A highly recommended post on China

Brad Setser (for it is he)

Brad Setser is my favourite number-crunch blogger and does a simply magnificent job at his "Follow The Money" site.

Today he's written an overview post about the Chinese economy and its growth prospects going forward. Unmissable post written in a not-too-wonky style that we can all understand easily. Setser is as good as it gets on the Chinese economy. Stop reading this site right now and go read Setser. Here's the link.

Chart of the Day

From Brad Setser at 'Follow The Money'

His blog really is unmissable for financial wonks (guilty). Go over and read the context to this very impressive piece of charting.

Beware of anyone who says they "know" what's going on and how this will end. The best brains out there are flummoxed, so just ignore the pseuds and fools, please. Play it safe and preserve capital.

One question about this AIG thing

When a gov't cuts a cheque for U$85Bn, where do the funds come from?

Seriously, I've been thinking about this since last night and I've come to the conclusion that I don't have a clue. It's not from any fiscal surplus, that's for sure. Brad Setser took time out from the fast-breaking news all around him yesterday to look at the July TIC data and rightly called it 'stunning'. What with the capital outflows since that month, things can only be worse, too. Setser's blog is required reading for those who want to understand the current structural weakness of the US economy, although I'd also equally recommend that you don't read it because it brought me out in a cold sweat last night thinking about the consequences.

And people don't think that Bennyboy has fired up his helicopter yet? They're mad. You guys up there are about to find out what inflation really is....so far it's just been the hors d'oeuvres, the snacky things on sticks they come round with before you sit down. You haven't even started the soup course.

Otto advises: Make gold a significant part of your long term portfolio. Preserve your capital. Samo samo I know, but the thing to do in this climate is hunker down and wait for the moment that your money can be used for real gains. The stock marktet today is nothing less than Las Vegas. Fun for the little money but not for farm-betting. Be careful out there.