Net private financial flows are not large enough to finance a $800 billion-plus U.S. current account deficit. And with $600 billion or so in global reserve accumulation this year -- about the same as last year, once adjustments are made for valuation -- the private sector doesn't have to. Remember, private investors put about $150 billion more into emerging economies last year than they took out. Emerging economies are financing the U.S. because their central banks want to finance the U.S.; private investors are quite willing to finance the emerging world.

A lot therefore hinges on the willingness of a few actors, and in particular China, to keep on financing the U.S. The amount China has had to spend to keep the yuan from rising has grown every year for the past four years; it will reach 15% of China's GDP this year. If China continues to intervene at that pace, its reserves would reach $2 trillion, or 75% of its GDP, by the end of 2008.

China has to keep on intervening not to support an expanding export sector, but just to hold on to its existing export sector. The U.S. needs continued reserve inflows from China not to allow housing prices to keep on rising, but to keep them from falling. The winners from the current U.S.-China trade don't realize that U.S.-China trade is responsible for their success. Home owners in Orange Country and real estate brokers in Florida are not lobbying for China to hold on to the yuan peg. The U.S. Treasury -- the biggest winner of all in some sense -- is lobbying China to change the peg.

As temperatures drop, people who heat their homes with natural gas -- about 57% of the 110 million U.S. households, according to the Census Bureau -- are in for an unpleasant jolt. Natural-gas prices have risen above $13 per million British thermal units from around $7 a year ago. Most of that extra cost is getting reflected directly in gas bills. Owners of gas-heated homes should expect to spend an average of $1,096 this winter, up 48% from last winter's already-high prices, according to the federal Energy Information Administration.

For many families, high bills could result in greater credit-card debt, delinquent payments, utility shutoffs and diminished Christmas spending. When to disconnect customers who don't pay their bills is likely to be a touchy issue.

Unlike oil, it's hard to ship natural gas across the ocean, so more than 97% of U.S. supply comes from North America. During the past 12 months, natural-gas prices for consumers have risen 28.1%, according to the Bureau of Labor Statistics.

In December 1999, the National Petroleum Council, an industry group that advises the energy secretary, said there were "sufficient resources...to meet growing demand well into the 21st century." The council projected average prices through 2010 wouldn't rise much beyond $3 per million BTUs. It was wrong. The last time natural gas traded below $3 was August 2002. On Friday, November natural-gas futures were priced at $13.22.

Wells these days are finding less gas and running dry faster. In 1990, energy companies drilling in the lower 48 U.S. states and the Gulf of Mexico could expect a new well to produce 12% less in its second year. By 2004, wells were expected to lose 37% of production in their second year, according to IHS Energy.

But with energy costs soaring and a hike in interest rates likely in the months ahead, all of a sudden the Exurban American Dream is looking a whole lot tougher for many. Just ask Frank E. Heater, a carpenter who lives in Pike County, Pa., a fast-growing exurb of New York City. To afford his 3,500-square-foot ranch home, planted on five wooded acres, Heater pulls out of his driveway at 4:15 each morning to drive his Ford Expedition 86 miles to New York. In the best of times, his routine was grueling: "Come home, eat, shower, sleep, and you're back on the road again." But his gasoline bill now hovers around $180 a week, about double what he paid two years ago and an ever-growing big bite out of Heater's take-home pay. Now he wishes he could take the bus, tools and all. "The gasoline is killing me," he says.

The economic consequences of a slowdown in exurban exuberance is difficult to measure. Clearly the exurbs' rapid growth has been one of the main engines of U.S. economic expansion in recent years. Consider all the homebuilding plus the malls, box stores, restaurant chains, fire departments, and schools that have popped up on cheap farmland beyond the suburbs. The new arrivals provided huge growth for retailers and other service companies, hundreds of thousands of new jobs for teachers, firemen, and the like, and entrepreneurial opportunities galore. Indeed, it is unlikely that the U.S. economy could have outperformed every other major industrial country in recent years without the explosion of exurbs and their ripple effects on business.

So far this year the mainland has consumed about a third of world output (of 730m tonnes), and its demand is rising at an annual rate of 20% or so. But China's own production is expanding even faster, by around 30% a year. As a result, China, which last year imported about 15m tonnes, is likely to export as much as it imports this year and may have trade surpluses of 9m tonnes in 2006 and 13m in 2007, reckons Trina Chen, an analyst at CSFB.

The capacity of China's 260-odd steelmakers could reach 390m tonnes by the end of 2005, up by 23% year on year, and maybe 500m tonnes by 2007. At a steel conference in Seoul this week, Nicholas Lardy, of the Institute for International Economics in Washington, DC, pointed to “massive, massive excess capacity” in China at a time when steelmakers elsewhere are curbing production growth.

"At Toyota, luxury brand Lexus has begun distributing through dealerships a pamphlet on the RX 400h, Lexus's luxury hybrid SUV, listing reasons why the vehicle may not get the 31 mpg the EPA estimated for the vehicle in city driving. The EPA tests, the brochure points out, assume drivers accelerate slowly, leave the air conditioning off, and average a speed of 20 miles per hour in the city. The pamphlet tells drivers that quick acceleration, heavy braking and driving at speeds above 60 miles per hour can make the mileage lower than the EPA estimates.

When Amy Quirk bought her Toyota Prius, the pricing sticker said it got 60 mpg. So when the San Francisco-based environmental lawyer saw she was consistently getting only 30 mpg, she complained to her dealer's service department. First she was told the problem was the cold weather. Then she was told that the Prius didn't get the mileage that was advertised on the vehicle sticker price. Ms. Quirk now gets about 40 mpg on her Prius, which she bought a year ago, by coasting down hills when she drives."