>>Other explanations? Statistics? Sample-of-one stories? Adam -- yes, still employed in sofware security industry; and in addition have been doing crypto consulting since 97 (http://www.cypherspace.net/) if you have any interesting applied crypto projects; reference commissions paid.<<

The problems remain the same,IMO.If you invent PGP that is seen as threat,ask Phil.Sharp swords cut both ways.Why should large Co's,big Govts invest in what has been posited as the death of them.Fear is the key.
 MS is like a drowning man grasping at Palladium straws to pull its .Nuts out of the fire.
Simple anti-trust like old teddybear big stick wielded,should help bill Gates sing soprano.Should,but history has a way of repeating as farce,doesn't it?

>>- perhaps security infrastructure and software upgrades are the first things to be canned when cash runs short? <<

Why shouldn't they be? Those Dept's are run by who? Fallen angels?

>>- custom crypto and security related software development is perhaps weighted towards dot-coms that just crashed.<<

The 'sweet spot' for crypto seems to be either high,eg.Idquantique or so low it hasn't happened yet.eg.The millicent ghetto.I have high hopes for this in the Pron arena.btw.The paradox of the self destructive aspects inhibits the mid rangers,Govt and/or Business.Just a hunch.I don't have experience.Ptrei might help.

>>- you might think the physical security push following the world political instability worries following Sep 11th would be accompanied by a corresponding information security push -- jittery companies improving their disaster recovery and to a lesser extent info sec plans. <<

Out of sync,sorry,I'm using WINE.Where were we? You might think that well known KerPunkers would NOT join in an undignified rush to the troughs of recycled pork.
Sadly there are always a few prepared to sell out ASAP. A security push that threatens the very 'base' of the power of those Co's is not going to be told full steam ahead and damn the torpedo's anyway.CEO's aren't stupid.(in general)Fear is the key...its also the two edged sword.The APster meme lurks,sometimes it even hunts.
Draws blood.See the Pacifier letters,operation soft drill.Fear so palpable you can smell it.

>>US Information Security Czar Clarke making grandiose pronouncements about how industry ought to do various things (that the USG spent the last 10 years doing it's best to frustrate industry from doing with it's dumb export laws<<

This Palladium thing is so Clipper its not funny,until you watch a little US TV and realize the hard truth.The moronic inferno has a short attention span and an even shorter memory.

>>- dot-com bubble (though I saw some news reports earlier that though there is lots of churn in programmers in general, that long term unemployment rates were not that elevated in general) <<

Don't let facts,statistics etc slow ya down...and don't let a chemist get mad atcha!

>>PKI seems to have fizzled <<

Lots of hot shit has 'fizzled'...Financially...Is that all there is? If thats all there is my friends lets keep dancing:)
Quantum key transport is sizzling,get yer Qrypto on!

>>crappy state of crypto in software. <<

Dontcha mean the crappy state of software in crypto?

>>Microsoft is really good at this one. The number of times they re-used RC4 keys in different protocols is amazing! <<

Stuff recycling.Wheres judge jackson when you need him! The most famous applied cryptographer is still in business,last I heard from my beantown mate.Don't worry,be WAPpy.