TED Spread at one year low... YET!

Amazing the equity market rebounded so high as Euro grids are showing the bank lending is still not functioning.

U.S. Treasury prices are off sharply. Note 2yr spread U.S-EZ has risen (less negative). A move closer to parity would be a positive for the USD, but not at the moment.

3M lbr 4.635 -11.8 -6.5
US-2Y 1.951 35.3 -109.9
US-5Y 3.072 31.0 -95.8
US-10Y 4.058 17.8 2.8
US-30Y 4.316 18.6 -14.5


Now governments on the HOOK for THREE years for inter-banking loans… Just in the middle of a ursidae family recession, it becomes interesting how governments might just have coerced investment banks to let program trading give the markets a shot of crack cocaine. I can imagine Paulson saying to Goldman CEO: “: Heck I got Bush to pony up another $250BB. Just go out there, get your program trading boys to run wild. Buy every equity index you can. Here is the list of banks to buy up and I guarantee you that if you were to lose money on these trades, I would buy equity in your bank without any significant dilution to your team…”

WHAT SCARES ME IS THAT THIS AGAIN WAS ALL DONE ON LEVERAGE!!!!!!!!!!!!!!!!!!!!!!!!!


Hubris or just great opportunity to make some quick coin and leave with your tail between your legs?
Alot of hedge funds will be dead this year so the pie of leverage plays dying
Who would have guessed the US government under Bush would socialize banking to Swedish standards?
I love history in the making!


Below 800 I am buying Gold bullion!


Cheers


P