From Karl Denninger at the market-ticker.org.

Posted 2011-10-16 14:06
by Karl Denninger
in Editorial
OWS (And Everyone Else): Pay Attention To Greece

The politicians are now reduced to begging:

(Reuters) – Prime Minister George Papandreou pleaded for patience from Greeks growing increasingly angry with relentless austerity efforts, telling a newspaper his government was struggling to prevent a financial “catastrophe.”In an interview with the weekly Proto Thema newspaper, Papandreou said the government was fighting to stop Greece defaulting on its debts but the road ahead was hard.

“I would very much like to guarantee everyone an immediate solution, a better life today,” he told the newspaper in an interview which hit newsstands Saturday.

“I would be the happiest man in the world if I could do that but I can't and I have a duty to be honest and tell this truth to every Greek citizen,” he said.

Finally, the truth.

Here are some realities for everyone to think about and (hopefully) understand:

Government cannot expand faster than domestic economic output does. That is, if you want government to get bigger, the economy must get bigger to support it.

Growth in the economy must come from economic surplus, not borrowing. Economic surplus is what you have left after you (1) labor, and (2) pay for all of the things you must buy with that labor. Whether your payment is direct (e.g. you pick strawberries and get to keep X% of your output) or indirect (you are paid a wage in “dollars” and then spend that money) the fact remains that economic growth can, in the long run, only come from economic surplus.

The process by which economic surplus is turned into economic expansion is called capital formation. Capital formation is not borrowing; borrowed funds are fungible (that is, interchangeable) with formed capital but they are not the same thing. Only capital formation produces lasting prosperity. Replacing formed capital with borrowed funds produces bubbles; these are inherently pyramid schemes in both concept and execution and thus must eventually burst.

Due to inefficiency in all things, including the markets, when a bubble bursts you're worse off than if it had never occurred in the first place. This is the principle known simply as “there's no such thing as a free lunch.” It's true in thermodynamics and it's also true in economics.

Trade deficits are self-correcting phenomena without explicit and intentional acts by the government and monetary authority to cover up their natural effects. Specifically, a trade deficit causes capital to drain from the deficit nation to the surplus nation. This in turn makes their currency balance shift and shuts down the cycle all on its own. Only intentional and willful distortion, in this case by injecting “credit” to replace capital, allows it to continue. Yes, the Chinese are responsible for what has happened in this regard with offshoring, but so are our politicians and Federal Reserve! Any actual means of addressing this problem must include all guilty parties.

Politicians turn to producing bubbles when they want to promise you something they cannot pay for via voluntary taxation. And make no mistake on this point: All taxation is voluntary. Greece is showing us this fact in stark relief. The people can withdraw their consent to taxation any time they'd like. Sure, they have to go on a general strike to do so, which is the inhibiting factor – it results in personal pain. But it's the correct, non-violent and legal means to tell the government to stuff it when it comes to their tax policies.

There are only two means to compel a government to act when it becomes co-opted by minority interests, such as what happened with the bailouts, banks and similar foolishness. One is lawful and the other is not. The unlawful means comes through violence. In the “common name” we call these “riots” when they're localized and small (e.g. looting, etc.) When they're not we call them “Revolution”, and the legal term for inciting one is “Sedition.” The key point to remember about the latter is that on a historical basis you have a very low probability of success through revolution — most of the time what comes out of a revolution is worse than what you started with. Keep that in mind before you go pining for it, because you are much more likely to get a Hitler out the other end of that process than a George Washington, and the outcome is generally not under your control.

The lawful means of compelling a government to act is called a “General Strike.” It is a refusal to work, and it is effective because it is work that is taxable. If you perform none then there is nothing to tax; ergo the government's finances collapse. This is what is happening in Greece.

Beware, however, that if you demand that which is impossible, you won't get it – no matter whether you press that demand through a General Strike or through unlawful means. That's simply because that which cannot happen won't.

There is no such thing as a Unicorn that craps out pretty colored candies.

In the case at hand in the United States we have a government on both sides of the aisle that has made promises that are mathematically impossible to keep. That same government conspired with The Fed and with Wall Street to blow a series of bubbles that led you to believe, over the space of 30 years, that you could have more than you can actually pay for with your work output. This claim was a lie and it infested virtually every area of our nation. Housing, education, medical care – all were used as a means to blow up the bubble to larger and larger dimension whenever it threatened to collapse and expose the frauds.

These claims were active frauds as anyone who examined them with any sort of critical eye toward the mathematical realities of the claims knew they were crap and could never happen.

As just one example of dozens the claim that “house prices are expected to increase 10% a year for the foreseeable future” was interpreted by many as “it's safe to finance the purchase of a house and then withdraw the claimed increase in value as this will go on forever” (see the foreseeable future words for justification in the common man's reliance.)

The lie is the mathematical impossibility of this. A $150,000 house that appreciated at that rate for 10 years would be worth $389,000. But over 30 years that same $150,000 house would be “worth” $2,617,410. Nobody ever asked the obvious question: Exactly how was a “middle class” person going to afford to buy a $389,000 house, say much less a $2,617,410 one?

They couldn't, of course, but this was the lie that was run.

In College education land the same lie was run. It led to an outrageous increase in college costs that dramatically outstripped earnings for degree-holding graduates. This in turn made college a bad deal nearly across-the-board and as it occurred colleges and lenders lobbied Congress to change the law so that when your kid got rooked by this scam they couldn't file bankruptcy and force those who blew the bubble to eat the loss.

We did the same thing with Medical Care. By providing “free” (or nearly so) care to Seniors and illegal immigrants, with the former being told “they paid for it” through Medicare taxes (a bald lie as on average they only put in 1/3rd in inflation-adjusted dollars as to what is spent on them) and the latter being simply told “you deserve it” the increase in medical insurance costs has run approximately 9% annually and will continue until and unless policies are changed. This means that the $700 a month insurance policy for the reasonably-healthy 50 year old ($8,400 a year) who has been promised “no reduction in his Medicare” will cost $171,477 a year by the time he's 85 with no adjustment for the higher expense that comes with age. That is, today's 15 year old will be forced to pay $171,477 a year for his medical insurance when he reaches 50. Obviously, he won't as that amount is more than three times today's median family income and even if we allow a 3% inflation rate (which we should not) it will be more than 100% of the median family income in inflated dollars! Since you can't pay more for something than you earn in total, what the politicians are telling you they will do cannot happen.

This, fundamentally, is the problem.

The slams and frankly slanderous lies coming from the so-called “Tea Party” jackasses are just as bad as those coming from the Soros mouthpieces. They're all lies.

As an example:

I am saying that no matter what your reasoning is, beyond Pensacola Florida's limited provincialism, or that of other small city's, the VAST MAJORITY of the OWS crowd, its organizers and “friends” (ACORN, SEIU, UAW, AFL-CIO, Ayres, Dohrn, Obama & Co. underwritten by George Soros who certainly never made a dime on Wall Street), are NOT OUR FRIENDS.

THEY ARE THE ENEMY!

Well, yes. Now prove that the VAST MAJORITY of the “OWS” crowd on a national basis is affiliated with or paid for and/or underwritten by George Soros and those others who you claim have done so.

Prove it. And do so under the rules of strict proof, because this sort of claim is an extraordinary one. I didn't see any evidence of it – at all.

There was one table that was clearly union-oriented. It contained members of the local transportation union trying to get a petition going against Veolia, a foreign company that the local area apparently hired to run the city buses. Is their complaint legitimate? I don't know; I haven't looked at it yet. I did take their flier and will see what I can find out. It will be a feature article later this week, I suspect.

But there was no hidden agenda here; these were clearly people asking for a redress of grievances. Isn't that what you're supposed to do when you have grievances?

They are generally the crowd of entitlements and breaking America down, dumming America down, LEGALIZING ILLIGALS, and making what made America wealthy in the first place – capitalism – into something evil, into something it isn't and never was.

Oh really? What “Capitalism” is present in making student loans non-dischargable, so that the student who does a dumb thing in taking them goes bankrupt and is hounded for life while the lender and their cronies can double – or more – the debt owed and lose nothing? These same so-called “Capitalists” include the Mortgage Bankers Association who strategically defaulted on their own building mortgage, a common (and perfectly legal) tactic in the business world, yet they tell people it's immoral to do it themselves, and when possible these same “capitalists” get the laws changed so you, the people, cannot do what they did and do themselves!

Capitalism? Where, may I ask? The penalty for making bad loans is you go bankrupt!

When you change the laws so that the other guy goes bankrupt and you get to keep the loot the word for that is not capitalism, it is THEFT.

Where are the so-called “Tea Party” people that should be arguing for the REVOCATION OF BANK AND CORPORATE CHARTERS when they steal in this fashion? Isn't that the same thing at a corporate level as imprisonment is at a personal level? It sure is!

Now explain the so-called “Tea Party's” utter refusal to demand that Wachovia have its charter revoked for drug money laundering, something they admitted to doing, or shall we talk about the drug company that got caught twice committing the same criminal offense of marketing for unapproved purposes with the second offense occurring as they were negotiating a trivial FINE for the first one!

The so-called “Tea Party” is “for” the drug war, but refuses to demand that the penalties enforced against PERSONS who participate in the distribution of drugs be applied against CORPORATIONS that are part and parcel of the same offense!

