TB, I don't think it was that Michael was slipping. I think that it was a thought too horrible for him to comprehend. Poor, sweet Fredo? Fredo, who always needs taking care of? Who can't even control his wife's behavior at a party? A Judas?? And against his brother Michael, who he loves, and who loves him?

I think that Michael felt that, like Tom, Fredo was one of the few people who would never betray him. Michael was so alone in this world. Fredo was one of the few people he could trust, who he could relax with. I think that he couldn't even entertain the thought of Fredo's betrayal. You can see how painful it is to him at the Superman show. He acts as if he's taken a punch to the gut.