ECB calls Cyprus deposit theft "solidarity levy"

From the Washington Post:

“If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such,” European Central Bank Executive Board member Joerg Asmussen said today in Berlin. “What’s important is that the planned revenue of 5.8 billion euros remain.”

The Orwellian theme from government leaders has gone global. Let's raise our victory gin to the solidarity tax, which will help us defeat Eurasia! We've always been at war with Eurasia, or was it Oceania?

In case you were wondering, what is supposed to happen when a bank fails is that the value of the stock goes to zero, bond holders are impaired to the extent needed up to a 100% loss or conversion to equity, then the state takes over the bank and depositors with balances above the insurance limit take losses. In this case, they are hitting all depositors first, including those below the insurance limit, and apparently leaving the bond holders and management untouched. In fact, it is blatant theft of lunch money by the EU and ECB bullies.

The global game now is to make sure when the next government backed bank theft comes, the next MF Global, the next TARP, etc. your money isn't there.

Gold vs U.S. debt linear regression -- correlation over?

The chart below is based on data since 2001. The adjusted R-squared is 0.97.


Best fit price is $1,789.
One sigma below is $1,706.
Two sigma below is $1,624.
Three sigma below is $1,536.

The correlation between the gold price and rising US debt has been very strong since 2001. The extremes in deviation have been slightly more than 2 sigma plus (September, 2011) or minus (September, 2008) the best fit linear regression line. The gold price as of March 1, 2013 is testing the bottom end of the range at about 2.5 sigma below the best fit price.

This price either signals an incredible buying opportunity or the end of the twelve year correlation. If gold closes below $1,536 in March, I would suggest it means the end of the correlation. The odds of the correlation remaining intact with a three sigma variation is 99.7% against.

Whether this is the end of the gold vs. debt correlation or not, I am convinced that U.S. debt will continue to accumulate at a faster than average pace. Apologists for the administration like to point to the second derivative of the deficit, saying the rate of the improvement, or reduction, in the deficit as a percentage of GDP is better than ever. However, the actual deficit for 2012 was a very high 8.5% compared to the average from 1970-2008 of less than 3%. If the sequester remains in effect through 2013, the estimated deficit would still be a higher than average 5.5%. Total credit market debt remains near all time highs.