They are the Politics of Envy, of DISTRIBUTING of OTHER'S PROPERTY. Of other's sweat and blood; of other's future, the eventual and certain diminishing of the quality of lives of our children. And equal society where the LCD's run things for the LCD's benefit. Where excellence is punished, stupidity and commonness rewarded.

Again, oh really? What's Capitalist about Citifinancial who had their former chief risk officer testify under oath that the firm was selling on loans that they knew did not meet underwriting guidelines – that is, they knew they were defective and not what was represented to buyers. This isn't conjecture and it wasn't a “small number” either – he testified that 80% of the loans they made in 2007 were defective.

Is it “capitalism” when I sell you a car showing 50,000 miles on the odometer but I rolled it back from 150,000, or is that theft and fraud when you buy said car and discover later that the engine and transmission are basically worn out, and thus you paid $10,000 for something that was worth $2,000? I ****ed you out of the other $8,000 – I stole it – and in every other area of business when I do that it's illegal.

That is not capitalism – it is theft. THAT is what you are supporting.

Reducing the ability of our nation to defend itself. That is what it's about. It is redistributing the nation's revenues from defense to various social programs (green energy and glabal warming concerns) under the phake and phoney flag of blaming banks and “banksters” for everything that went wrong with the economy and the human race. The irony never sparks in their minds that the banks allowed 99% of Americans to own a home in the first place.

Oh, “reducing our ability to defend ourselves”, eh? This is why after 9/11, when we knew that the majority of the people who did it came from and were funded by Saudi Arabia, we did not act against them?

What are we “defending”, may I ask? Oh I don't have to: We're defending “access” to cheap oil. We're promulgating a failed foreign policy that has now turned to propping up literal Kings and Dictators (Chavez anyone?) so we don't have to face the fact that we didn't do what was required to have a secure and thermodynamically sound energy policy for 30 years.

What went wrong, and why the unions are out in force, is the FACT the $85/hw wages the UAW now takes for granted cannot compete with $2-5/hr wages in Korea, Taiwan and China and the $1 TATA Motors pays in India to manufacture low end cars in second and third world countries in Asia and Africa – the only global sector that is actually growing.

And what is your solution?

My solution is to stop the stupid, including but not limited to those who want to promote mathematically bankrupt and therefore stupid policies in the monetary, economic, trade policy, tax policy and energy realm.

We cannot have illegal aliens in this nation at the behest of so-called “capitalists” who are simply exploiting effective slaves, smug in the knowledge that not only can they not complain when abused (lest the INS get called) but that when or if they get hurt, have a baby, or send their kids to school they will get to force, literally at gunpoint, everyone else to cover those costs they shoved up everyone else's ass. The bleeding heart liberals are bad enough, but it is the hard-core right that has serially pandered to the “demand” for illegal labor for the farmers, home builders, lawn services and poultry houses across this nation! I stand for ejecting every illegal immigrant from this nation right now!

We cannot have a Federal Reserve that believes in “2% inflation” when the law says STABLE PRICES. A 2% increase is not stable; over the average man's working life of 45 years that leads to prices that are 244% of where they were when he was 20. This makes it impossible for him to save for retirement; he either “takes risk” or winds up with literally 1/3rd of what he saved when he was 18. This is theft and fraud; the value I earned and that represents my economic surplus is mine and when you steal it whether you do it a penny at a time or all at once you're still a thief.

We cannot have a Federal Government that spends more than it takes in via taxes for so-called “social programs” – or anything else, including “defense.” Compound growth – the very nature of exponents – makes such concepts, irrespective of where you try to run them, literally impossible to sustain over the long haul. This rock we call “Earth” is of finite size, mass and resource. Those resources are vast but the “dominionists” who believe they are infinite are factually wrong. The House, Republican controlled, has not put forward a budget containing one dollar in actual spending reduction and they continue to pass “continuing resolutions” to permit continued increases in spending despite the Senate's refusal to follow The Constitution and pass a damn budget! Republicans support “The Rule of Law” my ass.

We cannot have an economic system where debt grows faster than output does. The fundamental nature of exponents — mathematical law — guarantees that any such attempt will fail. Those who argue otherwise are doing the equivalent of persecuting Galileo, are just as evil, and should be tried and imprisoned for their crimes that they intentionally and willfully inflict upon society with their factually bankrupt and morally evil stupidity.

You want to know what I stand for?

THAT is what I stand for.

It is why I started writing The Market Ticker in 2007, when I saw the exact same wingnut crap being run by Bush and company after seeing the same bull**** run by the lefty redistributionist Clinton and company in the 1990s with his willful and intentional refusal to deal with obvious frauds in the Internet space that led to the Nasdaq market collapse. I gave interviews at the time (1998/99) stating exactly this. It was a known fact that the claimed “doublings” were not happening yet they were reported in so-called “Earnings” reports. Literal thousands of people knew this was a lie and yet not one person was indicted or imprisoned for these intentionally false statements. When I saw evidence of the same crap again in 07 I decided that it was not going to happen to the public a second time without me raising hell about it.

It was that fact and the fact that the so-called “conservatives” in fact had stolen the wealth and futures of people from infants to young adults who they scammed into taking unpayable loans for “college” while changing the laws so they could not petition for bankruptcy and blew an intentional housing bubble while offshoring our jobs at the same time, thereby guaranteeing both a monstrous bubble and the ensuing bust that led me to this publication.

It was the fact that McCain and his advisors knew damn well that this was theft and fraud yet he suspended his campaign to bail out the thieves that led me to publicly denounce him and everyone involved in it.

It was the fact that instead of focusing on this where The Tea Party began with both my call for tea bags to be sent to Congress and Santelli's scream, which was focused on exactly the same scams and theft, the so-called “Tea Party” instantly turned to “Guns, Gays and God” and gave a complete and utter pass to the intentional theft that led us to where are now, and has to this day refused to demand that those who participated in that theft face the music for their acts and that the stupid lenders go bankrupt right next to the stupid borrowers who must be afforded the same opportunity, including students who were scammed into taking unpayable loans with ridiculously rosy and intentionally false projections of job prospects that the math PhDs at those colleges had to know were factually impossible.

It is the fact that despite claiming to be for “fiscal responsibility” The Tea Party folded with many of its members voting Yes to the debt ceiling increase, refusing to publicly denounce the Ryan and McConnell plans that do not cut one single dollar of federal expenditures; they in fact both RAISE federal expenditures. Worse, both plans contain projections (such as Ryan's “5% growth rates”) that have never been sustained on a forward basis over the time projected in the history of the nation once one subtracts out additional systemic debt. In other words these plans are knowing and willful frauds upon the public and the Tea Party is supporting them. Even the CBO, which has historically always projected a too-rosy future on a fiscal basis (they projected in 2000, remember that the nation would have no debt whatsoever by 2010!) says these plans rely on unreasonably-rosy projections into the future.

You want to know why I said “**** the Tea Party”, called it out before the 2010 elections as a bunch of bull**** artists playing the same tired “Guns, Gays and God” song that the Catholic Church ran against Galileo oh so long ago?

THAT is why I did so and will continue to do so right up until people just like you who claim to be “affiliated” with that “movement” (which you stole from one Sam of some 200+ years ago; you no more own it than I do as it's an idea, not a person or organization) quit perverting that idea and*****ing on the graves of men who actually were great, actually had sound ideas, and gave us this nation – a nation you seek to destroy through utterly bankrupt and knowingly-fraudulent promises just as do the hard-core leftists.

Incidentally, the Catholic Church eventually apologized for what they did. The Tea Party has not.

PS: You want to know why I should have not had to write Leverage? It's found right here – it is the willful and intentional refusal to understand what you learn in fifth grade, which is the subject of a rather dry academic lecture you can find online. It is this willful and intentional refusal to deal with these fundamental mathematical facts that led to the outright theft and fraud in our economy and government, and until the so-called “Tea Party” comes to face mathematics you're just as much a part of the scam as is the left. Period.

Read this. This is real. If it hasn't happened to you yet, it will in a month or two.

