Okay, this is another of those “New Terms” that have been around forever, but are just coming to the fore front of our national consciousness. We at Wetwired have decided to make a concerted effort to shed some light on these terms as we are basically a news gathering organization and the current monetary crisis is quite possibly the biggest news story of the last 50 years.

(This one is a little more complicated, so try to follow along)

It all starts with Naked Short Selling, or Naked Selling. This is when a someone sells a share of stock, and fails to deliver it.

A Naked Short Sale is a manipulative trading technique. It takes advantage of a loophole in the system. This loophole allows a transaction to occur, and all monies to be paid before delivery of the stock share is made.

It should be noted that a Naked Short Sale is very different than a legitimate short sale. Short selling is an accepted means of selling a share at a price, and re buying it from the person when the price drops. This is a method of making money on a stock whose shares fall. It differs from Naked Short Selling in that it does not attempt to manipulate the market by taking advantage of deficiencies in the existing system.

The SHO List is a daily list required by the Securities Commission to show what stocks and futures have been most influenced by Naked Short Selling. When a stock appears on the list, it is usually considered to be “depressed” and therefore an unwise investment in most cases. The longer something stays on the list, the less chance it has of recovery.

When a stock is removes from the SHO List, it has a better chance of recovery than those on the list, but many stocks never recover from their time on the list.

With all the things going on in the financials market, and international monetary crises (what is the plural of apocalypse again?) there are a lot of terms being introduced to the average American that was not in their vocabulary yesterday.

One of these “New Terms” is The TED Spread.

First off, TED Spread is not an actual person named Ted. It is a comparison between the three month T-Bill interest rate and the three month LIBOR.  That is a lot of fancy jargon for simply stating that the TED Spread is a measurement of the willingness of banks to lend money to one another. As the spread increases, the more unstable the lending process becomes, and the more the spread decreases the less likely banks are to default on those loans.

That maybe a bit of an over simplification, but it is accurate none the less.

Of course due to current conditions the TED Spread is at just about an all time high.

T-Bills are short for Treasury Bills, and they are loans to the Treasury department that mature in one year or less. They are considered a very low risk investment.

The LIBOR is the London Interbank Offered Rate, which is the daily rate of leanding between banks.