I can recall in the 1980's the smug, self satisfaction emenating from Europe with regards to America's homeless problem. It was plain that our euro friends felt superior to Americans because they had so few citizens living on the streets.

In truth, the majority of homeless people in the US still today are substance abusers or mentally ill - just as they were back in the 1980's. But as the social fabric that was held together by massive benefits begins to fray, some parts of Europe, too, are now experiencing a skyrocketing rate of homelessness.

Reuters:

Officials say the number of homeless in Greece has increased about 20-25% in two years, a staggering rise in a country where adult children often live with their parents and pensions traditionally go to supporting young families.

It's a statistic that resonates across many European countries laid low by the one-two punch of recession and austerity, as rising unemployment, shortages of affordable housing and social benefit cuts push more people over the edge and affect people who thought they were immune.

The clean-cut Papadopoulos, 40, shakes his head in disbelief at the year he spent sleeping rough before finding a bed in the shelter. His two brothers -- his only close family -- were too hard hit by the crisis themselves to be able to help him for long.

"I never thought this could happen to me. I later realized how thin the line is," Papadopoulos said. "It can happen to anyone. We are all potentially homeless."

In contrast to the old cliche of the disheveled homeless man with mental health or drug problems, Papadopoulos is part of a new generation of Greeks who have fallen victim to the benefit cuts meant to stave off the country's deep debt crisis.

"The population of the homeless has changed," said Aris Violantzis, a psychologist at the Klimaka NGO. "It's usually middle-aged people, in their productive years, who thought everything was going fine and they did the right things.

"They feel cheated," he added.

It was always an illusion, of course, this fantasy of cradle to grave security. This is not to say the homeless should be left to fend for themselves, but the premise upon which European society has been built has been shown to be a sham. And the chances of it getting worse rise every day that EU leaders refuse to do what is necessary to stem the crisis building in its financial sector.

New York Times:

As for the broader economic effects of Europe's woes, Mr. Weinberg expects credit around the world to become even scarcer. "Outside the U.S., we never really resumed credit growth since 2009," he said. "Another hit now would bring credit down and impose a huge squeeze on small businesses throughout Europe and over here also."

ONE troubling aspect of the euro zone crisis is just how large the European banks' sovereign debt holdings are. At many institutions, the positions dwarf what American institutions held in mortgage-related securities, for example, when compared to book values.

Why? Regulators encouraged European banks to hold huge amounts of European government debt by letting them account for these investments as if they posed zero risk. That meant the banks didn't need to set aside a single euro in capital against those holdings.

Now, according to an analysis by Autonomous Research, 43 large European banks hold debt in troubled sovereigns that is equal to 63 percent of those institutions' book values.

American media is just starting to pay attention to this crisis - a crisis every bit as grave as any faced by the world economy. There are bound to be more homless on the streets of Athens, as well as Lisbon, Dublin, Madrid, and perhaps even Rome before the bottom is hit - or falls out.

And we are not immune to the effects of the meltdown.