The Wall Street Journal has a thorough dissection of the Obama Administration's recent walk-back from its aggressive anti-Wall Street stance. Now, part of me wants to throttle the guy who said this--"The Obama folks don't even like us"--and scream "Are you kidding!?! Did you listen to a word Geithner said yesterday? We're giving you billions in free money!" But then I compose myself and realize that, to be fair, these are guys who lived through eight years of Bush, preceded by eight years of Clinton, preceded by...you get the point. They're used to being coddled, even in a recession.

Which is really the core of Obama's dilemma. In a shallow recession, like those in the early 90s and early 00s, you really do need Wall Street, if only because Wall Street, save for a few firms and a replaceable army of traders, isn't going anywhere. The guys who go are scapegoated, and the ones who remain convince themselves that they're on the side of the angels. And, since the last two recessions were almost over by the time we recognized them, teaming with Wall Street as soon as possible was critical to getting the economy moving.

But in a deep recession or a depression, Wall Street as we know it will disappear, so there's no need to curry favor. At the same time, there's real opportunity--to refashion the financial sector, impose new regulatory regimes, all the things that wouldn't be possible in any other environment. And of course, populist rage under 8 percent unemployment is fleeting; populist rage under 20 percent unemployment is destabilizing. Thus the dilemma: Where are we? Clearly things are worse than the last two dips. But despite all the millenarian chatter about a new Great Depression, we're nowhere near that point. The investment banking sector fell apart, but so far most of the underlying structures remain, just under new regulations or ownership.

So far, unfortunately, the Obama team has taken the worst of both directions: It has talked a tough talk, and it has barely lifted a finger to muzzle Congressional ire. But in its policies it has largely refrained from the sort of game-changers that such talk implies (nationalization, for example). I'd personally rather see them take a tougher line, but consistency is a virtue, and if the Journal article is right, the White House understands that, too.

--Clay Risen