The anti-aircraft guns started firing just after 3am.

Something had been spotted over Santa Monica, and according to one witness, the air over

Los Angeles erupted like a volcano.

It was February 1942, and Pearl Harbor had been bombed less than three months before.

Now it seemed World War II had come to the city of Angels.

Air raids are ensounded, and a full blackout descended.

Over 1,400 anti-aircraft shells were fired, five people died from heart attacks or crashes

in the dark.

But the Japanese bombs never fell.

It was a false alarm, the anti-aircraft guns had been firing at an American weather balloon.

The Battle of Los Angeles, as it became known, never held any real threat.

Now, though, with living costs rising and the population decreasing, there's a different

sort of phantom floating over America's dream factory.

I'm John Prado, and this is Chex and Balance from the Economist.

Each week, we take one big theme, shaping American politics, and explore it in depth.

Today, Los Angeles is shrinking.

Is that a problem?

For generations, Los Angeles' perfect weather and booming economy has drawn in California

dreamies.

The county's population is larger than that of 40 states.

But now America's second city is getting smaller, losing population, and companies.

As the Hollywood strikers revealed, the high costs of housing, living, and running

...