By Lance Helfert

Satirical newspaper The Onion ran this headline in July 2008: "Recession-Plagued Nation Demands New Bubble to Invest In." The joke works because it's true, and because investment bubbles of the last fifty years were so frequent, so frenzied, and so well documented. The history of economics - and progress - has been a history of bubble and bust economic cycles.

In his book Pop!: Why Bubbles are Great for the Economy (Collins Business, 2007), Daniel Gross explains that before they pop, stock market bubbles create tremendous wealth and a useful infrastructure that survives to create new kinds of economic activity after the bust. From the nationwide network of railroad tracks to the World Wide Web, Gross shows how entrepreneurs take advantage of post-bust bargains to create new economic drivers, some of which turn into the next bubble.

Unfortunately, this most recent bubble appears to have left an infrastructure of vapor, since the subprime mortgage market seems to have been a pyramid of shell games. Or, for a more literal interpretation, the primary product and economic driver of this bubble was debt, and now we are left with an infrastructure of arrears. Economists contend that we have a two-year oversupply of houses, but some were hastily and shoddily built, and in any case, a housing inventory does not constitute a new economic infrastructure.

So it seems unlikely that the next great economic driver will spring from the ashes of banking and finance.

Sustainability is gaining traction as both a business strategy and an ethos. If the most important words in economics are, "How can I help you?" The world has already answered: We need affordable, non-polluting, renewable energy.

Last April, Exclusive Outlook noted that high oil prices and environmentally friendly presidential candidates made alternative energy investments more attractive than ever before.  Then, oil prices collapsed and investment in alternatives dropped dramatically. Yet now we have reached a point of economic crisis so dire that governments may step in to jump-start the eco-bubble. However, green energy will require a lot more investment than is currently on the table, even in light of the new stimulus package. With low oil and natural gas prices, private investment in alternative energy is nearly dead. But the start-up costs will be enormous. Wind, for example, requires massive debt financing and higher competing energy prices for the economics to pencil out. Neither exists at present, so governments may need to subsidize development of this large-scale economic driver.

Society faces a difficult choice: Do we try to save our current economic model of consumerist consumption, or to we encourage transformation to a more sustainable, less polluting, and completely unfamiliar future? As former UK Treasury economist Lord Stern told The Guardian, "With billions about to be spent by governments on energy, buildings and transport, it is vital that these public investments do not lock us for many more decades into a costly and unsustainable high-carbon economy."

We have no doubt the US can lead a world economic recovery, and that the economic driver rising from the ashes of our consumer consumption economy will be lean and green. As we wrote in April, "With America's traditional entrepreneurial zeal and our new political will, we can seize the opportunity presented by the Green economy and make the world a better place in the bargain."

Lance Helfert is co-founder and president of West Coast Asset Management, and a co-author of The Entrepreneurial Investor: The Art, Science and Business of Value Investing. This blog entry is an excerpt from West Coast Asset Management's monthly newsletter, Exclusive Outlook.