EuroTARP vs. US TARP

Well, the Europeans have unleashed their own version of TARP. Markets are reacting well and that is fine, but this should not put all our minds at ease. The US version of TARP worked out pretty well despite its ugliness, but the Euro version has a critical difference. While our TARP was designed to give our banks running room to restructure and earn their way out of the ditch, EuroTARP is designed to give governments the same running room. The critical difference is that our banks are American corporations, which are both willing and capable of restructuring, and European governments are, well, European governments, which are unwilling and only capable of restructuring under the most remote of circumstances and with the most Herculean of efforts. JPMorgan Chase was hot to give the TARP money back a nanosecond after they got it. The governments of Greece, and eventually Portugal and Spain, will have to be forcibly removed from the ECB's lactating teat. US TARP was ugly in design and birth but mercifully benign in its lifespan. EuroTARP was smooth and efficient in the birth, but will prove quite trying through its infancy and beyond.