More TARP Bashing | Beat the Press:
"The serious question is how bad could we reasonably expect the downturn to have been if we had gone the cold turkey route [no bailout]. The place to look for insight on this question is Argentina, which went the financial collapse route in December of 2001. This was the real deal. Banks shut, no access to ATMs, no one knowing when they could get their money out of their bank, if they ever could.

"This collapse led to a plunge in GDP for three months, followed by three months in which the economy stabilized and then six years of robust growth. It took the country a year and a half to make up the output lost following the crisis.

"While there is no guarantee that the Bernanke-Geithner team would be as competent as Argentina's crew, if we assume for the moment they are, then the relevant question would be if it is worth this sort of downturn to clean up the financial sector once and for all. I'm inclined to say yes, but I certainly could understand that others may view the situation differently.

"Anyhow, this is the debate that we should have had [at] the time and at least be acknowledging in retrospect. The cost of not doing the bailout was not a second Great Depression."