FWIW, Krugman just published a short paper that's much less blog-y (and, alas, far more geeky; if you don't mind 'the greeks' ...) and lays out what I think is a compelling story about what has changed for (the study of) international macro economics and thus conclusively why (he thinks) the bailout "won't work" ... see especially Seciton 5: Implications.
FWIW, bits and pieces of this story have been in his blog over the past week, but he put it all together in a 5 page paper (plus some graphs).
http://www.princeton.edu/~pkrugman/finmult.pdf
/jordan