The speculators won — and will win again next week

Despite Henry Paulson et al insisting that Lehman Brothers, AIG, etc. would not be bailed out, it seems like the Treasury-as-auction-house portion of the lenders’ bailout play isn’t even close to a “hard line.”

Here’s why, in a quote, the speculators have won:

“It sounds like there's going to be a giant dumpster for illiquid assets,'” said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, which oversees $22 billion in assets. “It brings up the more troubling question of whether the U.S. government is big enough to take on this whole problem, relative” to the size of the American economy, he said.

If SENATOR Barack Obama signs off on Congressional approval for whatever plan Paulson pushes without attaching major new regulatory requirements, and not just powers, we’ll know that Goldman Sachs’ money has done its job well.

Oh, via BizJournals, let’s not forget that Obama GOP backer Jim Leach was one of the sponsors of suddenly-radioactive 1999 Gramm-Leach-Bliley Act. Also, both Clnton’s then-Treasury Secretary Robert Rubin, who pushed hard for it, and his predecessor, Larry Summers, are Obama advisors, McCain’s camp alleges.

Also, given the budget impact of this, there had better be an income tax surtax on some rich individuals and some rich corporations in this field, along with changes in tax code.

Charles Schumer, I mean, I want your personal Yes vote for taxing hedge fund managers’ income as income.

In reality, though, I’ll bet you at 50-50 odds that Congress buys this crap in a bill without attaching significant new regulatory requirements, not just powers, to the bailout.

The House and Senate vote will be largely “bipartisan,” too. Probably a bipartisan whitewash.

You heard it here first. More tomorrow, and I’ll throw some economic odds-making in this week’s Intrade.