The bubbles that built America

Today, amid concerns over global warming and the rising price of oil, alternative energy is emerging as the next potential bubble. As in prior episodes, government policy is playing a significant role in encouraging private investors to take a fling on an untested sector. Federal subsidies for ethanol production, and state measures that call for significant growth in alternative energy supplies are providing crucial incentives.

Ironically, many of the same entrepreneurs and venture capitalists involved in the dot-com bubble are now backing alternative energy companies. Bill Gross, the visionary behind Internet incubator Idealab! founded Energy Innovations, which builds commercial solar energy grids. Ray Lane, the former Oracle executive turned venture capitalist, says: "This is bigger than the Internet, I think by an order of magnitude."

Evangelists are claiming that alternative energy start-ups, which will address limitless markets, can change the world, and save the planet - all while making investors rich beyond belief. By spreading environmentally-friendly technology, and by generating investor interest in cleaner sources of energy, this bubble could wind up being the most beneficial of all.