The city shimmers, traffic moves a little more slowly, but it was never fast. The clients of the 30 bus out of Dalston Junction are no stranger than they ever were: an excitable young man smoking dope, two women talking fast and loud in Spanish on a shared mobile-phone, a very local youth proclaiming a sudden interest in voodoo. "You find a piece of gold, bruv, an' you kill your mum and dad. It's interesting, bruv. It's powerful. Africa is powerful, bruv." Noise levels drop as a sallow, bearded man in an unexpectedly good suit, white shirt, no tie, wrestles with a cumbersome black rucksack. He struggles to extract something and we all struggle with him: designer dark glasses. Now he looks more than ever like a movie assassin. He returns to the bag. Three upper-deck passengers make for the stairs. "Allo, mum. It's me." One week on and Hackney transport is the performance art it always was, but more so. The audience is sharper, more alert, quicker to respond.
We have these pictures lodged in our heads. Peeled faces, wet tissue, syrupy blisters: tactful but inadequate masks of surgical gauze. Overripe colour exposed to the forensic intimacy of digital interrogation. A pack of identity card portraits revamped by Francis Bacon.
The ruins we remember from another era - shells of churches, despoiled libraries - survive in romantic monochrome: the comforting lie. Stoic architecture, chippy humans, the Queen Mother like a Pearly Queen visiting the East End. Tumbled masonry, wrecked teeth. War photographers pick their way through the rubble of the new morning making art, framing statuary against a lowering sky.
Now the horror comes in the muted register of the universal mobile-phone greeting. I'M FINE RU OK is the text we receive before we know anything is wrong. Fast-twitch technology anticipates disaster. The latest gizmos mediate between the ugly truth of the streets - dirt, danger, noise - and the computer-generated cyberspace of the world as it ought to be - blue water, green trees, Barratt homes. Contemporary ruins are never quite finished: shamed vanity project hospitals, state-of-the-art pools that don't actually open. Landfill mountains and dereliction are hidden from the innocent gaze of rail passengers and Olympic commissioners heading eastwards from Fenchurch Street towards Southend. A bright new wooden fence has been erected, miles of it, to cancel blight: the Great Wall of Rainham. Then, suddenly, from nowhere, news reports blow such feeble strategies apart, presenting us, in unforgiving full colour close-up, with real damage, actual bodily harm.
We shouldn't, unless we work in hospitals, in casualty departments, witness such things: cooked flesh pitted with dirt, second-degree burns, hands in plastic bags. This, as we eat or slump in our homes after the daily battle with an overstretched transport system, is news from elsewhere. But that elsewhere is strangely familiar. We've grown used to out-of-synch video-phone quiver from deserts, shanty towns, wrecked tourist hotels. Such sights do not belong in Aldgate East, Tavistock Square. They hurt.
The victims speak with our own voices. They make sense of trauma, placing it in a frame work of everyday concerns. Interviewed, the walking wounded fix on certain details, the insensitivity of being led back from the smoke-filled, wrecked carriage past the bodies of the dead. This, they acknowledge, is the Theatre of the City. It is democratic, anyone can join in. The writer Derek Raymond used to call it the "general contract" - mortality. Shit happens. You don't have to fill in an application.
We have been told, but we didn't believe it coming from that source, the politicians, that there were people out there who didn't know us but who wanted to kill us. Blow us apart. Destroy the idea of the city as a community, a viable organic entity. They wanted, above all else, to activate one strand of urban life: paranoia. The dark thing that is always beside us, nudged by every 20-minute hold in an Underground tunnel, close heat, no voice, or the voice of some distant robot.
Fear is intensified by devices created for our protection, the "ring of steel" around the old financial centre, the City of London. If there are red-and-white barriers, checkpoints, glass kiosks, there must be danger. So we suppress conditioned reflexes, we learn to sleepwalk. The money men, the hedge-fund operatives, are not so easily cowed. The events of the morning of July 7 shifted the climate of investment, risk-takers made their plays. The markets, as Lord Archer repeated time after time in the days when he did the interviews, bounce back. Random acts of terror are finite, the money wheel never stops turning.
We have one further step to take, the recognition that anxiety is now a permanent and irreversible condition. It will happen again and again. We live in a war state, in a time of war. Globalisation makes that possible. Nations are irrelevant. The Americans franchise kidnapping, interrogation. Torture procedures are "outsourced" to Egypt, Saudi Arabia - even Syria. Just as this London event might well have been outsourced by a fundamentalist brand to local mercenaries, people who look just like us: confused, preoccupied, sweating. Fiddling with luggage, fumbling for tickets.
