‘Political palatability over economic reality’

That’s the criticism of Columbia University economic historian Charles Calomiris for “Plan Geithner,” TARP 2.0, TRAP or whatever we should call it.

R. Christopher Whalensays that has resulted in Wall Street seeing “bull – and indecision” in Geithner, along with the possibility of paralysis. Hence the Street’s Tuesday selloff.

In short, Geithner came off yesterday like a deer in Wall Street’s headlights. Wall Street, in turn, is NOT going to buy into Geithner’s public-private partnership to buy bad real estate-related assets.

The Street knows many of those assets are toxic and still considers them as such. Until and unless Geithner gets more specific on how much of a haircut they would take, vs. the government picking up, as part of this partnership, they’re not going to buy.

And, for them to get that info, Geithner’s going to have to tell the more craptacular banks some bottom-line numbers, as in, “We’ll pay X and no more for those assets.”

But, short of nationalization, so far, this appears to be one of the biggest Geithner-Summers no-gos. And, Geithner’s performance yesterday hasn’t changed that impression.