The debate over whether the tech sector is entering another bubble , in which madness reigns and prices are detached from reality, is reaching a fever pitch as we move into 2007.

The Wall Street Journal recently took up the debate, offering a point/counterpoint discussion with two prominent venture capitalists on whether the new surge in Internet startups, commonly called Web 2.0, means that the sector has again slipped the leash of sanity and is reveling in the same kinds of excesses that it swore off only a few years ago.

That same discussion has been brewing among pundits and bloggers for months. A Technorati search on the phrases "Web 2.0" and "bubble" yields 11,000 results. The same search on Google's ( GOOG) main engine brings up 1.8 million pages.

For a couple of years, I have been monitoring signs of a new bubble . Sure enough, evidence is suggesting that a new bubble, while clearly not yet a reality, is increasingly possible.

One of the misconceptions about financial bubbles is that they only happen once in a generation. According to a report from the International Monetary Fund, U.S. stocks fell 26.8% between 1875 and 1877, following a rally of 50.5% in the previous two years. That rally had been driven by speculation in new railroads, an industry that has recently been compared in both its growth and impact to the Internet sector.

Soon after, stocks had risen another 51.3% on the back of -- that's right -- the railroad boom. But by 1881, a mere four years after the end of the previous railroad bust, stocks began another slide and lost 22.2%.

A similar incidence of double bursting bubbles occurred in the first decade of the 20th century. Between 1902 and 1904, the so-called "rich man's panic" caused the stock market to lose 19.4% of its value. After recovering briefly, a global financial crisis in 1906 dragged stocks down another 22.3%.

Proponents of the bubble-is-back theory say some of the inflated assets of the dot-com bubble simply migrated to the real estate market, which thrives on low interest rates that, ironically, were low because of the Nasdaq crash. With real estate prices correcting, that same money has nowhere else to go but back in stocks.

Bubbles are psychological phenomena writ large. They are most likely to happen when people are insisting that there is no bubble, that the rules have changed, that a historical exception is underway -- or that things really are different this time.

No one is preaching those slogans yet, but some of the classic warning signs of poor judgment are starting to creep back: Celebritylike worship of CEOs, garish yet deadly-dull parties, an IPO market heating up after years of frigidity, red-ink startups jockeying for entry into the IPO pipeline, and above all, money desperate for somewhere -- anywhere -- to go.

Just as worrisome, high price-to-earnings ratios are being tolerated because of the fast revenue growth that "promises" return in the form of profit growth a few years on. At the end of last week,'s ( AMZN) P/E was 56 -- more than three times as high as the S&P 500's ratio -- and Akamai's ( AKAM) was an even-loftier 140. ( CRM) was trading at 92 times 2007 earnings and more than 700 times its 2006 figure.

And in November, margin debt jumped $26.2 billion, or 11%, to $270.5 billion, the largest month of dollar increase on record and a mere 3% below the March 2000 high, according to Trim Tabs Financial Services. And while the speculation that inevitably accompanies such borrowing hasn't hit many individual stocks yet, it's possible that this time the speculative money is broadly distributed though ETF trading.

None of this offers overwhelming evidence that we are in the midst of another stock bubble -- yet. But it does serve as a reminder that the stock market is like an alcoholic: It can stay on the wagon only as long as it exercises strict discipline. When that discipline goes out the window, the bingeing will begin again.

And in some ways, the bubble debate is like group therapy: The more back-and-forth there is on the return of a bubble, the more mindful the market will be about repeating its past excesses. So let the bubble-spotters be loud and vigilant, even if they cry wolf now and then. They may be all that stands between us and another year of sober trading.