I would call “unexpected” an adjective here — it refers to the “squashing together” (a gerund of the phrasal verb “to squash together”, meaning to form into one unit by squashing). The gerund is a noun, so this is indeed a “noun of noun” structure. “Of lives” has the same meaning as the object of the gerund — we could rephrase it as “squashing lives together”. The new version is ambiguous; we can use it as either a gerund phrase or a participle phrase, depending on the context.

Dear Stephanie, This sentence came from TIME. I felt strange at first sight as well. : ) Ref: https://tinyurl.com/ycmnc6ot Thanks for your reply. ^_^

That is very strange sentence. To try to explain I will say that there seems to be a noun before "Of lives" The noun would be the implied action of grouping things. I have heard of gerunds and know that they are -ing words. S.