus on near-term results. “For every Intel that spends too much on its future, there are at least 10 companies that don’t spend enough,” McNamee says. “Over time, this will hurt the U.S. economy.” The more heartbreaking commentary, though, comes from NetSuite’s Nelson: “I told my nephew, who is at Santa Clara University, if he wants to make money, be a hedge fund manager, not a high-tech C.E.O.”