Tuesday, February 24, 2009

Good news recap (2)


The TED spread (the difference between 3-mo. LIBOR and 3-mo. T-bill yields, which is a good indication of the market's fear of bank failures) has declined hugely from its all-time high of October 10th. It is still significantly higher than what we would expect to see in normal times, but the market nevertheless does appear to be healing. It took over two and a half years for the TED spread to come back to "normal" levels following the crisis leading up to the Crash of '87. The current crisis hasn't even reached the two-year mark, if you assume it started back in August of 2007. Since this crisis is all about fears of a collapse of the global banking system, progress of this sort is excellent news indeed.

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