TED Spread up another 10% today

For those who haven’t been following what Paulsen and Bernanke follow, start tracking the TED spread. The bloomberg link is here. This is the best real time measurement of how reluctant banks are to lend to each other. It is the spread between the rate investors get loaning to the fed (the Tbill) and the rate they get loaning on an interday basis in Euro Dollars to each other (the big ones) - the ED. This has historically been about even. Maybe .19-.25. It is today 3.91, up 10% today. That means banks want 391 basis points MORE to loan to each other than to the fed. That has for all intensive purposes put the kibosh on interbank lending. No-one would pay that rate. And those who must borrow at that rate are in BIG trouble. Watch this rate. If it goes back down to around 1, we have restored enough confidence and money should start to move again. But we ain’t there yet folks. No where near.