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The Circular Logic And Prayer Tactics Of Draghi Queens, Sinomaniacs, And Other Orwellians

Tyler Durden's picture


We have desperately tried to explain the sheer idiocy of the circular argument of the Fed 'attemping' to stimulate fiscal policy by enacting an overly permissive monetary policy, having failed miserably time after time. Perhaps the 'simplistic' argumentation of Diapason's Sean Corrigan will succeed where we have failed (although we are not holding our breath).

"Companies in the steel sector should be prepared for a long-term depression," Zhang Changfu, secretary-general of the CISA, told media earlier.


Strange then, that the offificial data for July suggest that Chinese steel outout hit a new, all-time high of 61.7M tonnes during the month, the YoY increase making up no less than 99% of the entire global increment over the year. Why on earth would this be?


Chalk it up to moral hazard - specifically, the same zombifying belief shared by the whole motley crew of Sinomaniacs, Draghi queens, and QEasers everywhere; that bad news equals good; that, in true Orwellian fashion, 'Weakness Is Strength' - that any shortfall in voluntary demand will elicit a large enough crank of the priting press handle that the glut will soon be removed from the market and so obviate the need to undertake any painful restructuring, or to quit the business and release scarce resources for use by those with a genuinely viable busines plan.




Back in metal-bashing business, Wang Lei, the head of a Shandong ore trading company, bemoaned the current adversity, telling Caixin:


"If you had iron ore [last year], you could hold it for a couple months and then sell it and earn $20 to $30 per ton easily. We bought ore for about $135 per ton, but no one will take it, even if we try to sell it at a loss."


Wang and his friends apprear to have drawn a deangerous lesson from the events of 2008-9 though. As he told the magazine, Wang remembers watching the value of his company's inventories decline rapidly in 2008 until the price bottomed at US$60 per ton the following year.


When the ore prices fell, he reminisced, he and his fellow trades were not pessimistic because they correctly assumed that the Chinese government would step in with an economic stimulus to offset the crisis and so revive demand. Sure enough, as the boom progressed, prices soared, reaching close to $200 a tonne in 2010, a level they revisited some 18 months ago, before policy began to tighten and the long slide to sub-$100 began.


So, once bailed out, always bailed out seems to be the guiding inference. Meantime, close your eyes and pray.

Via Sean Corrigan of Diapason Commodities

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Sat, 08/25/2012 - 16:01 | 2737467 blindman
blindman's picture

Clarence "Gatemouth" Brown - Dollar Got The Blues

Sat, 08/25/2012 - 16:03 | 2737472 dolph9
dolph9's picture

The world now has 7 billion people all of whom think they will live forever and become millionaires.  And governments and central banks are doing everything in their power to make sure these delusions continue.

Sat, 08/25/2012 - 16:05 | 2737477 Western
Western's picture

CBs will make us all millionaires.

Sat, 08/25/2012 - 16:17 | 2737505 Pure Evil
Pure Evil's picture

Plenty of trillionaires in Zimbabwe.

Sun, 08/26/2012 - 08:24 | 2738275 deez nutz
deez nutz's picture

The world now has 7 billion people all of whom think they will live forever and become millionaires.

The world now has 6.65 billion people who think they are all getting "american outsource jobs" while americans think they will sup on EZ CREDIT forever. 

Sat, 08/25/2012 - 16:05 | 2737478 Spastica Rex
Spastica Rex's picture

Another ZH article promoted by a big hooters picture. Pathetic.

Sat, 08/25/2012 - 20:52 | 2737834 James_Cole
James_Cole's picture

The ads are google adsense, so they target to whatever else you've been looking at. I get airplanes, cars and engineering software ads. Never seen hooters on here. 

Sun, 08/26/2012 - 03:52 | 2738118 object_orient
object_orient's picture

He probably means the big sumo wrestler under the headline. Spastica Rex is a funny guy, you should give him the benefit of the doubt.

Sun, 08/26/2012 - 03:59 | 2738119 Dead Canary
Dead Canary's picture

Mister Cole, you have the brain of either a small child or a large cow.

