Australia’s Prime Minister, Kevin Rudd, has flown into a toxic debt storm in Washington.

He arrived there, for his first meeting with the new US President, Barack Obama,  just as the Obama administration launched an ambitious scheme  to sell toxic assets to private investors.

To describe the scheme, that the US Treasury Secretary, Tim Geithner, is promoting merely as dangerous would be a huge understatement.

Mr Geithner is promising that the US government would lend the private investors up to 95 per cent of the money they would pay for those assets.

The scheme, which has been tried before, has its attractions.  Particularly for those private investors.

If those – presently  despised -  assets do turn out to have some residual value, after the present US recession ends, they could make big profits, through such purchases.

But if those assets remain effectively worthless, those investors could, as the Nobel Prize winning economist, Paul Krugman warns, simply “walk away from their debts.”

Heads, the investors win.  Tails, US taxpayers lose.

Geithner says his scheme would “use the expertise of the market” to set a value on those, now toxic, assets.

But Krugman recalled that a previous Treasury Secretary, Hank Paulson, proposed a similar “cash for trash” scheme, six months ago, when George W Bush was still president.  His idea was  quietly abandoned later.

Mr Rudd has a better plan, in his briefcase.

He will try to persuade President Obama, to clear the way for China to be given a bigger say in the International Monetary Fund, at the G20 Leaders’ Summit, next weekend.

China does, after all, have vast cash deposits, which are  presently held in US government securities.

A little of that money might be made to work harder, pulling the world out of its recession, if the conservative Chinese government could be persuaded to make a few, well-placed, investments.

The Chinese, though, won’t be tempted by the Geithner plan.  They know a toxic idea, when they see it.

The real issue, here, is that the global crisis is now advancing so rapidly, that hundreds of thousands of US -and other – jobs are being lost each week.

This is no time for the great and the good to be pushing dangerously unworkable schemes.

That just wastes very valuable time.