CALLING KRUGMAN'S CREDENTIALS AS A HISTORIAN into question?
Most important, what Krugman calls the “right-wing mythology” is largely correct: government intervention is responsible for the systematic problems with the US banking system. That, however, is not the same as “bad banking.” Banks, like any other business, make mistakes all the time. Bad banking happens in free markets, but markets provide incentives and knowledge signals that help banks avoid and correct such mistakes. The question is not whether there is or isn’t “bad banking,” but which institutional environment minimizes and corrects it best. What doesn’t happen in free markets are the systematic mistakes that lead to panics and massive bank failures.
The passage I quoted is really a critique of Krugman on political macroeconomy, but there's plenty of room left to criticize Krugman's alt-historical approach, his motivations, really his entire weltanschauung. Read the whole thing.