by Laura Conaway

The TED spread is dropping — it's still too high, but at least it's falling — and yet the financial world still seems to have the flu.

Currency guru Meg Browne of Brown Brothers Harriman explained.

 

Banks have gotten more willing to make very short-term loans. As a result, interest rates on overnight borrowing have fallen, which is pushing the TED spread down. So far, so good, Browne says.

But she's seeing far less change in longer-term loans — like loans for a month, say, or three months. Those remain painfully high.

"It says that banks are still unwilling to lend," she explains. "That trust that officials are looking for still isn't there."

And here's the thing: Despite intervention by governments around the globe, this crisis has started to drag on and on. "The longer it takes, the more it prevents normal business from taking place," Browne says. That's bad news for Main Street.