As Congress gets ready to pass the new Pork-n-Bailout Plan, everyone is breathing a huge sigh of relief. Help is on the way!
But what if that help doesn’t fix the problem? By now, there seems little chance that Congress will block the bill (that 778-point drop in the Dow having gotten their constituents’ attention), so the markets should already be discounting its passage.
Which is why it’s disconcerting that the credit markets are still tightening. The TED Spread hit a new high this morning: 360 basis points. (The chart below shows through yesterday. It’s up again today.) Yields on Treasuries dropped again. LIBOR is up again, for a fourth straight day.
Could it be that Pork-n-Bailout isn’t going to solve our most pressing problem?