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 The euro rose to $1.36 over the weekend, just shy of an all-time high. Germany booked a 7 billion euro increase in May exports. The pound also took back last week’s dollar gains. The sterling will now set you back $2.01.
 U.S. markets ended the week slightly higher. So far in the third quarter, the Dow, S&P and Wilshire are up a bit more than half a percent each.
 Friday’s Labor Dept. employment report showed an addition of 132,000 jobs in June. Coupled with May’s nearly 200,000 new jobs, that puts unemployment, according to government quants, at 4.5% -- close to a six-year low.
We’re a skeptical bunch. So apart from our usual accounting of those in the “given up” or “why bother looking for work” categories, or kvetching about low-paying service jobs, we went searching for some other dark cloud. Here’s one:
African-American teen unemployment grew to seven times the national rate in June. White teen unemployment is at its highest in two years. And while overall unemployment held steady at 4.5%, teen unemployment made a significant jump, rising steadily to 15.8%, its highest since September 2006.
"If teens are having trouble finding summer jobs now, it will only get worse, thanks to recent minimum wage hikes," said Dr. Jill Jenkins, chief economist for the Employment Policies Institute. "Wage hikes don't help those in need. They force businesses to cut jobs and scheduled hours, which could turn a summer break into summer employment heartbreak."
 Gold's in good shape this morning... currently at a one-month high at $661. And a little drama in Africa is pushing up oil, too... it’s at almost $73 a barrel.
 The share of subprime mortgages going bust in the first quarter of 2007 was the highest in almost five years, according to the Mortgage Bankers Association. And that’s just the beginning. Loans that require “little or no documentation of income” made up 46% of all U.S. subprime mortgages last year.
“Subprime defaults are ‘clearly a huge problem’ for investors in collateralized debt obligations (CDOs),” Ivan Vatchkov from Credit Suisse told Bloomberg this morning. Credit Suisse estimates losses for investors in bonds backed by U.S. subprime mortgages may total $52 billion. And that’s the low end. Analysts at Deutsche Bank put that number closer to $90 billion. Pimco number crunchers say $75 billion.
 About the practice of “putting lipstick on a pig” as our Dan Amoss calls it, or giving these CDOs safe credit ratings, thereby luring in unsuspecting investors, Pimco’s Bill Gross had this to say:
“What was chaste and AAA years ago may no longer be the case today. Our prim remembrance of Gidget going to Hawaii and hanging out with the beach boys seems to have been replaced in this case with an image of Heidi Fleiss setting up a floating brothel in Beverly Hills. AAA? You were wooed, Mr. Moody’s and Mr. Poor’s, by the makeup, those six-inch hooker heels, and a ‘tramp stamp.’ Many of these good-looking girls are not high-class assets worth 100 cents on the dollar.”
We’ve even heard allegations that one of the major ratings firms was being paid to give funds laden with CDOs AAA ratings. We’re looking into it…
 Many Asian governments are rolling back reforms made in the wake of the Asian currency crisis of 1997.
In the past 30 days: South Korean regulators ended restrictions on bank investments by chaebol, conglomerates that plummeted under the weight of their own debt back in the late 1990s; Indonesia introduced new restrictions on foreign ownership of domestic businesses; Thailand introduced new controls on domestic equity investments; and Taiwan capped mutual fund investment in a bid to stem capital outflows.
Each of these countries has tried to pull the rug out from overseas money before… with horrible results.
“The crisis of ’97 obliterated several Southeast Asian stock markets,” Chris Mayer comments. “From May 14, 1997, to Jan. 8, 1998, Thailand’s stock market dropped 69%. The Philippines lost 61% of its value. Indonesia 65% and Malaysia 75%. The crisis brought on a plunge in real estate prices and widespread insolvency.
“It’s taken a long time to dig out of that hole. But now government officials seem to have forgotten that lesson… not smart. I guess one Asian crisis was not enough.”
 “Brazil is turning 56% of its sugar into ethanol this year,” reports Kevin Kerr of Resource Trader Alert.
“It’s crazy that we’re looking to oil to drive sugar prices,” Kevin told Joe Kernen on CNBC on Friday, “but this is what the market is following right now.” Global fuel demand has prodded Brazilian officials to bump up ethanol production and, in turn, devote more of the sugar crop to fuel production. How much? About 270 million metric tons.