Sat, 08/25/2012 - 16:09 | 2737493 Xibalba
Xibalba's picture

You know what would be great for iron ore?  WAR.  Expect that shit soon. 

Sat, 08/25/2012 - 16:14 | 2737504 Hulk
Hulk's picture

I lost 5000 tons of iron ore in a very bad canoeing accident on Lake Superior in 75...

Sat, 08/25/2012 - 17:06 | 2737587 francis_sawyer
francis_sawyer's picture

Rehypothecated by Gitchee Gumee... But what happened to the other 21,000?

Sat, 08/25/2012 - 17:21 | 2737603 yabyum
yabyum's picture

Wreck of the Ella Fitsgerald?

Sat, 08/25/2012 - 18:39 | 2737693 blindman
blindman's picture

Gordon Lightfoot - The Wreck of the Edmund Fitzgerald
Funny Catherine O Hara and Fred Willard scene from "Waiting For Guffman"
On the Edge with Professor Steve Keen
Posted on August 25, 2012 by stacyherbert
"Something's Gotta Give" Ella Fitzgerald

Sat, 08/25/2012 - 21:32 | 2737881 yabyum
yabyum's picture

Blindman: Thanks for the Ella F! + 1000

Sat, 08/25/2012 - 18:03 | 2737658 Hulk
Hulk's picture

It was a frickin canoe Francis, no way that thing could hold 26,000 tons of iron ore !!!

Sat, 08/25/2012 - 23:42 | 2737972 hoos bin pharteen
hoos bin pharteen's picture

It would also explain the rising oceans... 

Sat, 08/25/2012 - 16:24 | 2737519 kevinearick
kevinearick's picture

Library of Congress

Govt is nothing more than misdirection between passive aggressive male and female robots, posing as humans, with pent up emotions looking for an anonymous outlet, preferably with a label for the purpose, fighting for supremacy over the past, doomed to repeat it, as gravity for the next generation to deploy, imploding beyond control.

It is always the end of times for those awaiting consensus, and the beginning of times for those seeking to build a real life with real materials in the environment. Govt can only regulate your effort to the extent you compete for an equal opportunity to participate in capital’s so-scarce lottery, rather than building your own bridge. Law codifies behavior. But what fun would there be if there were no evil make-work empire around, for Ivan the Terrible to slash and slaughter once in a while?

What you require is an elastic legal system, with a negative feedback circuit to nature, which means you must learn from your children, to do the impossible. Self-governance is always the answer, though it may be implemented in any number of ways. Family is all about self-governance, in an empire landscape, as an example. Ask any librarian, if you can find one, beyond the mental age of 2.

Sat, 08/25/2012 - 16:28 | 2737524 Cult_of_Reason
Cult_of_Reason's picture

"Companies in the steel sector should be prepared for a long-term depression," Zhang Changfu, secretary-general of the CISA, told media earlier.

"Most private steel mills are short of capital now, as prices of steel products keep declining and sales keep shrinking," said a Tangshan-based steel mill owner surnamed Guan.

"The current situation is even worse than the economic crisis in 2008, and many private steel mills will go bankrupt in half a year if the industry gloom continues," said Guan.



Steel Prices Fall to Lowest Level in Three Years (China)

Domestic steel prices fell to 3,670 yuan ($583) a metric ton on Aug 21, the lowest level in three years, according to a report in the Economic Daily.

Major Chinese steel producers lowered their steel prices in September based on the falling prices in August. The steel industry is still registering losses and investors lack confidence...


Sat, 08/25/2012 - 16:43 | 2737554 resurger
resurger's picture

I was looking at AAPL chart from 1984 to 2012, am just amazed! Is it Normal or am just ....

Sat, 08/25/2012 - 16:32 | 2737533 LongSoupLine
LongSoupLine's picture

logic has nothing to do with the plans and actions of CB's. It is purely the intentional transfer of wealth. The less time we spend trying to analyze it in the context of honesty, and accept it ad it is, purely criminal, the quicker we can get on with revolution.