I am a huge fan of Jared Diamond.  I have read his books.  History books.  We have chosen to fail and now we are failing.  
T
Why big-money men ignore world’s biggest problems

by Paul B. Farrell – MarketWatch

We’re not dealing with the overpopulation disaster

Last year Bill Gates said if he had "one wish to improve humanity’s lot over the next 50 years" he would pick an "energy miracle," some magical "new technology that produced energy at half the price of coal with no carbon-dioxide emissions," says CNN editor Fareed Zakaria in the New York Times.
And he said "he’d rather have this wish than a new vaccine or medicine or even choose the next several American presidents."Energy miracle? But that’s not where he’s giving his billions. In fact, since 1994 the Gates Foundation has spent over $26 billion on philanthropic projects, ventures and innovations, lots in vaccines and medicines that extend life, increase mortality rates and encourage population growth. Yes, all good stuff, but ultimately undermining the possibility of discovering a magical energy miracle. Worse, if that energy miracle is discovered anywhere its value could easily be wiped out by the world’s out-of-control population growth, forecast to reach 10 billion by 2050 from 7 billion today, one brief generation. So why is Gates not focusing solely in his energy miracle? Better yet, why is he ignoring what he agrees is the world’s biggest problem? Even undermining the solution? Warren Buffett: Don’t ‘play safe’ with my billions, hit a home run
What happened to Gates and his $26 billion mission? When Warren Buffett added more than $30 billion to Gates’s foundation a few years back, Buffett said: "Don’t just go for safe projects. Take on the really tough problems." Well, to put it bluntly folks, the Gates Foundation is not spending the money on the "really tough problems." It is indeed playing it safe. So what does Gates see as the world’s other "biggest problem?" Not global warming. Nor poverty. Not peak oil. The absolute biggest? One like the trigger mechanism on a nuclear bomb? One that could throw a monkey wrench into global economic growth, end capitalism, even destroy civilization? The one that if not solved soon renders all efforts to solve all the other global problems — including global warming, poverty and fossil fuel depletion — irrelevant, futile and impossible ever to solve? Overpopulation. That was the consensus "biggest problem" when a group of billionaires that included Gates got together at a secret meeting in Manhattan a couple of years ago. Get it? Out-of-control population is the world’s No. 1 problem. Yet, governments with their $65 trillion global GDP aren’t even trying to solve the world’s overpopulation problem. They’re clueless. Can these philanthropists and their billions stop the coming disaster? No. In fact, their billions are accelerating the problem. So what will shock the world awake? A catastrophe. Only a major disaster, a massive global collapse bigger than anything in world history is needed to alter the inevitable.2 billion past Peak Population
Scientists estimate that the Earth’s natural resources can reasonably support about 5 billion people. We already have 7 billion. Get it? We’re 2 billion over Earth’s carrying capacity. Plus we’re racing headlong to 10 billion by 2050, adding over 50 million more each month. Simple math, high school economics and minimal psychological common sense tells us we’re deep in denial and headed into a disaster. And still, no adults are dealing with overpopulation, the "toughest of all problems." Instead, they’re dealing with "safe projects" that make them feel good in the moment, short-term solutions that ironically make the long-term problem worse not better. The truth is that Gates and his billionaire buddies are in denial, trapped in what Mother Jones columnist Julia Whitty calls "The Last Taboo." She says population is hidden in a "conspiracy of silence" that "unites the Vatican, lefties, conservatives and scientists" and now the world’s richest philanthropists have joined this "conspiracy of silence." Scientific American also warned that population is "the most overlooked and essential strategy for achieving long-term balance with the environment." Why? Politicians ignore this "last taboo," denying the fact that if all nations consumed resources at the same rate as America, we’d need six Earths just to survive today. Check the math: First World citizens now consume 32 times more resources such as fossil fuels, and put out 32 times more waste, than do the inhabitants of the Third World. Now they want what we have. By 2050, with a population of 10 billion, including 1.4 billion each in China and India, we are in effect committing suicide. How Gates efforts ripple, undermining the future of the planet
"One of the disturbing facts of history is that so many civilizations collapse," warns Jared Diamond, an environmental biologist and author of "Collapse: How Societies Choose to Fail or Succeed." Many "share a sharp curve of decline," that often begins "only a decade or two after it reaches its peak population, wealth and power." Some warn: "It’s already too late." "We’re past the point of no return." Gates billionaire buddies should reexamine the effect of the world’s out-of-control population problem as it ripples through the lens of Diamond’s "collapse equation." It’s very simple: "More people require more food, space, water, energy, and other resources … There is a long built-in momentum to human population growth." So take a moment and ask yourself how the world’s explosive population growth from seven to 10 billion in one short generation, plus their increasing demand for more resources per capita, will ripple through Diamond’s other 10 key variables: Energy
Oil, natural gas, coal: They’re all near or past their tipping points. With costs accelerating, new technologies and alternatives, biofuels, solar, nuclear power, will never be enough. Unfortunately, by 2050 demand for fossil fuels will still be 80% for 10 billion.
Food
Two billion global poor live on $2 a day, depend on fish and wild foods that are dying off for protein. Increasing food prices make matters worse. Green revolution failing: United Nations study says new production technologies have not improved food access.
Water
Water problems destroyed many earlier civilizations: Today a million lack safe drinking water. By 2015 two-thirds of the world will live in water-stressed countries.
Farmland
Water, wind eroding crop soils many times faster than new formation.
Forests
We’re losing rain forests and protective timber reserves at accelerating rates.
Chemicals
Our air, soil, oceans, lakes and rivers are dying from toxic chemicals.
Solar energy
Sunlight’s limited. By 2050 we’ll use 100% photosynthetic capacity.
Ozone layer
Our CO2 is destroying our ozone protection, reducing solar energy.
Diversity
Wild species, populations, genetic diversity, lost, rest out of balance.
Alien species
Transferring species to new lands destroying native species.
Diamond’s historical research tells us that leaders are myopic, motivated more by self-interest, expediency and money than by courage, convictions and long-term thinking. They fail to act in time. Unprepared, their worlds crumble fast. They may respond to a catastrophe. But in the end, history tells us over and over that most leaders live in denial, avoiding timely decisions, failing even in time of crises, till it’s too little, too late. Gates’s Billionaire Philanthropist Club probably knows in their hearts the truth. They’re not in denial. They’ve given up. The problem will never be solved. So they’re not even trying to fix the overpopulation problem, instead, focusing on short-term feel-good efforts, knowing that in the not-too-distant future the planet, our civilization and the human species will fade to black. Let’s pray that Uncle Warren gets back into the game demanding they "don’t just go for safe projects. Take on the really tough problems." Soaring Suburban Poverty Catches Communities Unprepared
by Peter Goodman – Huffington Post
Before the unraveling, Selena Blanco and her family felt secure in their hold on middle class life in this bedroom community just west of Denver. She and her husband both held professional jobs in industries that seemed sheltered from trouble, his in technology, hers in health care. Together they brought home $100,000 a year, enough to allay concerns about paying the bills, let alone having to ask for help. But over the last two years, both have lost their jobs. Her unemployment check ran out in the spring, leaving them to subsist on his jobless benefits alone, about $1,500 a month. The Blanco's shattered fortunes have supplied them an unwanted new status, one they share with millions of suburban households in a nation previously accustomed to thinking of suburbia in upwardly mobile terms: They are poor. They are officially so according to the federal government's definition, which sets the poverty line for a family of five at an annual income of $26,023 or less. It is viscerally true when one sees how Blanco, 28, now spends her day. She takes her four-year-old son to a county-operated Headstart program, free preschool for the poor. She forages for clothes at thrift stores. She scrounges for coupons to keep her family fed. "We were doing well," Blanco says, dabbing at reddening eyes with a tissue, trying to make sense of events that contradict her understanding of what is supposed to happen to people who work, save and provide for their children. "My husband and I would go out to eat without even thinking about it. We bought shoes. When I needed a bra, I went to Victoria's Secret. Now we're like, 'Which Goodwill is having a sale?'" They have applied for food stamps and the cash assistance program familiarly known as welfare, crossing a previously unimaginable threshold: For the first time in her life, Blanco — a self-possessed, confident, intelligent woman who still carries herself like someone who used to work in an office — has entered the ranks of those in need of public assistance. "It's a horrible feeling," she says, tears staining her face. "There's pride. I don't show my kids that we're hurting, but it hurts me. It makes me feel like I'm failing as a parent. It's embarrassing." Despite the typically urban associations evoked by talk of poverty in America, Blanco is the face of an emerging segment of the nation's poor now growing faster than any other. Though cities still have nearly double the rate of poverty as suburban areas, the number of people living in poverty in the suburbs of major metropolitan areas increased by 53 percent between 2000 and 2010, as compared to an increase of 23 percent among city-dwellers, according to a Brookings Institution analysis of recently released census data. In 16 metropolitan areas, including Atlanta, Dallas and Milwaukee, the suburban poor has more than doubled over the last decade. The swift growth of suburban poverty is reshaping the sociological landscape, while leaving millions of struggling households without the support that might ameliorate their plight: Compared to cities, suburban communities lack facilities and programs to help the poor, owing to a lag in awareness that large numbers of indigent people are in their midst. Some communities are wary of providing services out of fear they will make themselves magnets for the poor. In the suburbs, getting to county offices to apply for aid or to food banks generally requires a car or reliance on a typically minimal public transportation network. The same transportation constraints limit working opportunities, with many jobs potentially beyond reach and would-be employers reluctant to hire people who lack their own vehicles. These basic difficulties are now exacerbated as states and local governments cut services and lay off staff in the face of budget shortfalls. Growing numbers of the new suburban poor face the risk of slipping through the cracks, sinking into a state of dependence on public assistance just as aid is diminishing. "You're seeing communities that have seen really rapid increases in their poor populations, and they don't have the infrastructure to deal with it," says Elizabeth Kneebone, a senior research associate at the Metropolitan Policy Program at the Brookings Institution. "The safety net is already stretched really thin, and it's patchier in the suburbs. These providers are dealing with incredible increases in demand at the same time they are seeing their funding cut." Poverty Expands
The growth of the suburban poor was underway before the Great Recession, a reflection of how increasing numbers of Americans from across the socioeconomic spectrum have been gravitating to suburban communities: first, in search of better schools and remove from urban life; more recently, because jobs have been shifting there, attracting the affluent and the working poor alike. By 2000, some 49 percent of the American poor already lived in suburban communities, according to work by Alan Berube and William Frey at the Brookings Institution. But the recession substantially accelerated this trend in some suburban communities by assailing the incomes of previously middle class households, significantly elevating rates of joblessness, delinquency and foreclosure. In the Chicago and Detroit metropolitan areas, their suburbs last year claimed the distinction of holding more poor residents than the cities, according to Berube and Kneebone's analysis of census data. In both cities, the percentage of suburbanites living in poverty now exceeds 13 percent. In the Las Vegas area, where a housing boom gave way to a bust, eliminating thousands of jobs in real estate and construction, nearly 15 percent of suburban residents were poor last year, up from about 10 percent in 2007 when the recession began. In southern California, 17 percent of suburban residents in Riverside, San Bernadino and Ontario were impoverished, a jump from about 12 percent in 2007. Suburban-based social service agencies have been swamped. A survey of non-profit social service providers in suburban communities in the Washington, Chicago and Los Angeles metropolitan areas, conducted in 2009 and 2010 by researchers at Brookings, found that roughly nine in ten were seeing increased numbers of people seeking help compared to the previous year. Many had suffered cuts in financial support, prompting them to lay off staff and place needy people on wait-lists. "In many communities, there just aren't the organizations needed to provide job training, counseling or emergency assistance," said Scott Allard, a political scientist at the University of Chicago's School of Social Service Administration and the lead author of the survey. "Poverty is a recent phenomenon." One key piece of data from the survey underscores the corrosive effects of suburban poverty on the American identity: Nearly three-fourths of the suburban non-profits were seeing significant numbers of people turning up who had never previously sought help. "Growing up here, things were good," says Blanco. "Now, you talk to people at the PTA, in the school cafeteria, and people are struggling. At the grocery store, people are going in only for what they need and not for what they want. You see people driving Lexuses and BMWs, and now they are in line at the food bank. Everyone is hurting. Everyone is looking for a job. We're middle class in the suburbs, and now we're hurting." Just Beyond Denver
