President-elect Barack Obama won a historic election on a promise of “change.” James Howard Kunstler says Americans still have no idea just how big this change will be. He says we are heading into a “long emergency”, out of which a new, very different economy will emerge.

The typhoon of commentary that’s blown around the world a step behind the financial tsunami that’s wrecking everything, two little words have been curiously absent: “fraud” and “swindle.” But aren’t they really at the core of what has happened? Wall Street took the whole world “for a ride” and now a handful of Wall Street’s erstwhile princelings have shifted ceremoniously into U.S. Government service to “fix” the problem with a “toolbox” containing a notional two trillion dollars.

There is no longer any doubt that we are heading for a deep, deflationary recession. But James Howard Kunstler is more worried about the “tidal wave” of monetary inflation that will follow. With the financial landscape washed clean, the economy will need to be rebuilt on productive enterprise.

Clusterfuck Nation author James Howard Kunstler says “a cascading collapse of international finance is underway.” And it makes makes the 1929 crash and the events of the 1930s “look like an orderly small town auction of somebody’s grandmother’s effects.”

“What we developed over the past decade in America was not an ‘information economy’ or a ‘consumer economy’ but a suburban-sprawl-building economy, meaning an economy dedicated to building a living arrangement with no future, ” says James Kunstler, author of Clusterfuck Nation. Americans have one big problem: We can’t face up to the reality that the way live is no longer sustainable thanks to peak oil.

The U.S. has wasted the last decade trying to boost its influence Central Asia, when it should have been getting its own house in order. That’s the view of James Howard Kunstler, writing in The Daily Reckoning. He says the solution to the West’s energy crisis will not be found in the Caspian Sea. And the U.S. still has no real influence in Russia’s backyard. As a result, says James, while Russia oil-rich economy is alive and kicking, America’s banking system is effectively dead…

The American suburb was the greatest misallocation of resources in the history of the world, says Clusterfuck Nation author James Howard Kunstler. Why? Because it has no future, because we’re not going to be able to run it…. We don’t have the resource base to run it.

In a rare press conference yesterday President Bush tried to assure Americans that their banking system was “sound.”

Bush’s comments didn’t do much for investors confidence. Shares in troubled mortgage outfits Fannie Mae and Freddie Mac tumbled, along with most other financial stocks.

The bottom line is the U.S. financial system is now beyond credibility, as James Howard Kunstler puts it. And Dubya and his Republican party will be remembered as the party that broke America.

Home prices in Manhattan have remained largely immune from the housing crisis gripping the US… until now.

According to Reuters, the New York real-estate market is showing a significant reduction in new deals as Wall Street sheds staff to reduce costs.

“For the most part, the subprime crisis is past its inflection point,” says Eric Roseman in the Offshore A-Letter. “What matters now is how and when other credit indicators normalize.”

What will happen when there is less oil? U.S. oil demand will fall, whether anybody likes it or not.