For what I can tell, London has starting salaries in the £30-40k range which compared to the $60-100k in the valley seems absurd, specially as cost of living in London is not that much different.

Absolutely - if they work as regular employees. In Munich a senior dev can be offered around 100k. If he's single and without kids, the government will immediately take more than half of that. Then the apartment will set him back around 1000 euro a month. This leaves him with around 3000€/month.

I can make that in less than a week as a contractor doing the same thing in literally the same place.