Jefferson County, where the Blanco family lives, is precisely the sort of place where the newness of poverty has found the community inadequately prepared, with too few programs, to address the problems. Traditionally middle class, Jeffco — as it is widely known — runs from older suburbs on the fringes of Denver, within sight of the city skyline and the flatlands stretching eastward, and out to more rural communities that rub up against the foothills of the Rocky Mountains to the west. For decades, Jeffco has attracted people looking to settle outside the city limits. But beneath the surface of a community that is home to subdivisions with names like Hidden Lake and Country Meadows, Jeffco has been subject to the national trend. Between 2000 and 2010, the number of poor people living in the county grew from fewer than 27,000 to nearly 47,000, according to census data. Almost nine percent of the county is now officially poor. "It's just a sign of the times," says Lynnae Flora, the county's director of community assistance. "People used to be living paycheck to paycheck. Well, they're not anymore, because there isn't any paycheck." Jeffco has known acute tragedy: This is where the Columbine massacre played out. Now a more gradual disaster is unfolding, gnawing at the fabric of life. In 2002, about 17 percent of students at the Jefferson County School District, the largest in the state, came from impoverished households and qualified for free and reduced lunches. Nine years later, that percentage has swelled to 30 percent. Poor children tend to come from less stable homes, necessitating more frequent moves that interrupt the continuity of their education, consequently requiring extra attention to keep pace with wealthier peers. Yet these growing numbers of poor children are now getting less attention by dint of continuing budget troubles. Over the last three years, the school district's general fund, which pays for teacher salaries, text books and basic operations, has fallen from about $650 million a year to $586 million, according to the superintendent’s office. The loss of funding has prompted the district to lay off nearly 300 teachers. The district aims for a student-to-teacher ratio of 20 to 1 for grades one through three, but the average now is about 25 to 1, with some classes holding as many as 28. "The needs of the children are going up, and the funding is going down," says school superintendent Cynthia M. Stevenson. "When I step back and look at the big picture and know that it isn't going to get any easier, then I worry. We do everything we can for our kids, but there's simply no way to continue doing it." Two years ago, the county's Department of Human Services was fielding fewer than 900 applications per month from households seeking food assistance. This year, more than 1,900 applications a month have been pouring in. Yet, during the last two years, the county agency has reduced staff handling applications for food stamps from about 120 to 105. Flora says the cuts have been achieved through attrition, enabled by efficiencies in how the county processes applications. But she still wishes she had more people, particularly as the time to process an application for emergency food aid lengthens. She dispatches two outreach staff to non-profit social service agencies scattered through the county to help people fill out applications for food stamps. But they can only visit sites once or twice a week. As a result, many people needing help must make a trip to the county headquarters, a complex of offices perched at the top of a hill just above the town of Golden. With a commanding view over the parched terrain, the headquarters looks like a fortress. For many people seeking to reach it, it might as well be. On a recent morning, Jamie Leavitt enters the lobby of the county's division of community services, takes a number, and waits for half an hour among some three dozen people. When her number comes up, she heads to one of four open windows. Leavitt, 32, is a mother of three young children. She is here because she has been receiving food stamps in the wake of a divorce — her ex-husband was the sole breadwinner — and the division has sent her notice requiring that she recertify her eligibility. She has tried to call her caseworker numerous times, she reports, but has only gotten voicemail and an announcement that his mailbox is full. The clerk explains that the call center has been closed, though it is expected to reopen, because it has lost staff. So Leavitt has come to the county offices. Without a driver's license, getting here from her home in Littleton took nearly two hours via two buses. JeffCo's government appears eager to tackle contemporary problems in all their complexity. The county's child support division, which previously took an enforcement tack against fathers who fail to pay, has earned plaudits — and lower rates of non-payment — for a multipronged approach that helps jobless men train for and find employment. County officials exude sensitivity to the challenges and enjoy productive relationships with a network of local non-profits. But earnest efforts to tackle serious problems are running headlong into the limits of arithmetic in an era of shrinking budgets. At the county's workforce office, where jobless people sit quietly in front of computers, scrolling through listings, staff has been cut from 60 to 34 over the past two years. This, while the county's unemployment rate has ticked up from 8.1 percent to 8.6 percent. "We are at our absolute minimum of staff to meet the needs," says Flora, the director of community assistance. "We simply need more manpower." "I Never Expected Anything Like This"
On a recent morning, two dozen people line up outside the Action Center, a non-profit social service agency in Lakewood, just before its 11 o'clock opening time: men and women, young and old, many watching after small children. Much of the extra need for aid falls on the shoulders of non-profit social service groups such as this one. The center operates a 22-bed homeless shelter, a food pantry and myriad assistance programs, from cash grants to pay for utilities and rent, to transportation money that enables people to get to work. But much like the county, the Action Center is grappling with a spike in demand just as donations have tapered off. A federal grant that last year delivered $133,000 in utility assistance to about 100 families was cut in the spring. A similar program financed by the county has recently been cut in half. "The front door is busier than ever, but the resources coming in the back door, there's fewer of them," says the center's executive director, Mag Strittmatter. In a twist of fortune, some of the same people who used to show up at the back door to donate food and clothing are now coming in the front door to ask for some of those goods for themselves. "We're hearing this over and over again," Strittmatter says. "They used to donate, and they don't know how to do this, and they never thought this would happen to them." Tammy Pino certainly did not see this coming. The mother of four grown children, she worked for six years as a customer service manager for a trucking company, earning $11 an hour plus health and retirement benefits, enough to rent a modest duplex in North Denver. "I was doing fine," she says. "I had money to put away." But when the monthly rent climbed from $650 to $800, she moved to a cheaper place in Jeffco. Early this year, the trucking company went out of business. For two months, she looked for a similar job but came up empty, so she took a cashier's position at King's Grocery, where she earns $9.14 an hour. The grocery recently cut her hours from 37 a week to 24, leaving her unable to pay her rent. So she moved in with her sister, who is battling uterine cancer. Her two nephews, 11 and 17, occupy a bedroom, while Pino, 46, sleeps on a couch. Now, she is here, at the Action Center, wearing a pink T-shirt and matching pink flip-flops, sitting opposite a crisis counselor, Anita Daley, and asking for help. "I've never been like this anytime in my life," she says, breaking down despite stern attempts to maintain composure. "I never expected anything like this to happen." Her mother was a teacher, she says. He father was a janitor. They always worked. Pino could count on an allowance. At 16, her parents gave her a car. She had her own television, her own stereo system. "Now, it's like I'm 16 again," she says. "It's hard to ask anybody for help." She is eager for another job, a full-time position that would enable her to finance her own place, but her search feels increasingly futile. "My niece graduated from college and even she can't find a job," Pino says. "She's working at McDonald's." The counselor tells her about an upcoming job fair. She goes to a supply closet and fills a grocery bag with donated items — travel-size shampoo bottles from motels, a roll of toilet paper, toothpaste. What else does Pino need? "I need to go to the dentist," she says, complaining of persistent pain. "I've been trying to hold on." She gets no insurance at work, she says, adding that this did not stop her employer from recently demanding a doctor's note to excuse two days of absence when she had the flu. "I said, 'Unless you're going to pay for me to go see a doctor, I'm not going to pay just to find out that I have the flu,'" she recalls, quivering with anger. The counselor tells her about a free walk-in medical clinic and hands her the paperwork for food stamps. She fills out a slip of paper entitling Pino to take home a box of donated food. She offers some pots and pans, which Pino accepts with a frown. Her own kitchen goods are in a rented storage locker, along with most of the objects she has accumulated in her lifetime — clothing, furniture, photos of her children. "It's just depressing for me to go out there and open up those boxes," she says, referring to her belongings. She goes back out to the lobby and waits for her name to be called for the food. When the box comes, it holds packs of instant ramen noodles and cans of soup, green beans and peaches. Most of these items have been donated by local households and businesses. A plastic tray of dinner rolls bears a sticker telling Pino who supplied it: King's Grocery. Her employer does not pay her enough to feed herself the way she has for decades — by working — so her sustenance must now be seasoned with charity. And the charity comes from the same place where she rings up groceries destined for other people's kitchens — an activity that fails to equip her adequately to stock her own. "There's people who need help more than I do," Pino says, her lips trembling. "I thank God that I have family, and I don't have to go to a shelter. But I'm just trying to get back on my feet and it's so hard." Homelessness Touches Schools
At the headquarters of the Jefferson County School District in Golden, the marble lobby and two-story atrium attest to the level of comfort that has traditionally framed life here. Upstairs, three increasingly busy staff members in cubicles underscore how times have changed. The three staff members serve as the school system's homeless liaisons. They verify reports that a student is homeless, which can be defined as living in a motel, at a shelter or bunking with friends or relatives on a temporary basis. They offer what aid they can muster. A decade ago, the district verified that 59 students were homeless. In the last academic year, the number came in at 2,800. This year, only two months into a new academic term, the district has already found nearly 2,000 homeless students. "We have homelessness everywhere," says homeless liaison Sheree Conyers. "We literally get e-mails and phone calls all day long. Younger people are moving back in with their parents, doubling up. Parents are taking in their kids and their kids' kids because there is nowhere else for them to go." At Parr Elementary School, a tidy facility in a traditionally middle class neighborhood in the north of the county, where leafy streets are lined with brick homes on well-tended lawns, 28 percent of the student body was homeless at some point during the year. On a recent afternoon, homeless liaison Jessica Hansen is preparing to visit a family that has just been evicted from their rented home and has moved into a motel just off Interstate 70. They have two children: a girl in the seventh grade, and a boy in the eighth. Hansen is bringing toiletries, books and microwaveable food. She prepares bus passes for the two children, because the motel that has become their temporary shelter is far beyond walking distance from their school. Getting there now entails a nearly hour-long ride on two buses. She has in hand a list of available shelters, reflecting the reality that this will likely be the next stop for this family. They are moving into a motel that runs $34 per night, telling themselves they will save up and move back into their rental eventually. But the father works at McDonald's. The mother draws a small disability check. They will probably exhaust their resources in a matter of weeks, Hansen says, and then be forced to start dialing the shelters on the list in pursuit of available space. Among the 52 listings for shelter beds and transitional housing, only eight are in Jeffco, and only one is open to all types of people, with the others restricted to victims of domestic violence, youths or families. The vast majority are within the Denver city limit, a move that would make the children's bus commute even longer. The Family Tree, a non-profit social service group, operates a shelter in JeffCo for homeless and runaway youths, but not for families. Still, the options are so limited and the needs so great that, in some families, kids are leaving their parents behind. "We're getting kids coming into the shelter where the entire family is homeless," says Scott Shields, the group's chief executive officer. "They are so desperate that they are willing to split the family up." For years, Shields and colleagues at other social service agencies have talked about opening a new youth shelter in Jeffco but have not pursued plans in the face of opposition from the local zoning board. The school district derives most of its funding for homeless programs via federal grants delivered to the state. But this year, even as the need has exploded, the budget was cut from $40,000 to $36,000. Conyers, the coordinator, has managed to expand services by aggressively seeking donations. She recently secured a $10,000 check from a local church, using the money to stock a bank account for special emergencies. She tapped that money for a new mattress for a child who was staying with another family and sleeping on the floor. She used those funds to pay for a storage unit for a family in transitional housing, so they would not lose their belongings. She procures clearance items from local retailers — blankets, backpacks, toiletry items and food — storing her cache in a temporary classroom at an elementary school, alongside music stands arrayed for orchestra practice. All of this feels tenuous, she laments. "We're really only as strong as our collaborators," Conyers says. "We'll continue to hang on by a thread." Everyone Is Hurting
For decades, Selena Blanco and her family were doing far better than hanging on. They were representative of the burgeoning opportunities and rising living standards that characterized this swiftly growing metropolitan area. Growing up, her mother worked as an administrator for a Denver construction company. Her father worked in the technology department at AT&T. He drove a prized Corvette. When Blanco was five, her parents moved the family out of Denver to Edgewater, an established suburb just over the city line, in search of better schools. The unassuming A-frame house had an ample yard. Blanco walked to school, went to neighborhood Halloween parties, and studied at a local library. Her family took vacations to Disneyland. When Blanco got married and started her own family, she felt confident that the future would follow this familiar trajectory. But two years ago she was laid off from her job as an administrator at a health care provider. She and her husband could no longer afford the rent on their two-bedroom townhouse, so her father offered them, rent-free, the house in which she had grown up. He and Blanco's mother had split years earlier, he was living elsewhere, and the house was vacant. In January, her husband lost his job in customer service at Dish Network when the satellite television provider shuttered a local call center and shifted operations to Mexico. She drove to the county seat in Golden to apply for public assistance. She felt a deep sense of shame, combined with a deeper feeling of resignation: She had a family to feed. Her case officer explained that she did not qualify for help. Her husband's income was imputed to her, and that income bumped them over the limit for cash assistance and food stamps. The bureaucracy seemed to be working against families. "If you're a single parent, you can get so much help," she says. "But if you're a family, they don't help you. If I divorced my husband, I would qualify for everything immediately." Her husband has searched aggressively for work, looking for jobs that seem incommensurate with his experience, which includes a college degree. "He has applied to Walmart and Target, the simplest places to get a job," she says. "And they don't even call him back." Without money for childcare, she can no longer work, she says, further limiting their income. She did qualify for Headstart, and she values the experiences her youngest child is having there, but that is only three hours a day, four days a week — not a window that any employer can use. From the curb, her home looks like many on her block. A trampoline sits out back. An American flag flaps in the breeze above their front stoop. But when Blanco contemplates her life, her family's future feels deeply unsettled. They are behind on their cable bills and on their Internet service. They have grown used to picking up the phone to hear menacing words from bill collectors. Blanco and her husband describe themselves as Christians. "We stay positive," she says. "We have faith." Yet the breakdown in their lives is testing that faith. "I put on such a good face," she says. "People have no idea how we're hurting. In all actual reality, there's times when I'm like, 'How are we going to get through this?'"