I used to work on Liverpool Street station at night, humping mailbags on and off trains, at the time of the IRA threat in the 70s. We were told, often, about parcel bombs. Stay alert. Alert to what? The alien with the rucksack? The tourist? Your fellow labourers, that bunch of many-languaged freelances with the dubious paperwork? Nothing happened, beyond the boredom that is always twinned with terror. The future, JG Ballard reckons, is a cocktail of those elements: the ennui of edge-land architecture, airport roads the same everywhere, and highly-visible tanks patrolling the perimeter fence. If an English cricket team ventures to Pakistan it will be accorded, so the relevant diplomat assures us, the highest level of security: "head of state."That is to say, public roads in Karachi will be entirely cleared between five-star hotel and stadium. The city of the spectacle is deserted, crowds under curfew, so that the sport of the people can be performed, at a time suitable to the television networks, in a massively guarded redoubt.
The novelty of the recent atrocities lay in the astonishing immediacy of the forms of remembrance. No editing, no staged highlights. No retakes. We seem to be remembering events that have not yet occurred. A fabulous stream of low-definition, drift imagery: pedestrians swimming through smoke and fuzzy light. Recorded by someone, anyone, who is a part of the event, not a privileged outsider. Tunnels and trains captured on a mobile-phone. We see through our pores. We exchange deep memory for a disposable sense of present time. Everything is out there, nothing is special. The past is redundant.
Bomb outrages, or the recasting of such interventions, have been with us for a very long time. Joseph Conrad in The Secret Agent (1907) drew on a real-life episode, an anarchist who detonated himself while plotting an attack on the Greenwich Observatory. A simple-minded boy is blown apart by his own explosive device. The planner vanishes into the obscure cinema of the city. "Nobody looked at him. He passed on unsuspected and deadly, like a pest in the street full of men." Alfred Hitchcock, translating Conrad's novel (keeping the virus alive), called his 1936 film Sabotage. He confessed that it was one of the worst mistakes of his career, the subverting of the rules of suspense, when he allowed the bomb to go off, accidentally, in a London bus.
Now we have a new cinema, requiring minimal light, no technical expertise (switch on and hold above your head like a torch). The people's cinema of the mobile-phone: careless and magical. The results are more precious than the over-considered banalities of picture-postcard television. Those screaming reds, blue bus seats in surreal positions, that potent sign on the cracked destination plate, HACKNEY WICK - we want to avert our eyes.
Mobile-phone reports are unauthored, without ego: the city as itself. At the moment of crisis, phones shift from being mere tools of convenience. They begin to create a poetry of unease. The authorities want you to send in all your digital improvisations, your snapshots, your small vanities: "I'm on the 30, I'm coming home." There are specialists in futurology who will examine, like a dubious Old Master, every centimetre of your miniature epic. The explosive devices may well have been triggered by mobile-phone alarms, before the network failed, overwhelmed by its sudden popularity. When we called up that terrible silence.
It might once have been thought that London was a city entirely occupied by dogs and cats. Their humble portraits are stapled to suburban trees, pasted on electrical junction boxes. Rewards are offered for vanished pets. Now human faces, lifted from home movies, nights out, degree ceremonies, replace the animals: proud smiles and troubled frowns. These are the ones who disappeared underground, the children, parents, lovers. They look, all too quickly, faces left out in the weather, like those oval photographs set on gravestones.
Friends email from other countries, the bombs have made news in America. It is the sort of news they understand. A painter who left London for a quieter life on the south coast tells me that she felt, at once, how much she wanted to be back, at home. She invoked the "spirit of the Blitz", the belief that London was a sentient being. A being she needed to touch, embrace. She reasserted, in her marine exile, a nagging sense of belonging to the place where she had grown up. Trauma sharpened the appetite.
The city writes its own script. Things are always much stranger than they seem. A couple of months ago, I walked around all the London mainline stations in a day, to find what was left of the first world war memorials, the names of the thousands of railwaymen who died in the conflict. Among the manifold building works that we endure as the cost of our brilliant future are tattered flyers for victims of the tsunami. The King's Cross disaster from November 18 1987, when 31 people were killed, during or after a fire at the station, was presently without any form of memorial. Nobody at the information booth could remember such a remote event. The plaque had been removed, because of building works, to the railway museum in Acton.
The driver of the 30 bus, so I was told, began to walk west, in the aftershock of the explosion, still covered in blood. He walked for seven miles, through the hallucination of London, deaf to the sound of the city, until he found himself in Acton. Geography was confused. His bus shouldn't have been in Tavistock Square. It had been diverted. Only walking, entering the dream, could repair the hurt.
· Iain Sinclair is the author of London Orbital, the account of his year-long walk around the M25. His latest book, Dining on Stones, is published by Penguin.