At school that morning, Kira, 14, had made fun of another girl's clothing. She paid the price for her comment that afternoon, when several other kids surrounded her in front of the supermarket, pushing her and calling her a "bitch."

"Why are you putting one of us down?" they demanded. "You think you're better than us?"

None of the passersby there on the shopping street paid any attention to the teenagers. No one helped Kira as the other girls knocked her down, asking, "Does it hurt?" Boys from their group stood by and filmed the violence on their mobile phones.

Kira's bruises and abrasions landed her in the hospital. For days afterward, she hid in her room, not wanting to tell even her mother what had happened. When she finally dared to file a report with the police, nothing came of it. Instead, she received death threats via the Internet. "Next time it won't just be a few blows," one of her fellow students wrote in an online forum, adding that "very different people" would come to get her next time. Kira didn't venture out of her room for weeks.

Nostalgia for Neukölln

All this happened shortly after Kira's family moved a few months ago from Neukölln, a city center district of Berlin, to a cheaper apartment in an area known as the Kosmos-Viertel ("Kosmos neighborhood"). Built before the fall of the Berlin Wall, when the area was still part of communist East Germany, it is a development of bleak residential high-rises at the far southeastern edge of the city. From Kira's 10th floor window, she can see all the way to the Schönefeld Airport runway, outside the city. To the other side of the building are bare fields. Then comes a highway, then, somewhere far in the distance, downtown Berlin -- home to Kira's old life.

Kira sits on her bed, shivering a little in a neon-colored tank top. "I wish I could go back to Neukölln," she says. "Things were better there."

That sentiment may seem surprising to those who know Neukölln's reputation. All over Germany, the central Berlin area is associated with violence, poverty, people on welfare and the failed integration of immigrants. This is the city district that provided Thilo Sarrazin, author of the controversial bestseller "Germany Does Itself In,"  with fodder for his notorious theories about "headscarf girls" from Muslim immigrant families. The district's tough-talking mayor, Heinz Buschkowsky, has become a talk show star because of his outspoken views on the area's problems.

Neukölln is also home to the Rütli School, which made headlines across Germany when its desperate teachers appealed to the government to close the school, saying it was full of neglected children from immigrant families with little inclination toward education. This is also where Kirstin Heisig, a well known juvenile court judge who hanged herself last year, passed her strict sentences. Heisig's book about juvenile violence became a bestseller.

In the minds of millions of Germans, Neukölln remains the country's worst trouble spot, a lawless place run by juvenile gangs.

'The Slums of the 21st Century'

Yet there are now people like Kira who look back wistfully at the time when they lived in the notorious district. Misery is moving house in Berlin: Many of the city's problems are shifting out toward the city limits, into new slums which are starting to resemble Paris's dreaded banlieues. Meanwhile, areas such as northern Neukölln, neighboring Kreuzberg and other parts of the city traditionally populated by workers and immigrants are becoming increasingly popular with middle class residents and hipsters. Tourists are also attracted to the areas by glowing articles in the international media.

It's nearly impossible these days to find an apartment near the Rütli School. Real estate agents see these properties virtually snatched from their hands, even though rents have shot up -- even doubling in some cases -- within a short space of time. Students and artists from around the world are eager to get into the area and apartment viewings often draw 50 people at a time.

Those who, like Kira's parents, can no longer afford the rents in the city center, withdraw to the concrete ring that encircles the German capital. Of Berlin's 3.45 million residents, 420,000 live in these high-rise housing projects on the city's outskirts, in neighborhoods that have so far attracted little media attention.

"The slums of the 21st century are threatening to form on Berlin's outskirts," warns sociologist Hartmut Häussermann, who authored a study called "Monitoring Social City Development 2010" for the Berlin Senate, the city government. His study describes these peripheral neighborhoods as "areas with a low development index" and a high "concentration of social problems."

It's a dangerous development. Urban studies experts warn of the segregation that occurs when a society breaks down into various parts that rarely come into contact with one another. "This displacement needs to be stopped," Häussermann says, explaining that it bars individuals from many opportunities. The phenomenon affects tens of thousands of children, Häussermann says. Not only are they geographically isolated from the downtown area, but their chances of social mobility are also reduced as a result, he explains.