Read this. This is real. If it hasn’t happened to you yet, it will in a month or two.

I am a huge fan of Jared Diamond.  I have read his books.  History books.  We have chosen to fail and now we are failing.  
T

Why big-money men ignore world’s biggest problems

by Paul B. Farrell – MarketWatch

We’re not dealing with the overpopulation disaster

Last year Bill Gates said if he had “one wish to improve humanity’s lot over the next 50 years” he would pick an “energy miracle,” some magical “new technology that produced energy at half the price of coal with no carbon-dioxide emissions,” says CNN editor Fareed Zakaria in the New York Times.
And he said “he’d rather have this wish than a new vaccine or medicine or even choose the next several American presidents.”

Energy miracle? But that’s not where he’s giving his billions. In fact, since 1994 the Gates Foundation has spent over $26 billion on philanthropic projects, ventures and innovations, lots in vaccines and medicines that extend life, increase mortality rates and encourage population growth. Yes, all good stuff, but ultimately undermining the possibility of discovering a magical energy miracle.

Worse, if that energy miracle is discovered anywhere its value could easily be wiped out by the world’s out-of-control population growth, forecast to reach 10 billion by 2050 from 7 billion today, one brief generation. So why is Gates not focusing solely in his energy miracle? Better yet, why is he ignoring what he agrees is the world’s biggest problem? Even undermining the solution?

Warren Buffett: Don’t ‘play safe’ with my billions, hit a home run
What happened to Gates and his $26 billion mission? When Warren Buffett added more than $30 billion to Gates’s foundation a few years back, Buffett said: “Don’t just go for safe projects. Take on the really tough problems.” Well, to put it bluntly folks, the Gates Foundation is not spending the money on the “really tough problems.” It is indeed playing it safe.

So what does Gates see as the world’s other “biggest problem?” Not global warming. Nor poverty. Not peak oil. The absolute biggest? One like the trigger mechanism on a nuclear bomb? One that could throw a monkey wrench into global economic growth, end capitalism, even destroy civilization? The one that if not solved soon renders all efforts to solve all the other global problems — including global warming, poverty and fossil fuel depletion — irrelevant, futile and impossible ever to solve?

Overpopulation. That was the consensus “biggest problem” when a group of billionaires that included Gates got together at a secret meeting in Manhattan a couple of years ago. Get it? Out-of-control population is the world’s No. 1 problem. Yet, governments with their $65 trillion global GDP aren’t even trying to solve the world’s overpopulation problem. They’re clueless. Can these philanthropists and their billions stop the coming disaster? No. In fact, their billions are accelerating the problem.

