Last night’s The Daily Show featured an interview with eternal optimist Thomas Friedman. In it, Friedman argues that the way forward is through investment and innovation in the energy industry. He even promotes an “energy bubble,” saying that the infrastructure such a bubble would lay would make the pain of the bubble worth it. While it’s clear that the energy industry is the likely Next Big Thing, whenever I hear folks talk it up, I think about this article from Harper’s last February, “The Next Bubble: Priming The Markets For Tomorrow’s Big Crash,” the thesis of which is that the American economy has become reliant on bubbles, the most recent being technology in the late 90s and housing in the middle of this decade, with energy being the next wave in the next decade.
George Soros, in his recent piece, “The Crisis & What to Do About It”, talks of a “super-bubble” our economy has been in since the move toward deregulation in the early 80s (thanks to both Reagan and Thatcher), which, juxtaposed with the Harper’s piece, suggests why we seem to be in this sequential-bubble-economy. The question seems to be, while energy innovation and investment is valuable, can we do it in such a way to mitigate the inevitable bust?