“We are at key technical levels here,” advises Kevin. “This could be the impetus to move it back above 12 cents.” For ideas on trading the ethanol boom in both sugar and corn, be sure to subscribe to Resource Trader Alert.
Kevin’s had one sugar trade expire this year for a 100% loss… but another one go up for a 84% gain in just three days. Last year, he scored 204% and 379% gains against a 98% loser. So when you hit, you hit big. Lifetime for sugar... he is up 93%. Trading corn... he's sold twice in 2007 for 162% and 77%. If you’d like to learn more, click here.
 The Dubai government has “decreed” a new fiscal plan that will help build the world’s largest shopping mall, airport and strip of hotels. His Highness Sheikh Mohammed bin Rashid al Maktoum granted the Al Bawadi hotel project twice as much money as originally budgeted, putting it on track to build 51 hotels with over 60,000 rooms -- the largest grouping of hotels on the planet… including the biggest single hotel in the world, Asia-Asia, a 6,500-room beast.
Al Bawadi will simultaneously become the world’s biggest shopping center, with 300 movie theaters, 1,500 restaurants and what’s sure to be many more stores and shops. The price tag for this mega-strip of hotels and shops? $60 billion.
That’s in addition to the $82 billion we told you about on Friday that will be spent over the next decade on “aviation,” including the $33 billion Dubai World Central Intl. Airport. The aptly named airport will be the world’s largest, once completed… up to six planes will be able to take off simultaneously.
Some pictures to illustrate what’s happening in the Sheikdom by the Sea:
Dubai in 1990
The same street in 2003. Dubai is currently home to 15% of the world’s building cranes. And sports the world’s only underwater hotel. Here’s a sketch:
The hotel was built entirely in Germany, and then reassembled in Dubai in 2006.
You can see more pictures of the zaniness going on in Dubai at the following Web site: http://dubai.isnuts.googlepages.com -- but be warned -- it’s not one of our sites and some of the language would make a linguist blush.
We’re going to Dubai in the fall. On the way back from our Asian Tiger Investment Tour of India in October, we’ve scheduled a three-day side trip to Dubai. If you’re interested in joining Karim Rahemtulla, Chris Mayer and yours truly on the trip, there are still a few spots open.
 “Hugo Chavez was elected in what international observers have said was a free and fair election,” wrote a reader. “The man has done a lot of good for his people. Could he do better? Of course. All this bad-mouthing of him is part of the Bush administration’s playbook on regime change. Don't take us there.”
We haven’t received our copy of the playbook. But our “bad-mouthing” of Chavez is more like mockery. What good is he doing for his people that they couldn’t do better themselves? State ownership of the nation’s refineries and banking system isn’t going to help anyone in the long run. With even a cursory look at the history of the 20th century and the myriad experiments with state-run economies -- the USSR, China, India, to name just the biggies -- how can you say otherwise?
 “What an ignorant statement,” opined another reader. “‘Carter tried to wreck the economy in the '70s.’ No president tries to wreck the economy, least of all a first-term president. If you look at the facts, inflation reached over 11% in 1974 under Ford, and then settled back until 1979, when it took off again.
“What triggered the inflationary spurts was ‘Oil Shock 1’ and ‘Oil Shock 2.’ Neither Ford nor Carter had that much control over the cause of the inflation. In fact, if you look at the Reagan years, the fiscal policy followed then was much more likely to create inflation than anything Carter did. Do you truly believe that a massive tax cut and spending increase in 1979 to generate a multihundred-billion-dollar deficit would have decreased inflation?”
You’re preaching to the choir on tax cuts and deficit spending. We’ve been following the Concord Coalition around the country on its Fiscal Wake-Up Tour. It features prominently in our upcoming documentary. At one point, Harry Zeeve, the coalition’s field coordinator, made a simple point: It doesn’t matter if you want big government or small government. But it is fiscal suicide to SPEND like a big government and only PAY for small government.
If you parse the history books, you’ll find we haven’t had a president since Andrew Jackson in the 1830s who thought it was part of his job description to pay off the federal debt. Reagan was as fiscally irresponsible as the best of them. But Carter was no saint. And price controls? C’mon. That’s no better than Chavez in Venezuela today.
Best regards,
Addison Wiggin,
The 5 Min. Forecast
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