The Capital of Low Wages

Berlin's children's emergency services, which help children at risk in problem families, are already unable to cope. They report increasing numbers of children taken into care because they can no longer stand the situation at home. The costs of government social services provided to families in need are rising, and statistics put child poverty in problem areas at more than 70 percent.

Teenage gangs fight over territory on the streets and squares, sometimes attacking unlucky passersby without warning. Three weeks ago, in an incident that shocked Germany, four young men attacked a painter who was passing through the Lichtenberg subway station on his way home, beating him into a coma for no apparent reason.

With elections to the Berlin city-state parliament coming up in September, a debate has sprung up among politicians over the need for more surveillance and more security personnel -- and a sustainable approach to preserving the city's social cohesion. Berlin's current coalition government of the center-left Social Democrats (SPD) and the left-wing Left Party "has looked on for years, but done nothing," complains Renate Künast , the leading candidate for the Green Party, who is looking to unseat the incumbent mayor, the SPD's Klaus Wowereit. The current mayor acts concerned about social issues, Künast claims, but in reality is allowing rents to rise and leaving poorer people to fend for themselves. "Berlin is the capital of low-paid jobs," the Green Party politician says, claiming that the city's government "isn't taking action to change tenancy law or to fight for a mandatory minimum wage."

Downwardly Mobile

Here on the outskirts of Berlin, trash bags hang from tree branches, nearly every balcony sports a satellite dish and the sidewalks are strewn with broken beer bottles. The street names -- Sirius, Venus, Uranus -- are the only thing left of the vision of progress harbored by the Kosmos-Viertel's original planners. In the late 1980's, the communist East German government wanted to build modern apartments here for employees of its state airline, Interflug. Today, many of the residents simply call their neighborhood "our ghetto."

Outside the supermarket, illegal cigarette dealers make little effort to conceal their business. One man lifts a manhole cover and pulls a carton of cigarettes -- presumably smuggled in from Eastern Europe -- out of his hiding spot. A tradesman grins as he passes by on his way to his car. "I only do work here if they pay in advance," he says.

The owner of a local bar stands in his empty establishment. When asked how the area has changed in recent years, he says nothing and just makes a sharp downward gesture with his hand.

The Berlin Senate's report talks, rather abstractly of a "concentration of social problems." One man whose job is to read electricity meters experiences what that means every day. He has known this area for years, and doesn't need to think long when asked to describe the people who live here in the run-down apartments. He rummages in a jacket pocket, lights a cigarette, and says, using the English term: "white trash."

He's seen them all, the meter reader explains, taking a drag on his cigarette. He's seen their faces, their apartments with damp, molding walls and their hopelessness. Housing developments like Kosmos, he says, are home to downwardly mobile people who used to belong to the middle class, low earners and social welfare recipients who have been forced to leave the city center because the authorities are no longer prepared to cover their rising rents.

Kids with Beer Bottles

They're people like Charlotte S., who's currently taking part in a job-retraining program for the long-term unemployed. In Neukölln, her rent recently went up to €800 ($1,100) for a two-bedroom apartment. "Here, I have a three-bedroom apartment for €490, including utilities," explains the 40-year-old mother of two. But when she moved here a year ago, she didn't realize fear would be the price to pay for the lower rent.

Charlotte S. sits in her tidy living room and talks about how she's worried about her 18-year-old daughter and her nine-year-old son. She wants to get them out of this environment again as soon as possible, but hasn't managed to do so. "There are 12-year-olds with beer bottles out on the street," she says. When a pensioner tried to talk to the kids about it, they shouted back at him, "You should be six feet under!" Charlotte S. says things are even worse for her friend whose daughter is dark-skinned. The girl has to put up with insults such as "nigger bride," and she hardly dares to go outside.

Neighborhoods like this one provide a counterargument to Thilo Sarrazin's polemics, contradicting his claim that poverty, violence and lack of prospects are particularly characteristic to areas with a high percentage of Turkish or Arab residents. Immigrants make up less than 5 percent of Kosmos' residents. In contrast, there is high support here for the far-right National Democratic Party (NPD). It has its national headquarters in the Treptow-Köpenick district of Berlin, where the Kosmos-Viertel is located, and it holds regular social gatherings at a local bar called "Zum Henker." In the last Berlin state parliament elections, in 2006, the NPD garnered nearly 20 percent of votes in the area around Venusstrasse, its highest result in all of Berlin. Racial slurs and attacks are part of daily life in Kosmos.