Or maybe not. Interfluidity:

I don't know if the financial universe will blow apart if Asian markets open tomorrow night and there is no bail-out in sight. I do know that the TED spread may not be telling us what we think it is, that the current proposal has almost nothing to do with the stressed out corporate paper market except via the catch-all term "confidence", and that the timing of bank failures is largely at the discretion of the FDIC. I accept the principle that it is worth bearing significant costs to insure against even uncertain catastrophes, but other than cries of inchoate pain from anything labeled financial, I have yet to hear a compelling tale of why we should be confident that this expensive ounce of prevention will actually work. Hope is not a plan, and neither is discomfort.

See? It's not just me.

Of course the people advocating the Paulson Plan have the capacity to create pain that might be perfectly avoidable. Yes that's cynical [or realistic]. But that's honestly where I am. Not only do I not have confidence in the solvency of the banking system, I don't even have confidence that important players in both the public and private sectors wouldn't use the tools at their disposal to create a little pain, until they bully the public into giving what they want. I know, I know, give me my tinfoil hat.

When the going gets tough, the tough get foily. Anyhow, if somebody was going to give you a trillion dollars if you caused somebody else a little pain, what would you do?

For the Village, where torture has long been normalized, such a question answers itself.

But, if you believe the advocates of the Paulson Plan, major financial institutions would be insolvent if they marked their assets to current (um, "fire sale") market bids. That's not what their balance sheets say. If it's true, investors and the public at large have been lied to for months by the leaders of the institutions to which we are expected to trust our life's savings. And they want us to help cover that up. So, I'm cynical.

NOW NOW NOW!