Paul Krugman, Matt Yglesias, and Brad DeLong are worrying that the Obama Administration does not have a clear and consistent narrative about its policies for the financial industry. They enumerate 5 possibilities:
1. We have to enrich undeserving banksters by driving up asset values because there is absolutely no other way to prevent the economy from getting much, much worse for everybody else.
2. Because government investments into the financial system are not infected by the recent "irrational pessimism" of the private sector, the government investments will stabilize the system in the short term and pay off handsomely later.
3. It is likely we will need to do more to rescue the economy—even dramatically more—but we can't get Congressional approval for more unless and until our current authority proves insufficient.
4. Receivership (opponents call it "nationalization") for the largest banks is impossible for feasibility, political, and/or ideological reasons.
5. The current approach of Public Private Investment Partnerships will cost the US government less in the long run than the receivership option.
These pundits wring their hands because the Obama Administration has not settled on a single narrative to the exclusion of all others. Krugman even compares the lack of a single focus to the shifting rationales that the Bush Administration used for tax cuts in 2001 and the invasion of Iraq. I note that there is no inherent inconsistency among the 5 narratives—they could all be true. Maybe the best way for the Administration to explain what it's doing is comprehensively instead of in sound bites.