Credit, Uncrunched

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The above graph of the current TED Spread -- the difference between what it costs banks to borrow money from the government and what it costs banks to borrow from one another -- is a heartening sign that the liquidity crisis may well be behind us, and that the massive government interventions we've been seeing are actually working.

The TED spread is still wider than its historical average, but we're out of the crazy spreads of a few months ago.

The question that ought to be put to the Obama administration is why the second installment of $350 billion TARP dollars is really needed if the crisis point in the credit markets appears to have passed?

I'm generally in favor of having that money to play with as a fungible part of the overall stimulus effort. It gives Obama flexibility and potentially prevents congressional monkeying from dragging the economy into bottomless waters.

But given that the $700 billion figure was just pulled out of Hank Paulson's butt, and given that TARP wasn't intended to be a presidential slush fund, it seems there's reason for real congressional resistance to releasing the second half of this money unless it's really needed for the intended purpose.