So what will shock the world awake? A catastrophe. Only a major disaster, a massive global collapse bigger than anything in world history is needed to alter the inevitable.

2 billion past Peak Population
Scientists estimate that the Earth’s natural resources can reasonably support about 5 billion people. We already have 7 billion. Get it? We’re 2 billion over Earth’s carrying capacity. Plus we’re racing headlong to 10 billion by 2050, adding over 50 million more each month.

Simple math, high school economics and minimal psychological common sense tells us we’re deep in denial and headed into a disaster. And still, no adults are dealing with overpopulation, the “toughest of all problems.” Instead, they’re dealing with “safe projects” that make them feel good in the moment, short-term solutions that ironically make the long-term problem worse not better.

The truth is that Gates and his billionaire buddies are in denial, trapped in what Mother Jones columnist Julia Whitty calls “The Last Taboo.” She says population is hidden in a “conspiracy of silence” that “unites the Vatican, lefties, conservatives and scientists” and now the world’s richest philanthropists have joined this “conspiracy of silence.”

Scientific American also warned that population is “the most overlooked and essential strategy for achieving long-term balance with the environment.” Why? Politicians ignore this “last taboo,” denying the fact that if all nations consumed resources at the same rate as America, we’d need six Earths just to survive today.

Check the math: First World citizens now consume 32 times more resources such as fossil fuels, and put out 32 times more waste, than do the inhabitants of the Third World. Now they want what we have. By 2050, with a population of 10 billion, including 1.4 billion each in China and India, we are in effect committing suicide.

How Gates efforts ripple, undermining the future of the planet
“One of the disturbing facts of history is that so many civilizations collapse,” warns Jared Diamond, an environmental biologist and author of “Collapse: How Societies Choose to Fail or Succeed.” Many “share a sharp curve of decline,” that often begins “only a decade or two after it reaches its peak population, wealth and power.” Some warn: “It’s already too late.” “We’re past the point of no return.”

Gates billionaire buddies should reexamine the effect of the world’s out-of-control population problem as it ripples through the lens of Diamond’s “collapse equation.” It’s very simple: “More people require more food, space, water, energy, and other resources … There is a long built-in momentum to human population growth.”

So take a moment and ask yourself how the world’s explosive population growth from seven to 10 billion in one short generation, plus their increasing demand for more resources per capita, will ripple through Diamond’s other 10 key variables:

Energy
Oil, natural gas, coal: They’re all near or past their tipping points. With costs accelerating, new technologies and alternatives, biofuels, solar, nuclear power, will never be enough. Unfortunately, by 2050 demand for fossil fuels will still be 80% for 10 billion.
Food
Two billion global poor live on $2 a day, depend on fish and wild foods that are dying off for protein. Increasing food prices make matters worse. Green revolution failing: United Nations study says new production technologies have not improved food access.
Water
Water problems destroyed many earlier civilizations: Today a million lack safe drinking water. By 2015 two-thirds of the world will live in water-stressed countries.
Farmland
Water, wind eroding crop soils many times faster than new formation.
Forests
We’re losing rain forests and protective timber reserves at accelerating rates.
Chemicals
Our air, soil, oceans, lakes and rivers are dying from toxic chemicals.
Solar energy
Sunlight’s limited. By 2050 we’ll use 100% photosynthetic capacity.
Ozone layer
Our CO2 is destroying our ozone protection, reducing solar energy.
Diversity
Wild species, populations, genetic diversity, lost, rest out of balance.
Alien species
Transferring species to new lands destroying native species.

Diamond’s historical research tells us that leaders are myopic, motivated more by self-interest, expediency and money than by courage, convictions and long-term thinking. They fail to act in time. Unprepared, their worlds crumble fast. They may respond to a catastrophe. But in the end, history tells us over and over that most leaders live in denial, avoiding timely decisions, failing even in time of crises, till it’s too little, too late.

Gates’s Billionaire Philanthropist Club probably knows in their hearts the truth. They’re not in denial. They’ve given up. The problem will never be solved. So they’re not even trying to fix the overpopulation problem, instead, focusing on short-term feel-good efforts, knowing that in the not-too-distant future the planet, our civilization and the human species will fade to black.

Let’s pray that Uncle Warren gets back into the game demanding they “don’t just go for safe projects. Take on the really tough problems.”

Soaring Suburban Poverty Catches Communities Unprepared
by Peter Goodman – Huffington Post
Before the unraveling, Selena Blanco and her family felt secure in their hold on middle class life in this bedroom community just west of Denver. She and her husband both held professional jobs in industries that seemed sheltered from trouble, his in technology, hers in health care. Together they brought home $100,000 a year, enough to allay concerns about paying the bills, let alone having to ask for help.

But over the last two years, both have lost their jobs. Her unemployment check ran out in the spring, leaving them to subsist on his jobless benefits alone, about $1,500 a month. The Blanco's shattered fortunes have supplied them an unwanted new status, one they share with millions of suburban households in a nation previously accustomed to thinking of suburbia in upwardly mobile terms: They are poor.

They are officially so according to the federal government's definition, which sets the poverty line for a family of five at an annual income of $26,023 or less. It is viscerally true when one sees how Blanco, 28, now spends her day. She takes her four-year-old son to a county-operated Headstart program, free preschool for the poor. She forages for clothes at thrift stores. She scrounges for coupons to keep her family fed.

“We were doing well,” Blanco says, dabbing at reddening eyes with a tissue, trying to make sense of events that contradict her understanding of what is supposed to happen to people who work, save and provide for their children. “My husband and I would go out to eat without even thinking about it. We bought shoes. When I needed a bra, I went to Victoria's Secret. Now we're like, 'Which Goodwill is having a sale?'”

They have applied for food stamps and the cash assistance program familiarly known as welfare, crossing a previously unimaginable threshold: For the first time in her life, Blanco — a self-possessed, confident, intelligent woman who still carries herself like someone who used to work in an office — has entered the ranks of those in need of public assistance. “It's a horrible feeling,” she says, tears staining her face. “There's pride. I don't show my kids that we're hurting, but it hurts me. It makes me feel like I'm failing as a parent. It's embarrassing.”

Despite the typically urban associations evoked by talk of poverty in America, Blanco is the face of an emerging segment of the nation's poor now growing faster than any other. Though cities still have nearly double the rate of poverty as suburban areas, the number of people living in poverty in the suburbs of major metropolitan areas increased by 53 percent between 2000 and 2010, as compared to an increase of 23 percent among city-dwellers, according to a Brookings Institution analysis of recently released census data. In 16 metropolitan areas, including Atlanta, Dallas and Milwaukee, the suburban poor has more than doubled over the last decade.

The swift growth of suburban poverty is reshaping the sociological landscape, while leaving millions of struggling households without the support that might ameliorate their plight: Compared to cities, suburban communities lack facilities and programs to help the poor, owing to a lag in awareness that large numbers of indigent people are in their midst. Some communities are wary of providing services out of fear they will make themselves magnets for the poor.

In the suburbs, getting to county offices to apply for aid or to food banks generally requires a car or reliance on a typically minimal public transportation network. The same transportation constraints limit working opportunities, with many jobs potentially beyond reach and would-be employers reluctant to hire people who lack their own vehicles.

These basic difficulties are now exacerbated as states and local governments cut services and lay off staff in the face of budget shortfalls. Growing numbers of the new suburban poor face the risk of slipping through the cracks, sinking into a state of dependence on public assistance just as aid is diminishing.

“You're seeing communities that have seen really rapid increases in their poor populations, and they don't have the infrastructure to deal with it,” says Elizabeth Kneebone, a senior research associate at the Metropolitan Policy Program at the Brookings Institution. “The safety net is already stretched really thin, and it's patchier in the suburbs. These providers are dealing with incredible increases in demand at the same time they are seeing their funding cut.”

Poverty Expands
The growth of the suburban poor was underway before the Great Recession, a reflection of how increasing numbers of Americans from across the socioeconomic spectrum have been gravitating to suburban communities: first, in search of better schools and remove from urban life; more recently, because jobs have been shifting there, attracting the affluent and the working poor alike. By 2000, some 49 percent of the American poor already lived in suburban communities, according to work by Alan Berube and William Frey at the Brookings Institution.

But the recession substantially accelerated this trend in some suburban communities by assailing the incomes of previously middle class households, significantly elevating rates of joblessness, delinquency and foreclosure. In the Chicago and Detroit metropolitan areas, their suburbs last year claimed the distinction of holding more poor residents than the cities, according to Berube and Kneebone's analysis of census data. In both cities, the percentage of suburbanites living in poverty now exceeds 13 percent.

In the Las Vegas area, where a housing boom gave way to a bust, eliminating thousands of jobs in real estate and construction, nearly 15 percent of suburban residents were poor last year, up from about 10 percent in 2007 when the recession began. In southern California, 17 percent of suburban residents in Riverside, San Bernadino and Ontario were impoverished, a jump from about 12 percent in 2007.

Suburban-based social service agencies have been swamped. A survey of non-profit social service providers in suburban communities in the Washington, Chicago and Los Angeles metropolitan areas, conducted in 2009 and 2010 by researchers at Brookings, found that roughly nine in ten were seeing increased numbers of people seeking help compared to the previous year. Many had suffered cuts in financial support, prompting them to lay off staff and place needy people on wait-lists.

