It's time to look forward to something new and exciting: Nanotechnology and bioengineering are among the technologies with the greatest promise to create major industries, make new millionaires, and drive the stock market forward--just as personal computers and the Internet did. I say did because I write on one of the blacker days in the history of the stock market, the Monday after WorldCom declared bankruptcy--the largest bankruptcy in American history. Not that today is necessarily the nadir of the market, nor that the WorldCom news will be the last of the great accounting collapses. It is a day, however, when a great many Americans finally shook their heads, looked at the market, saw politicians including the President doing nothing significant, didn't like what they saw in the economy, and decided not to spend any more money than absolutely necessary. That is where we crossed the line between the dubious economic indicator of the stock market and a sag in the real economy.

Speculation cycles--boom and bust--are nothing new, of course, particularly not for advances in technology. We've been there with railroads, gold mining, tulip bulbs, and a host of other things. Personally, it's more than disconcerting to live through one of these cycles while working on the inside of the bubble. It's worse to realize that the very nature of the two principal technologies responsible for the bubble's growth drew more people into the bubble than ever before.

Personal computers and the Internet were high-tech, yet they were accessible. Millions of people who'd never dealt with anything more technically complicated than a telephone eventually worked with, acquired, or even mastered the skills to operate a personal computer and surf the Internet. The fact that this mass education and adoption occurred in less than two decades is incredible. It's a testament to the power of the technologies and their importance. It also fueled people's enthusiasm for an economy spearheaded by these technologies and prepared them to invest in dot-com corporations and telecommunications.

A couple of years ago I had a long conversation with an investment manager of some repute. His theory at the time was that the rising stock market was not only real but also unprecedented because it was drawing huge numbers of small investors. Whether directly or through mutual funds, millions and millions of average Americans with some available capital were turning to the market, most for the first time. This was supplementing the institutional investors who traditionally drove the market, and causing the enormous creation of wealth. Today, this gentleman should avoid aggregations of the elderly and retirees if he values his life.

I think he was right though, in that the technology-engendered bubble of the '90s did feel different to people both inside and outside financial and stock markets. The technologies themselves were fundamentally sound and encompassing--one could say even democratic. The personal computer, Internet, and telecommunications industries were exciting and so were the new investors, young and old, who were drawn to them. I still remember my aunt, who's now 90, pestering me about Apple stock and whether Steve Jobs was right for the company.

All these new investors validated not only the speculation but also the market. Older and wiser heads shook, but few uttered serious words of warning. The stewards of the new investors, the CEOs, CFOs, and directors of corporations big and small, new and old, sniffed the easy capital and found it good. They set about using it to their advantage.

Perhaps some of you remember the Information Superhighway, a catch-all buzzword used in the mid-'90s for a computer network that would deliver information and services throughout the country and open a whole new world of communication and commerce. At the time we didn't know (for sure) whether the Information Superhighway was going to be some form of the Internet, which already existed, or something more or less new--constructed by the eager telecommunications and computer industries. What was clear was that a lot of new infrastructure was needed, and that would cost a lot of money.

About this same time the United States was busy deregulating its telephone system through the continued breakup of the AT& T monopoly and through legislation that, in theory, supported greater diversification of communications services. This helped set in motion an enormous amount of restructuring in the communications industry--constant mergers, buyouts, spin-offs, and conglomerations. Significantly, the main engine of this restructuring wasn't always for pieces of the existing pie, but jockeying for position in the new world of computer and telecommunications convergence (the digital pie-in-the-sky).

Putting all the elements together, the situation in the telecommunications industry looked like this: Huge new corporations were being formed in a whirlwind of consolidation. Regulations were being relaxed left and right. Huge amounts of money were being made available through traditional and venture capital sources. There was an implicit mandate to build the largest-ever public computer network on the speculative assumption that an enormous amount of new rate and fee money could be collected.

To call this a swashbuckling environment would be an understatement. Its defenders said (and some continue to say) that the lack of restraint was necessary to achieve the growth and spread of the Internet that society demanded. Of course, it doesn't take a lot of experience to know that if money is easy, somebody will play fast and loose with it. When large amounts of money are involved, it's easier for pieces of it to go missing.

Just as the credit-card companies know that they're going to be ripped off to the tune of some percentage every year, I think people around the communications industry (including many in government) simply expected a certain amount of speculation to occur as a cost of doing business in this freewheeling way. They also expected that like the credit-card industry, a certain amount of security and various amounts of regulation would keep the percentage of loss under control.

Consequently, foresight said that a certain amount of fraud and chicanery would exist in the building of the Information Superhighway--the Internet. Now, in hindsight, we are beginning to ask whether there was actually systematic, institutional fraud. We are also asking if the fraud wasn't compounded by an unusual, though also systematic, breakdown of the watchdog functions (accounting audits and boards of directors). We ask these questions because, instead of a "certain amount" of losses, we need to know how it is possible to lose billions of dollars and some of the largest corporations in the country through fraud and accounting cover-up.

How we interpret what went wrong in the soaring '90s might help us avoid similar problems in the coming "terrific teens" when technologies like nanotechnology and bioengineering get cranking. Do we interpret the losses as aberrations and write them off? This is appealing to people like John Sidgmore, new CEO of WorldCom, who would like to forget history and get on with restructuring the company. Or do we look for a larger structural interpretation--something wrong with our system (without jumping to the rhetorical conclusion that this is all the fault of capitalism) and find more fundamental solutions? It would seem that the cries and outrage of millions of investors would call for the latter, but there is a lot of resistance.

It wouldn't be surprising if it took between now and the beginning of the next boom to sort out what happened and decide what to do about it. The thing is, it may not be that long to the next boom. Nanotechnology is already in the news. Just as computers and communications played a major role in accelerating problems at Enron and WorldCom, the next boom will develop more quickly than ever. We may be entering a cycle of technical development and economic exploitation that happens faster than our ability to manage what happens, including keeping it legal. With all the implications of genetic manipulation and bioengineering, looking forward with enthusiasm is more difficult.