Things you need to know...

in order to understand where we are now, and where we may be heading:

"The world burns 85 million barrels of oil a day, and the US alone consumes a quarter of that amount - of which more than half goes to road transport: the US has the least fuel-efficient cars on the roads, the lowest energy taxes, and the longest daily commutes of any industrialised nation.

It is an arrangement that James Howard Kunstler, the author of The Long Emergency: Surviving the End of Oil, Climate Change and Other Converging Catastrophes of the Twenty-First Century, describes as 'the greatest misallocation of resources in the history of the world. America took all of its postwar wealth and invested it in a living arrangement that has no future.' A future imperilled yet further by fuel prices exceeding $4 a gallon - enough to occasion rising panic in a society where cheap fuel has always been regarded as an entitlement."

"The subprime crisis was largely the consequence of a series of smoke-and-mirror innovations in finance through the 1980s that enabled mortgage lenders to generate more loans by packaging up their debt and selling it on in the form of bonds known as mortgage-backed securities (MBSs), which would, in turn, be repackaged and sold on the financial market as collateralised debt obligations (CDOs). These financial innovations enabled lenders to evade much of the regulatory framework that had been in place since the 1930s when the Roosevelt administration halted bank runs with government guarantees. Passing on the risk meant that lenders could afford to become less cautious about whom they lent money to. Poor or middle-income borrowers - many from ethnic minorities - who would never have previously qualified for a mortgage or would have been regarded as a bad credit risk, suddenly found lenders falling over themselves to offer them loans. These were mostly in the form of adjustable rate mortgages (ARMs), usually offered at deliberately low 'teaser' rates, often as little as two or three per cent, but rising to as much as 15 per cent after two or three years. What this meant in effect was that the most risky loan products were being sold to the least sophisticated borrowers. By dicing and spicing the debt of high-risk borrowers, clever - or naive - financiers were able to sell rubbish as triple-A securities. And some of the world's supposedly most savvy banks - Morgan Stanley and Merrill Lynch included - were among the buyers."

"In 1997 subprime mortgages accounted for three per cent of the mortgage debt in the US. By 2006 that figure had risen to more than 20 per cent."

and more, here, apocolyptically:

James Howard Kunstler takes a yet more apocalyptic view. He believes that on the current projections of oil supply America will see the beginnings of 'a major collapse' of suburbia within the next 10 years, which no amount of 'wishful thinking' about alternative energy supplies will be able to arrest:

'We are not going to run Wal-Mart, the Interstate Highway system and Walt Disney World on any combination of solar, wind, nuclear, biofuels, ethanol or used french-fry potato oil. The bottom line is that we will use all these things but we will be very disappointed in what they will actually do for us. The problem is too big. The design of our living arrangement is simply inconsistent with the energy realities of the future. But Americans are just not able to process this. If you look hard enough at America, what you discover is a shockingly infantile belief system, with two fundamental ideas that are deleterious to our future. There's a widespread belief in America that it's possible to get something for nothing, and that mentality has been very destructive to our society. The other idea that has become normative is that when you wish upon a star your dream comes true. These two things have become the basis of the new American ideology.

'More than half of the American public live in the suburbs. There is going to be a very strong expectation that they will be supported and that their troubles will be attended to. But what we're seeing with the mortgage crisis is that people who have made their stand in the suburbs are being hung out to dry, because there's nothing that can be done for them without bankrupting the nation.'

Kunstler predicts a future of economic disarray, political turbulence, 'and quite a high potential for social turbulence as a result'.

Riots at petrol stations?

'It could include that. One of the features of American society is how well-armed we are, and how fragile the civic bond is. Especially in the sun belt where you have an ethos of extreme individualism combined with the romance of firearms, and the belief that hyper-individualism ought to be defended by the liberal use of firearms. This is not a good recipe for civic cohesion.'

The huge, car-dependent metroplexes such as Atlanta and Houston are not scaled to the 'energy-diet' of the coming decade, Kunstler went on, and are doomed eventually to fail. 'Phoenix,' he added bluntly, 'will dry up and blow away.'

In San Bernadino:

'Tent City is a sprawling encampment of the homeless that was established by the city of Ontario authorities in July 2007 in an enterprising attempt to provide makeshift housing for people who would otherwise be sleeping in shelters, or on the sidewalks. Seventeen people had initially taken up residency, but as word spread the homeless began arriving from all over the state, and beyond. By March 2008 the camp had acquired a name, and a population of some 450 people.'

'Tent City is located close by the airport and backing on to a railway line; a sprawling, dusty shanty-town of tents and makeshift tarpaulin shelters, it resembled a scene from John Steinbeck's epic tale of the Great Depression, The Grapes of Wrath. Route 66, the road that in the 1930s had carried the dispossessed from the dustbowl of the Midwest to California in search of a better life, was three miles to the north.'

'In the Depression, the shanty-towns that sprang up to house the homeless were called 'Hoovervilles' - an ironic reference to the president of the day, Herbert Hoover. Tent City had already been described as a 'Bushville'. 'But I'd actually call it a Reaganville', Busch said. Franklin D Roosevelt's prescription for the Great Depression, the New Deal, had enshrined a progressive outlook in America, Busch went on, 'that government's better role was not just to business, but to also guarantee peoples' basic human needs, and rights'. But Ronald Reagan 'and his neo-con followers' had ended that, proclaiming that a smaller role of government in social programs would somehow magically 'lift all boats' through increased business prosperity.

'Tent City is proof that Reagan's daydream for America was wrong.'

Americans, Busch said went on, were living in 'a third world economy' with no health benefits, no unemployment benefits. 'America's focus has been on the Dow Index, rather than the human development index. How many prisons have they built in the last 25 years when they should have been building schools? To erase the poverty gap in this country would cost $150 billion - roughly one fifth of the military budget. And the American people have finally woken up from that 25 year daydream - to see bank failures, visible homelessness, home foreclosures, joblessness, lack of health-care, wars, and environmental disasters.'

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The above are all snippets from an article written in The Telegraph, out of the UK. You can read the entire article here:

http://www.telegraph.co.uk/portal/main.jhtml?xml=/portal/2008/07/05/sm_america05.xml

It's fascinating, eye-opening, heady stuff.

Hopefully not portents of things to come.