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Jesse's Café Américain: Demystifying the TED Spread : "18 April 2008 Demystifying the TED Spread TED is an acronym for Treasury and EuroDollar. A Spread is just the difference or 'distance' between one thing and another. Eurodollars are bank deposits denominated in U.S. dollars but held at locations outside of the U.S. Initially, the term only referred to dollar deposits in London but has been expanded to include dollar deposits at any offshore location. The deposits may be held by the foreign branches of U.S. banks or by non-U.S. banks. Eurodollar deposits may be Eurodollar certificates of deposit or simply Eurodollar time deposits. T bills are US Treasury debt of short duration are considered to be risk free. TED Spread = Yield on Eurodollar deposits - Yield on T Bills...."

Bloomberg.com: Not over yet Paul Krugman NY Times April 10, 2008, 9:54 am Gurk. The TED spread is up again. So is the LIBOR-OIS spread. (One is the spread between Libor and Treasuries, the other the spread between Libor and the futures price of the Fed funds rate; I tend to prefer TED spread, because fears of bank defaults should affect Fed funds as well as Libor; but I know that Fed officials prefer OIS. Anyway, both pointing in the same direction.) And the flight to safety is back, with the interest rate on one-month Treasuries — which should be about the same as Fed funds — back down to 1%. All of this involves fear of defaults by banks — despite what look from here (central New Jersey) like utterly clear signals from the Fed that bank debts will be socialized if necessary. I’m puzzled, and worried.