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.