A lot to talk about today...

The “word” on the street is “subprime.” According to the American Dialect Society, it’s the most important new word this year. Along with “jingle mail,” “exploding ARMs” and “liars’ loans,” it came into the popular language recently...and now everyone uses the term “subprime” to describe anything that is cheap, low down, or deceitful...says the ADS.

We also want to talk about the collapse of gold and commodities...

About the coming surprise to investors...

And more about the fraudulent economic model America has been flowing for the last quarter century...

But first...something important:

“You’ve ruined my summer,” said Elizabeth over the weekend.

“Oh. How’d I do that?”

“You’re just such a wet-blanket...such a fuddy duddy. You never want to go out and have a good time.” More about that below...

But back to the news. On Friday, the meltdown of gold and commodities continued. Oil slipped $1.35. The commodities index, the CRB, fell below 500. The dollar rose to $1.46 per euro. The pound is losing value faster than at any time in 37 years. And get this – gold dropped $21 to close below $800, at $792.

So, what can we expect? Will everything go back to where it was in 2002? After climbing the mountain, will Jacks and Jills all over the world merely tumble down the other side? Oil – will it go back to where it was before the Bush administration attacked Iraq – at about $25 a barrel? Will the dollar go back to where it was just after the euro made its debut 10 years ago – at 88 cents? Will gold roll all the way back to where it was when George W. Bush was first elected president – at about $262 an ounce?

And maybe we’ll all be 10 years younger too!

Nah, too bad...but it doesn’t work that way. Every day, everything ages...changes...twists...corrupts...wrinkles...and decays. Nothing wrong with that, of course...that’s just the way it works. But it’s why, when you get a house, a wine, a stock or a woman, you want one that ages well – one that time improves.

But let’s not get distracted...

The slump in the U.S. continues. Foreclosures are still rising in California.

There’s “blood in the street,” says Barron’s of America’s most famous street, located in lower Manhattan.

Fortune tells us that the “next wave of mortgage defaults” is coming.

And down in Flawda, the Miami Herald reports that the unemployment rate has risen over 6% – its highest level in 13 years. Florida, along with California and Nevada, is where house prices are falling fastest. Many of the people who used to work in construction, or real estate, or installing granite countertops, or financing houses are now looking for work.

And here, we pause a moment to remember what a joke of an economy we Americans have created. We mentioned it last week. Fortune magazine reported a study that compared Germans to Americans. It found that Americans did not work more hours, after all. We work about the same number of hours as Europeans, generally. But Americans tend to do their work at low-skill, service jobs – like flipping hamburgers or cleaning driveways. Germans work at real careers, cook their own hamburgers and clean their own driveways. Germans put in fewer hours “on the job,” as a result.

But in the curious way in which statistics become confused with knowledge, the statistics on hamburger joint revenue get fed into the figures for GDP growth. Then, it looks like the U.S. economy is doing better than the German economy, even though both groups may be eating exactly the same number of hamburgers. And then, too, U.S. economists and politicians believe they have found the secret to economic success; because the US model puts people to work...and boosts GDP growth. Soon, they are giving advice to the Chinese and wagging their fingers at the Europeans. It’s only later, when the credit runs out and their service industries go broke...that they get the punch line – good and hard. Then, they have to cook their own hamburgers again.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.