Credit spreads: chronic weakness

A year ago, most central bankers expected the financial system’s woes to end in a few months. Their confidence was largely based on their own commitments – to provide liquidity for markets and support for troubled institutions. The authorities have kept their word with ample funding and easy rescues, but the credit markets are still in trouble. It’s not just Fannie and Freddie. The US mortgage banks’ paid 30 basis points more than the US government before the crisis and 80bps more this time las...