Every trade is a zero sum game. There is a winner and a loser. One bets right and the other bets wrong even if it isn't clear immediately which is which. If there are three parties involved, it doesn't make a difference. The sum is still zero.
The pimps at Pimco are calling the Geithner plan a win-win-win plan. Everybody wins. The banks will make a profit, the hedge fund investors will make a profit and so will the taxpayer! Wow, that must be quite a plan to defy even logic itself.
The fact of the matter is that the banks are not dumb enough to lose money on this plan. The hedge funds are not dumb enough to lose money either. The only one dumb enough to lose money is the hapless taxpayer whose representative Tim Geithner is actually working for the other players.