“In many communities, there just aren't the organizations needed to provide job training, counseling or emergency assistance,” said Scott Allard, a political scientist at the University of Chicago's School of Social Service Administration and the lead author of the survey. “Poverty is a recent phenomenon.”

One key piece of data from the survey underscores the corrosive effects of suburban poverty on the American identity: Nearly three-fourths of the suburban non-profits were seeing significant numbers of people turning up who had never previously sought help.

“Growing up here, things were good,” says Blanco. “Now, you talk to people at the PTA, in the school cafeteria, and people are struggling. At the grocery store, people are going in only for what they need and not for what they want. You see people driving Lexuses and BMWs, and now they are in line at the food bank. Everyone is hurting. Everyone is looking for a job. We're middle class in the suburbs, and now we're hurting.”

Just Beyond Denver
Jefferson County, where the Blanco family lives, is precisely the sort of place where the newness of poverty has found the community inadequately prepared, with too few programs, to address the problems. Traditionally middle class, Jeffco — as it is widely known — runs from older suburbs on the fringes of Denver, within sight of the city skyline and the flatlands stretching eastward, and out to more rural communities that rub up against the foothills of the Rocky Mountains to the west.

For decades, Jeffco has attracted people looking to settle outside the city limits. But beneath the surface of a community that is home to subdivisions with names like Hidden Lake and Country Meadows, Jeffco has been subject to the national trend. Between 2000 and 2010, the number of poor people living in the county grew from fewer than 27,000 to nearly 47,000, according to census data. Almost nine percent of the county is now officially poor. “It's just a sign of the times,” says Lynnae Flora, the county's director of community assistance. “People used to be living paycheck to paycheck. Well, they're not anymore, because there isn't any paycheck.”

Jeffco has known acute tragedy: This is where the Columbine massacre played out. Now a more gradual disaster is unfolding, gnawing at the fabric of life. In 2002, about 17 percent of students at the Jefferson County School District, the largest in the state, came from impoverished households and qualified for free and reduced lunches. Nine years later, that percentage has swelled to 30 percent.

Poor children tend to come from less stable homes, necessitating more frequent moves that interrupt the continuity of their education, consequently requiring extra attention to keep pace with wealthier peers. Yet these growing numbers of poor children are now getting less attention by dint of continuing budget troubles.

Over the last three years, the school district's general fund, which pays for teacher salaries, text books and basic operations, has fallen from about $650 million a year to $586 million, according to the superintendent’s office. The loss of funding has prompted the district to lay off nearly 300 teachers. The district aims for a student-to-teacher ratio of 20 to 1 for grades one through three, but the average now is about 25 to 1, with some classes holding as many as 28.

“The needs of the children are going up, and the funding is going down,” says school superintendent Cynthia M. Stevenson. “When I step back and look at the big picture and know that it isn't going to get any easier, then I worry. We do everything we can for our kids, but there's simply no way to continue doing it.”

Two years ago, the county's Department of Human Services was fielding fewer than 900 applications per month from households seeking food assistance. This year, more than 1,900 applications a month have been pouring in. Yet, during the last two years, the county agency has reduced staff handling applications for food stamps from about 120 to 105. Flora says the cuts have been achieved through attrition, enabled by efficiencies in how the county processes applications. But she still wishes she had more people, particularly as the time to process an application for emergency food aid lengthens.

She dispatches two outreach staff to non-profit social service agencies scattered through the county to help people fill out applications for food stamps. But they can only visit sites once or twice a week. As a result, many people needing help must make a trip to the county headquarters, a complex of offices perched at the top of a hill just above the town of Golden. With a commanding view over the parched terrain, the headquarters looks like a fortress. For many people seeking to reach it, it might as well be.

On a recent morning, Jamie Leavitt enters the lobby of the county's division of community services, takes a number, and waits for half an hour among some three dozen people. When her number comes up, she heads to one of four open windows.

Leavitt, 32, is a mother of three young children. She is here because she has been receiving food stamps in the wake of a divorce — her ex-husband was the sole breadwinner — and the division has sent her notice requiring that she recertify her eligibility. She has tried to call her caseworker numerous times, she reports, but has only gotten voicemail and an announcement that his mailbox is full. The clerk explains that the call center has been closed, though it is expected to reopen, because it has lost staff.

So Leavitt has come to the county offices. Without a driver's license, getting here from her home in Littleton took nearly two hours via two buses. JeffCo's government appears eager to tackle contemporary problems in all their complexity. The county's child support division, which previously took an enforcement tack against fathers who fail to pay, has earned plaudits — and lower rates of non-payment — for a multipronged approach that helps jobless men train for and find employment. County officials exude sensitivity to the challenges and enjoy productive relationships with a network of local non-profits.

But earnest efforts to tackle serious problems are running headlong into the limits of arithmetic in an era of shrinking budgets. At the county's workforce office, where jobless people sit quietly in front of computers, scrolling through listings, staff has been cut from 60 to 34 over the past two years. This, while the county's unemployment rate has ticked up from 8.1 percent to 8.6 percent. “We are at our absolute minimum of staff to meet the needs,” says Flora, the director of community assistance. “We simply need more manpower.”

“I Never Expected Anything Like This”
On a recent morning, two dozen people line up outside the Action Center, a non-profit social service agency in Lakewood, just before its 11 o'clock opening time: men and women, young and old, many watching after small children. Much of the extra need for aid falls on the shoulders of non-profit social service groups such as this one. The center operates a 22-bed homeless shelter, a food pantry and myriad assistance programs, from cash grants to pay for utilities and rent, to transportation money that enables people to get to work.

But much like the county, the Action Center is grappling with a spike in demand just as donations have tapered off. A federal grant that last year delivered $133,000 in utility assistance to about 100 families was cut in the spring. A similar program financed by the county has recently been cut in half. “The front door is busier than ever, but the resources coming in the back door, there's fewer of them,” says the center's executive director, Mag Strittmatter.

In a twist of fortune, some of the same people who used to show up at the back door to donate food and clothing are now coming in the front door to ask for some of those goods for themselves. “We're hearing this over and over again,” Strittmatter says. “They used to donate, and they don't know how to do this, and they never thought this would happen to them.”

Tammy Pino certainly did not see this coming. The mother of four grown children, she worked for six years as a customer service manager for a trucking company, earning $11 an hour plus health and retirement benefits, enough to rent a modest duplex in North Denver. “I was doing fine,” she says. “I had money to put away.”

But when the monthly rent climbed from $650 to $800, she moved to a cheaper place in Jeffco. Early this year, the trucking company went out of business. For two months, she looked for a similar job but came up empty, so she took a cashier's position at King's Grocery, where she earns $9.14 an hour. The grocery recently cut her hours from 37 a week to 24, leaving her unable to pay her rent. So she moved in with her sister, who is battling uterine cancer. Her two nephews, 11 and 17, occupy a bedroom, while Pino, 46, sleeps on a couch.

Now, she is here, at the Action Center, wearing a pink T-shirt and matching pink flip-flops, sitting opposite a crisis counselor, Anita Daley, and asking for help. “I've never been like this anytime in my life,” she says, breaking down despite stern attempts to maintain composure. “I never expected anything like this to happen.” Her mother was a teacher, she says. He father was a janitor. They always worked. Pino could count on an allowance. At 16, her parents gave her a car. She had her own television, her own stereo system. “Now, it's like I'm 16 again,” she says. “It's hard to ask anybody for help.”

She is eager for another job, a full-time position that would enable her to finance her own place, but her search feels increasingly futile. “My niece graduated from college and even she can't find a job,” Pino says. “She's working at McDonald's.”

The counselor tells her about an upcoming job fair. She goes to a supply closet and fills a grocery bag with donated items — travel-size shampoo bottles from motels, a roll of toilet paper, toothpaste. What else does Pino need? “I need to go to the dentist,” she says, complaining of persistent pain. “I've been trying to hold on.”

She gets no insurance at work, she says, adding that this did not stop her employer from recently demanding a doctor's note to excuse two days of absence when she had the flu. “I said, 'Unless you're going to pay for me to go see a doctor, I'm not going to pay just to find out that I have the flu,'” she recalls, quivering with anger.

The counselor tells her about a free walk-in medical clinic and hands her the paperwork for food stamps. She fills out a slip of paper entitling Pino to take home a box of donated food. She offers some pots and pans, which Pino accepts with a frown. Her own kitchen goods are in a rented storage locker, along with most of the objects she has accumulated in her lifetime — clothing, furniture, photos of her children. “It's just depressing for me to go out there and open up those boxes,” she says, referring to her belongings.

She goes back out to the lobby and waits for her name to be called for the food. When the box comes, it holds packs of instant ramen noodles and cans of soup, green beans and peaches. Most of these items have been donated by local households and businesses. A plastic tray of dinner rolls bears a sticker telling Pino who supplied it: King's Grocery.

Her employer does not pay her enough to feed herself the way she has for decades — by working — so her sustenance must now be seasoned with charity. And the charity comes from the same place where she rings up groceries destined for other people's kitchens — an activity that fails to equip her adequately to stock her own. “There's people who need help more than I do,” Pino says, her lips trembling. “I thank God that I have family, and I don't have to go to a shelter. But I'm just trying to get back on my feet and it's so hard.”

