Treasury Secretary Henry Paulson’s credibility continues to dwindle—not a good thing, considering the markets and the economy need to believe someone’s got a handle on the crisis.

The New York Times alludes to that in so many words on page one, but Bloomberg comes right out and says it in its headline, “Paulson Credibility Takes Another Hit With Rescue-Plan Reversal.” (By the way, that’s one thing to really like about Bloomberg: Its headlines are often pretty aggressive.) The Journal continues to be more favorable toward Paulson, as is the Washington Post—notably, they got interviews.

Yesterday, Paulson said he wouldn’t actually buy any troubled assets with the $700 billion he was given for the Troubled Asset Relief Program. That sent the stock market into a tailspin and left everybody confused as to what will actually happen: He has some scheme to boost consumer lending, but the Times is skeptical about it, comparing it to the nasty structured-investment vehicles that helped boost subprime lending.

Here’s part of Bloomberg’s harsh—and rightly so—take:

“This is a flip-flop, but on the other hand, when they first proposed the thing, they didn’t really know what they were doing,” said Bill Fleckenstein, president of Fleckenstein Capital Inc. in Seattle and author of the book “Greenspan’s Bubbles.” Paulson has pushed some “cockamamie schemes,” he said. “So one has to ask, does he have any clue?”

“This is not something he’s going to be proud to put on his resume,” said James Cox, a law professor at Duke University in Durham, North Carolina, who has testified on securities regulation before Congress and served on legal advisory panels for the New York Stock Exchange and National Association of Securities Dealers. “It does tarnish Paulson’s image, because it shows that a lot of political capital was spent on something that most of us thought was not a good idea to begin with.”

Only history will render a final verdict on Paulson’s handling of this year’s cascading economic crises. But he surely couldn’t have wanted to spend his final days in office this way: spearheading the massive government intervention in the banking, insurance and mortgage industries; fielding requests to bail out automakers General Motors Corp., Ford Motor Co., and Chrysler LLC, and even heating-oil retailers.

Paulson’s in an incredibly tough position, no doubt. But that’s no excuse for bouncing around like a pinball. The times call for steady leadership, to say the least.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.