John Hussman’s weekly letter: “I expect that in the next year or two, we will observe at least one quarter, and more likely a full year, in which the entire profit of the U.S. banking sector is consumed by loan losses.”

Oh, and by the way, if your mortgage is priced off LIBOR, watch out. It is up to 5.698% this morning, according to Reuters (I don’t have a direct quote feed for it). WIth the Treasury bill discount at 4.110, looks like the TED spread has blown out again to 158 bps.

Also a blast from the past, Bill Gross’ Plankton Theory, is worth a visit. “It may be a while before the Fed accepts and recognizes this, waiting for these Minsky style debt-deflation dynamics to become evident in broader measures of the economy’s health, notably job creation. But make no mistake: A Minsky Meltdown in the most important asset in most Americans’ asset portfolio is not a minor matter. Bill Gross’ Plankton Theory ain’t just a theory, but a reality.”

Note: LIBOR corrected - the BBC gave the sterling LIBOR, not the dollar. Sorry. But the TED spread is still wide compared to a normal 20-60 bps.