At the request of a loyal reader, here is an updated chart of the TED spread, which is very similar to the Libor/OIS spread he requested. I haven't posted this for awhile, mainly because it hasn't changed much so far this year, after collapsing in November and December. It's trading at about the same level today as it was in August '07. Still way above "normal," but well below the peak of late October '08.
It's probably too much to ask for this particular spread to fall back to normal levels at a time when the Fed is pursuing a quantitative easing policy. Fed policy has given us a short-term rate of almost zero, whereas 3-mo. Libor today is about 1.1%. The market is not expecting Libor to change materially until much later this year, when it is expected to be 1.4%. So we're at rock bottom, in a practical sense, for both of the spread components. I take that to be a positive, despite the fact that the spread is still unusually high.