If we are in a VC bubble, how would the bust play out?

If the VC bubble bursts, there will be substantially less money available for investment. Theoretically, only better companies should get funded, much like how only more credit-worthy companies got funded after the credit bubble burst. Massive losses in VC funds will crush economic growth. In the US there is currently an equity bubble, meaning the stock market is too high and a credit bubble meaning debt is cheap and plentiful. As in 2008, a serious collapse of one is likely to fuel a collapse of the other. Unlike 2008, interest rates cannot be pushed down to prime the pump. Any recovery is likely to be slower next time.

Current S&P 500 PE ratio is about 17, 16 is the long term norm. Given low interest rates and low unemployment, don't see any problem?

Not aware of any metric that would indicate that there is a VC bubble?

2009 was created because the Feds let the banks use taxpayer money for speculative investments. Do not see anything like that happening with VC?

Why would it "bubble"? - they rule of the game have changed from 2000 - VCs now invest into companies that have high potential to generate sustainable recurrent revenues and monitor revenues of the startups to see early signs of decay and take action.