Green Taxi

Harper’s Magazine’s Eric Janszen put together what is one of my favorite articles of the year so far with “The Next Bubble“.  Unfortunately, it is a subscription magazine, so I do not think the entire article is free to read.  However, the read is worth every penny.

Explaining very clearly how market bubbles form, using examples beginning with WWI, he works his way through their growth, reasoning, peak, and decline to finally pinpoint why “the bubble cycle has replaced the business cycle.”  The detail of the logic for the Internet bubble and the housing bubble is all to familiar, and makes you want to kick yourself for not doing something about it ahead of time. 

He lists these criteria for a bubble to form:

• The bubble often starts with a new invention or discovery. 
• The industry must support hundreds or thousands of separate firms financed by not billions, but trillions of dollars in new securities that Wall Street will create and sell.
• The sector must already be formed and growing even as the previous bubble deflates.
• For investors, legislation guaranteeing favorable tax treatment, along with other protections and advantages for investors, must already be in place or under review.
• Finally, the industry must be popular.

 He goes on to explain that,

“There are a number of plausible candidates for the next bubble, but only a few meet all the criteria.  Health care must expand to meed the needs of the aging baby boomers, but there is as yet no enabling government legislation to make way for a health -care bubble; the same holds true of the pharmaceutical industry, which could hyperinflate only if the Food and Drug Administration was gutted of power.  A second technology boom – under the rubric “Web 2.0″ – is based on improvements to existing technology rather than a new discovery.  The capital-intensive biotechnology industry will not inflate, as it requires too much specialized intelligence.

There is only one industry that fits the bill: alternative energy, the development of more energy-efficient products, along with viable alternatives to oil, including wind, solar, and geothermal power, along with the use of nuclear energy to produce sustainable oil substitutes, such as liquefied hydrogen from water.”

The article got me extremely excited about the GreenTaxi blog and made me realize that I need to spend more time combining the eco-green side of the blog with the money-green side.  The growth of the companies in this sector still has a long way to go and I need to figure out how to be more involved in these businesses and technologies.  I have recently thought that it was already becoming a bit of a bubble and that the green technology companies might be getting ahead of themselves.  But as explained in this article, the amount of infrastructure and ideas that still need to go into this industry will take a long time to develop, with the bubble peaking in 2014 by Mr. Janszen’s predictions.

*images courtesy of Harper’s

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