Sat, 08/25/2012 - 17:07 | 2737583 Atomizer
Atomizer's picture


Sat, 08/25/2012 - 17:43 | 2737631 Winston Churchill
Winston Churchill's picture

Same price as 1971.

Looks like most things (not PM's)are going to revert to that,if we're lucky.

Deflation bitchez.

Sat, 08/25/2012 - 18:10 | 2737663 JR
JR's picture

If you give cocaine to a user who’s addicted, he doesn’t have to buy it, which is what Bernanke and Draghi are doing. Rather than curing the users in the equity markets of their stimulus habit, it just gets worse and worse while the volatile and compulsive pattern of the addicted gets more dangerous. And the more the users binge and crash the more the QE pushers give out and the more the pushers cut the purity and the more the QE addicts need…until all the value of QE is gone and it’s just so much worthless paper.

Sat, 08/25/2012 - 18:39 | 2737690 q99x2
q99x2's picture

How are you feeling? Good.

Sat, 08/25/2012 - 19:40 | 2737752 Waterfallsparkles
Waterfallsparkles's picture

Does seem like everything has failed, EXCEPT THE STOCK MARKET.

Interesting to say the least.  Housing has declined in some markets by 75%.  Especially, the lower end of the Market and the higher end of the Market.

Yet, you have skyrocketing Food and Oil prices.  Wages are falling, that is if you HAVE a job.

All economic growth by the Corporations (especially those who do not pay taxes) are being transferred overseas.  To enrich other Governments and Foreign Countries.

Globalism is said to be good but until American workers are willing to work for Chinese wages we will be unable to compete and Corporations will continue to ship jobs overseas.  America needs to take control otherwise we are doomed to live like the people in impoverished Countries.

Sat, 08/25/2012 - 21:14 | 2737864 honestann
honestann's picture

Nope.  The solution is to leave the USSA.  Why?  Because the predators-DBA-government and predators-DBA-corporations in the USSA will not stop consuming everything good until everything good is gone.

Sat, 08/25/2012 - 21:32 | 2737882 Totentänzerlied
Totentänzerlied's picture

There are still plenty of places not at wage parity with China, i.e. labor markets ready to be developed and exploited. Globalism does not begin and end with America. It is a parasite, eventually it must move on because the host has either been made unfit or is dead. IF this somehow were to continue, say, 20 years (purely hypothetical), the Chinese would be in our shoes - screaming about outsourcing and wage arbitrage and corporate greed as their manufacturing base is dissembled and sent to Country X. This is what happened with Britain and the US, their economy tanked while ours exploded part-way through the Industrial Revolution. If I remember correctly, much of Britain's success was based on what amounts to theft of industrial, agricultural, and manufacturing technology whether as real or intellectual property. America then did the same to Britain, and now China has done it to America. There are many, many other examples.

Sat, 08/25/2012 - 21:27 | 2737877 Confundido
Confundido's picture

This guy wrote about this already a month ago:http://sibileau.com/martin/2012/07/23/the-age-of-circular-reasoning/

Sun, 08/26/2012 - 02:01 | 2738056 AnAnonymous
AnAnonymous's picture

'Americans' are revolutionaries: they are fond of circular logics.

Sun, 08/26/2012 - 03:20 | 2738100 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymousitizens are excretionaries: they are fond of roundabout roadside crapping.

Sun, 08/26/2012 - 12:44 | 2738659 akak
akak's picture

The ragingly bigoted and otherwise meaningless babbling of the demonstrated troll above are unworthy of response.
Please do not reply to it, or to him, in any way.

Sun, 08/26/2012 - 05:49 | 2738167 slewie the pi-rat
slewie the pi-rat's picture

all orwellians are not created equal

in slewienomics :>  equal means =

if somebody fuks you, you got fuked!

Sun, 08/26/2012 - 20:23 | 2739654 radicall
radicall's picture

Isn't the increased Steel production logic same as Regan's supply side economics? aka "if you build it, they will come"

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