'American Dream' withers as tent cities mushroom in promised land

The nation that once gloated over its ability to feed the entire world is seeing an explosion of poverty: The number of people surviving on food stamps is rising as biting unemployment refuses to abate, personal incomes have been falling while the debt bubble is inflating with each passing day and, in a more startling representation of the grim reality, tent cities are mushrooming as more and more people are pushed out of their ‘underwater’ homes.

Homelessness is skyrocketing, tent cities are popping up everywhere and countless numbers of American families are experiencing the soul-crushing despair that comes from desperately trying to hang on for month after month after
month, writes Michael Snyder in Daily Markets website.

Snyder narrates the woeful tale of people who once had stable careers and were part of the ‘American Dream’ ending up in tent cities after their houses were gone and life’s saving exhausted. Some battle it out in scrap yards while others, afflicted with illnesses, have no hope of getting medical aid.

And the whole misery is not just a product of the recession which followed the credit crunch, experts say.

The root of the troubles goes a long way back indeed, starting from the waning of the nation's industrial might, the closing down of factories and the slow and steady disintegration of the American middle class which started over a generation ago.

The United States has lost approximately 42,400 factories since 2001. The greatest economic machine in the history of the world is literally having its guts ripped out, and most of you kept voting in jokers who supported all of this deindustrialization, writes Snyder.

America is hurting everywhere -- from a Himalayan debt bubble to ballooning trade deficit, and from skyrocketing overseas military spending which is supposed to keep the show of strength from unraveling to the diminishing ability to influence global financial policy making.

In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion. Yet the U.S. efforts at G-20 to get trade surplus countries to agree to a plan to rebalance their economies came to naught.

As American wealth flows to those trade surplus economies every month, efforts to boost domestic jobs are failing flat out. As many 1.41 million Americans filed for personal bankruptcy in 2009, a 32 percent increase over 2008.

And the number of homes taken over by banks touched a new record in September when it crossed the 100,000 mark for the first time. The number of homeless people is rising at a staggering pace.

If you really want to see some soul-crushing desperation, go check out the flood tunnels under the city of Las Vegas. But do not do this alone – it is very dangerous down there. Today, there are hordes of “tunnel people” who call those dark tunnels home. Nobody knows for sure how many people are down there (some people say that it is well into the thousands), but everyone agrees that the number is rapidly growing.

But in many major U.S. cities there are no flood tunnels to go to. Instead, in many areas of the United States huge tent cities have sprouted, writes Snyder.

The crisis could worsen over time. Moody's Economy.com, chief economist Mark Zandi estimated earlier this year that
roughly 15 million American homeowners owe the bank more than their home is worth. The alarming fact is fact many homes are worth only half of their mortgages.

It's not just homes that the poor are deprived of, but food as well, according to recent reports.

A new report by the US Department of Agriculture (USDA) said a staggering 15 percent of US households, or 17.4 million families, were too poor to buy adequate food last year. More than 42 million Americans are now on food stamps, meaning they will not be able to buy food if the government did not give aid.

The report showed the number of families classified as “food insecure” has more than tripled since 2006.

“Virtually the sole cause of food insecurity in America—the largest producer of agricultural and food products on the planet—is lack of money. The poverty rate has risen sharply over the past three years, with an estimated 50 million people living below the official poverty line, which grossly underestimates the income needed for basic necessities,” points out Patrick Martin from the Centre for Research on Globalization.

However, he also says the USDA report on poverty did not make the front pages of mainstream newspapers. He says the news was relegated to inside pages in the Washington Post, while there was nothing in the New York Times.

In a society which took seriously the value of human life and the future of its children, the spectacle of 50 million people at risk of hunger, including 17 million children, would be a social emergency. Given that the United States once boasted of its ability to feed the planet, the indifference to the growth of hunger at home is a national scandal, writes Martin.

But in reality the society has been changing too, shedding its reputation for being equitable and egalitarian.

Studies have shown that the fabled American middle class has been shrinking for a long time, and the annual incomes of the bottom 90 per cent of the U.S. households have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. Meanwhile, the income of the top one percent has tripled.

From foreclosures to unemployment to household debt to bankruptcies, the American middle class is under assault -- and America is in danger of becoming a Third World nation, Arianna Huffington wrote in Huffington Post in August.

To cap it all, there is apparently a policy paralysis that could worsen the plight of the afflicted people, experts say.

Now, because of the horrific hole that our politicians have dug for us, we are faced with some heartbreaking choices. For example, right now the U.S. Congress is deciding whether or not to extend long-term unemployment benefits for the nation’s jobless. Extending those benefits through the end of February would add another $12.5 billion to the U.S. national debt. But not doing it would cut off the only lifeline that many Americans have just in time for the holidays, writes Snyder.