The $700 Bln bailout is not about US cash. The U.S. is a debtor nation. The cash for the bailout has to be borrowed, primarily from the Japanese and Chinese. According to one person I've spoken to who knows the top Japan and China banking regulators, they are not happy about the U.S. p***ing their money up the wall. The better informed congressmen have lines of communication to the Chinese & Japanese and know they can't sell it. Bush in Tuesday's speech insisted the toxic assets could, if held for some years, be sold at a profit. That's plain rubbish. If that was the case, there would be no need for a bailout. Banks could just sit on their assets until they recover in value. The problem is, they were so wildly overvalued, they are not going to recover in value. How were they so wildly overvalued. You won't read it in the FT or hear it on the BBC but clearly the answer is lies and fraud. Even more important This is not a liquidity crisis. On Tuesday night, European banks deposited well over 100 Billion euros at the ECB. The banks were not prepared to leave their money for one night in a retail bank. Perhaps, they know something we don't? If the banks deposited E100 Bln there is no shortage of cash. The point is they won't lend it. Not to each other, not to companies, not to home buyers, except at rates which make a mockery of the word 'lending'. This is a default crisis. Banks and large corporations are going to default. The banks know that. The public do not yet. What is the answer Hank Paulson, the dour looking ex-Goldman Sachs trader worth $500 Mln, says there is no alternative to buying the banks failed betting slips. There are several alternatives. One is to let the Japanese and Chinese buy the US's failed investment banks. They already own large chunks but politically the US cannot stomach Asia buying the Ivy League banks. Barter their assets. In 1998 the IMF told Russia that it should not bail out its banks. Ten years later the IMF is encouraging the US to do just that. One rule for the emerging markets, another for the Masters of the Universe. Russia dealt with illiquid banks by knocking their heads together and forcing them to swap assets at knockdown prices. Washington does not have the balls for that. It proposes using taxpayers money to buy assets the banks don't want. It is a recapitalisation of the banks by stealth and lie. God help us.