Economy not so bad as Wells Fargo bids for Wachovia

Wells Fargo ups Citigroup’s bid for Wachovia, setting up an epic financial battle. Because the WF deal is a straight bank acquisition, rather than a government-arranged shotgun marriage, I think it’s preferable.

News of the deal bumped the Dow upward.

(Disclosure: I bank at WF.)

Wachovia hypocrisy-bad timing alert

In the mail today, I get a flyer from Wachovia. I quote:

Celebrate a safe FDIC-insured savings option: a 3.75 percent APY Wachovia Money Market.

First, this had better be a money market savings account instead of a money market mutual fund; otherwise, Wachovia is lying out its FDIC-insured ass.

Second, the fine print:

The Annual Percentage Yield is in effect as of September 2, 2008. This is a variable rate and subject to change at any time after account opening.

First, I HIGHLY doubt it’s at 3.75 percent today. Let me check with Ben Bernanke or Henry Paulson first, including checking to see how much of Wachovia’s bad debt could get dumped on me the taxpayer.

Second, per further fine print, you gotta have $10K to qualify for that rate.

Wachovia cans CEO; what’s next?

In what is surely a sign of the subprime times, Wachovia Corporation CEO G. Kennedy Thompson is out on the street. Thompson had been stripped of his role as chairman of the board a month ago.

But, new chairman Lanty Smith said, “move on, don’t look here,” as in, this doesn’t mean Wachovia has new problems.

I disagree. Canning him without having any idea yet of a replacement has to raise red flags.

And, the warning flags are elsewhere, too.

Yesterday, Washington Mutual board stripped CEO Kerry K. Killinger of his position as chairman of the board. Rumor is he could be pushed out soon, too.

Buckle your seatbelt for a decade of fun

That’s the word from JPMorgan analysts, who say the current U.S. financial-sector problems will take a decade to shake out.

“We had the NASDAQ, we had LTCM, we had the various forms of emerging-market crises in the ’90s, we had the real estate crisis of 20 years ago: In most of these the direct impact on the behavior of the parties involved lasted more than 10 years,” Jan Loeys told Reuter. “It looks like it takes a generation for the memory to fade and for the same mistakes to be made again.”

Loeys expects financial sector regulation to increase. Obviously, Treasury Secretary Henry Paulson disagrees with that need.

The question is, will the next president change that mindset, and how much? Also, assuming the European Union implements some real reform, will we find out in the next decade who’s the dog and who’s the tail on the world economy?

Meanwhile, Wachovica dropped $400 mil in the first quarter and the head of major reinsurer Gen Re, Joseph Brandon, resigned, reportedly under federal pressure.

This baby is not close to being over yet.