Homelessness Touches Schools
At the headquarters of the Jefferson County School District in Golden, the marble lobby and two-story atrium attest to the level of comfort that has traditionally framed life here. Upstairs, three increasingly busy staff members in cubicles underscore how times have changed. The three staff members serve as the school system's homeless liaisons. They verify reports that a student is homeless, which can be defined as living in a motel, at a shelter or bunking with friends or relatives on a temporary basis. They offer what aid they can muster.

A decade ago, the district verified that 59 students were homeless. In the last academic year, the number came in at 2,800. This year, only two months into a new academic term, the district has already found nearly 2,000 homeless students. “We have homelessness everywhere,” says homeless liaison Sheree Conyers. “We literally get e-mails and phone calls all day long. Younger people are moving back in with their parents, doubling up. Parents are taking in their kids and their kids' kids because there is nowhere else for them to go.”

At Parr Elementary School, a tidy facility in a traditionally middle class neighborhood in the north of the county, where leafy streets are lined with brick homes on well-tended lawns, 28 percent of the student body was homeless at some point during the year. On a recent afternoon, homeless liaison Jessica Hansen is preparing to visit a family that has just been evicted from their rented home and has moved into a motel just off Interstate 70. They have two children: a girl in the seventh grade, and a boy in the eighth.

Hansen is bringing toiletries, books and microwaveable food. She prepares bus passes for the two children, because the motel that has become their temporary shelter is far beyond walking distance from their school. Getting there now entails a nearly hour-long ride on two buses.

She has in hand a list of available shelters, reflecting the reality that this will likely be the next stop for this family. They are moving into a motel that runs $34 per night, telling themselves they will save up and move back into their rental eventually. But the father works at McDonald's. The mother draws a small disability check. They will probably exhaust their resources in a matter of weeks, Hansen says, and then be forced to start dialing the shelters on the list in pursuit of available space.

Among the 52 listings for shelter beds and transitional housing, only eight are in Jeffco, and only one is open to all types of people, with the others restricted to victims of domestic violence, youths or families. The vast majority are within the Denver city limit, a move that would make the children's bus commute even longer.

The Family Tree, a non-profit social service group, operates a shelter in JeffCo for homeless and runaway youths, but not for families. Still, the options are so limited and the needs so great that, in some families, kids are leaving their parents behind. “We're getting kids coming into the shelter where the entire family is homeless,” says Scott Shields, the group's chief executive officer. “They are so desperate that they are willing to split the family up.”

For years, Shields and colleagues at other social service agencies have talked about opening a new youth shelter in Jeffco but have not pursued plans in the face of opposition from the local zoning board. The school district derives most of its funding for homeless programs via federal grants delivered to the state. But this year, even as the need has exploded, the budget was cut from $40,000 to $36,000.

Conyers, the coordinator, has managed to expand services by aggressively seeking donations. She recently secured a $10,000 check from a local church, using the money to stock a bank account for special emergencies. She tapped that money for a new mattress for a child who was staying with another family and sleeping on the floor. She used those funds to pay for a storage unit for a family in transitional housing, so they would not lose their belongings.

She procures clearance items from local retailers — blankets, backpacks, toiletry items and food — storing her cache in a temporary classroom at an elementary school, alongside music stands arrayed for orchestra practice. All of this feels tenuous, she laments. “We're really only as strong as our collaborators,” Conyers says. “We'll continue to hang on by a thread.”

Everyone Is Hurting
For decades, Selena Blanco and her family were doing far better than hanging on. They were representative of the burgeoning opportunities and rising living standards that characterized this swiftly growing metropolitan area. Growing up, her mother worked as an administrator for a Denver construction company. Her father worked in the technology department at AT&T. He drove a prized Corvette.

When Blanco was five, her parents moved the family out of Denver to Edgewater, an established suburb just over the city line, in search of better schools. The unassuming A-frame house had an ample yard. Blanco walked to school, went to neighborhood Halloween parties, and studied at a local library. Her family took vacations to Disneyland. When Blanco got married and started her own family, she felt confident that the future would follow this familiar trajectory. But two years ago she was laid off from her job as an administrator at a health care provider.

She and her husband could no longer afford the rent on their two-bedroom townhouse, so her father offered them, rent-free, the house in which she had grown up. He and Blanco's mother had split years earlier, he was living elsewhere, and the house was vacant.

In January, her husband lost his job in customer service at Dish Network when the satellite television provider shuttered a local call center and shifted operations to Mexico. She drove to the county seat in Golden to apply for public assistance. She felt a deep sense of shame, combined with a deeper feeling of resignation: She had a family to feed. Her case officer explained that she did not qualify for help. Her husband's income was imputed to her, and that income bumped them over the limit for cash assistance and food stamps. The bureaucracy seemed to be working against families.

“If you're a single parent, you can get so much help,” she says. “But if you're a family, they don't help you. If I divorced my husband, I would qualify for everything immediately.” Her husband has searched aggressively for work, looking for jobs that seem incommensurate with his experience, which includes a college degree. “He has applied to Walmart and Target, the simplest places to get a job,” she says. “And they don't even call him back.”

Without money for childcare, she can no longer work, she says, further limiting their income. She did qualify for Headstart, and she values the experiences her youngest child is having there, but that is only three hours a day, four days a week — not a window that any employer can use. From the curb, her home looks like many on her block. A trampoline sits out back. An American flag flaps in the breeze above their front stoop.

But when Blanco contemplates her life, her family's future feels deeply unsettled. They are behind on their cable bills and on their Internet service. They have grown used to picking up the phone to hear menacing words from bill collectors.

Blanco and her husband describe themselves as Christians. “We stay positive,” she says. “We have faith.” Yet the breakdown in their lives is testing that faith. “I put on such a good face,” she says. “People have no idea how we're hurting. In all actual reality, there's times when I'm like, 'How are we going to get through this?'”

Pop goes the weasel

Derivatives: The $600 Trillion Time Bomb That's Set to Explode
by Keith Fitz-Gerald – Money Morning
Do you want to know the real reason banks aren't lending and the PIIGS have control of the barnyard in Europe?

It's because risk in the $600 trillion derivatives market isn't evening out. To the contrary, it's growing increasingly concentrated among a select few banks, especially here in the United States.

In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.

The four banks in question: JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc..

Derivatives played a crucial role in bringing down the global economy, so you would think that the world's top policymakers would have reined these things in by now – but they haven't.

Instead of attacking the problem, regulators have let it spiral out of control, and the result is a $600 trillion time bomb called the derivatives market.

Think I'm exaggerating?

The notional value of the world's derivatives actually is estimated at more than $600 trillion. Notional value, of course, is the total value of a leveraged position's assets. This distinction is necessary because when you're talking about leveraged assets like options and derivatives, a little bit of money can control a disproportionately large position that may be as much as 5, 10, 30, or, in extreme cases, 100 times greater than investments that could be funded only in cash instruments.

The world's gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist. So there is literally not enough money on the planet to backstop the banks trading these things if they run into trouble.

Compounding the problem is the fact that nobody even knows if the $600 trillion figure is accurate, because specialized derivatives vehicles like the credit default swaps that are now roiling Europe remain largely unregulated and unaccounted for.

Tick…Tick…Tick
To be fair, the Bank for International Settlements (BIS) estimated the net notional value of uncollateralized derivatives risks is between $2 trillion and $8 trillion, which is still a staggering amount of money and well beyond the billions being talked about in Europe.

Imagine the fallout from a $600 trillion explosion if several banks went down at once. It would eclipse the collapse of Lehman Brothers in no uncertain terms.

A governmental default would panic already anxious investors, causing a run on several major European banks in an effort to recover their deposits. That would, in turn, cause several banks to literally run out of money and declare bankruptcy.

Short-term borrowing costs would skyrocket and liquidity would evaporate. That would cause a ricochet across the Atlantic as the institutions themselves then panic and try to recover their own capital by withdrawing liquidity by any means possible.

And that's why banks are hoarding cash instead of lending it.

The major banks know there is no way they can collateralize the potential daisy chain failure that Greece represents. So they're doing everything they can to stockpile cash and keep their trading under wraps and away from public scrutiny.

What really scares me, though, is that the banks

think this is an acceptable risk because the odds of a default are allegedly smaller than one in 10,000.

But haven't we heard that before?

Although American banks have limited their exposure to Greece, they have loaned hundreds of billions of dollars to European banks and European governments that may not be capable of paying them back.

According to the Bank of International Settlements, U.S. banks have loaned only $60.5 billion to banks in Greece, Ireland, Portugal, Spain and Italy – the countries most at risk of default. But they've lent $275.8 billion to French and German banks.

And undoubtedly bet trillions on the same debt.

There are three key takeaways here:

There is not enough capital on hand to cover the possible losses associated with the default of a single counterparty – JPMorgan Chase & Co, BNP Paribas SA or the National Bank of Greece for example – let alone multiple failures.
That means banks with large derivatives exposure have to risk even more money to generate the incremental returns needed to cover the bets they've already made.
And the fact that Wall Street believes it has the risks under control practically guarantees that it doesn't.

Seems to me that the world's central bankers and politicians should be less concerned about stimulating “demand” and more concerned about fixing derivatives before this $600 trillion time bomb goes off.