What a difference a weekend can make on investor confidence. Sharp rises in equity markets indicate some traction for worldwide efforts to promote corporate lending. A measure of current monetary policy effectiveness is the TED spread. This spread measure the difference between US 90 day treasury bills and Libor or the rate at which you can lend to commercial banks.  When rising this is an indication of a reduction in liquidity in the general economy. The equilibrium rate is expected to be somewhere between 50 and 100 basis points or below 1%. As you can see from the chart below we are at unprecedented levels more than 445 basis points. So while we are all thankful for this recent stock market reprieve, a healthy worldwide economy will be in a large part subject to a follow through in the reduction of the TED spread.