The TED Spread and the S&P 500 Compared

October 1, 2008 at 8:22 am | Posted in American politics | 4 Comments

The first image is the TED Spread over the past three years taken from Bloomberg. The TED Spread, as defined on wikipedia is “a measure of liquidity and shows the degree to which banks are willing to lend money to one another.” The higher the number, the less likely banks want to lend money one to another.

As you can see things were going fine up until mid-year 2007. The following is the S&P 500 from Google Finance, over the past three years.

As you can see, starting mid-year 2007, it began its drop, losing nearly 30% of its value over that time. This is a really bad problem, and unless fixed, will cause the collapse of our credit-driven economy.

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4 Comments »

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  1. I’ve been looking at those very things recently. Look at LIBAR tables as well. Crazy.

    The whole world is suffering in serious ways right now from overdebt and undervalue.

    This from an informed Wall Streeter (Managing Director):

    China has the most to lose in this game, and Russia is close behind (take a peek at a chart of the Russian stock market over the last few months @ bloomberg.com). They’ll fall in line, and when they do, Chavez will, as well. Venezuela just did a sovereign debt issue at a 15% interest rate. I don’t have oil reserves, and I could do much better than that.

  2. “This is a really bad problem, and unless fixed, will cause the collapse of our credit-driven economy.”

    You might want to consider that a “credit-driven economy” might just stand in need of serious collapse. Maybe it’s time to seriously reconsider our whole economic foundations.

  3. Mark N.,

    Barter?

  4. Trust. Forgiveness. Faith. You know, all those values that Christians supposedly put so much stock in.


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