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WHAT TO LOOK FOR... (aka when will it end)

If there is one key tool that will tell us when the credit crunch and problems in the financial markets are easing? It is the TED Spread. That is the gap between three-month US Treasuries (the risk free rate) and three month Libor (the rate at which banks lend to one another). Historically that rate has been a fraction of one percent. It spiked in September 2008 to over 2% and has increased since last month to well over 4%. A chart can be seen here. When this ratio declines it will be good news and when it it under 1% this crisis is likely nearing its end.

Posted by Sean Crowley on 10/13/2008 10:21 PM

Comments (5)

TED Spread in the ActiveRain Channel

financial crisis

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5 Comments on WHAT TO LOOK FOR... (aka when will it end)

OCT

2008

Sean~ Could you make it a point to let me know when this happens? I will be so glad when this crisis ends!

OCT

2008

Sean Thank you for your post. This is quite a period to get through but it will pass. Meanwhile, what do find is the general sentiment with the buyers you encounter on your Island? Here Its pretty much dead flat but the Buyers are extremely picky and hard to get "on paper."

Aloha

James Pycha (R)

Aloha Sean,

I've never heard of the TED spread but by the looks of it we have a ways to go yet. Thanks for the post.

Peace,

OCT

2008

I saw Ted and Libor both shrank today. Good to see some progress being made.

OCT

2008

I heard from an escrow officer that the rates may be headed to 7%. Before our last market took off we were at 7% and the market remained sluggish. 7% was not a bad interest rate before our market recovered.

Steve

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