Paulson’s plan is a Wall Street/Treasury Dept. three card monte where fatal systemic insolvency is passed off as temporary mega financial firm lack of liquidity. It protects those who have looted the system now by socializing their past losses and allowing them to walk away without prison or restitution.

Simply put, this is fraud.

The ship has struck the iceberg. Radio messages are received stating that there’s been serious structural damage …. the captain & his top officers are piloting the ship to safe harbor …. where dry dock repairs can be completed. Your prayers and patience are needed …. for everyone to get through the crisis …. because we’re all in this boat together. When the ship is repaired & declared seaworthy again …. it will be smooth cruising with room for everyone on board.

Those glued to their radios don’t know that they are listening to a 21st century version of H.G. Wells’ War of the Worlds.

The messages are not being broadcast from the bridge, which along with the rest of the ship, is already on the sea floor under 15,000 feet of water at 6,500+ psi, and has been at least since the great unravelling was exposed in mid-2007.

AIG’s counterparty derivative insurance losses and as yet unrealized liabilities must be kept out of bankruptcy court where everyone involved would be under oath and subject to penalty of perjury. I suspect that none of the CEO’s at the heart of this week’s rally would be testifying about rosy profit pictures this year or next because their obscenely leveraged bets, won or lost or insured against loss, aren’t secured by anything, and therefore, are uncollectible.

The Fed borrowed nearly $180B on the backs of taxpayers and “purchased” 80% of AIG. No one will put a figure on the total liabilities assumed in this manifestly bad deal for the real economy, which will eventually become known for what it is — the second half of George W. Bush’s Mission Accomplished. This illusion cannot be maintained if AIG’s solvent, profitable units are separated from its trillions in unregulated businesses, with taxpayers holding the solvent assets and the counterparty losses left to fend for themselves.

The “Paulson Doesn’t Work Here Anymore” line pushed by Geithner is just the opposite. All of the good assets will be purchased at the fire sale with Wall Street hedge fund bonuses, and taxpayers left to raise a ship that’s already sunk under three tons of debt per square inch.

Leonhardt’s history of looting has the excruciating details:

http://www.nytimes.com/2009/03…..hardt.html

All of this involves pushing around a lot of fake financial instruments and exchanging things of real value, like money and physical assets for them.

I have an incredible sinking feeling about this Geithner plan. It could be the biggest looting we have yet seen in all this.

It’s kind of sad.