Who Is TED And What Is This Spread?

Go here or here for info about the "TED Spread."

Basically, the TED Spread is the difference "spread" between the London Inter Bank Offered Rate (The LIBOR - the rate at which banks charge when they lend to each other) and the rate on the 3 month treasury bill. It's sort of a measure of economic stability. If there is very little chance that banks will go under, the difference between the rate for a short term loan to a bank will only be a little higher than the rate you would get from lending the government a similar amount of money (a Tbill being essentially that). But, if there is a higher chance that a banks will go under, lending banks will want a higher interest rate to compensate for a higher risk they're taking. To put it the other way around: if there's instability, you would MUCH rather lend money to the government (a relatively safe loan) than lending to a bank (which would not repay you if it went bankrupt).

Therefore, the fact that the TED spread is very big (in historical terms) means that the future of banks generally is very unsure.