Citi/ Wells Extend Wachovia Talks, but Debt Clock Overwhelmed

Ed Kountz | October 09, 2008, 09:58 AM

8am Friday is now high noon in the Citi/ Wells negotiations over the future of Wachovia.

After a week of back-and-forth on the firms' respective offers for the troubled Charlotte bank, the two have extended their negotiation period until 8am on Friday. It appears that, as discussions proceed, talks are progressing along the lines of divvying up Wachvia's businesses along geographic lines, with Wells angling for Southern and Western operations and Wachovia's brokerage business. It's unclear what happens if a deal isn't reached, although reports suggest that (should the deadline pass without a deal) both firms are ready to revert to an aggressive posture.

Globally, another week of market troubles have led to increased government intervention and market worry over the increasingly precarious state of the banking industry. The concurrent interest rate cuts by multiple global central banks (and a positive IBM earnings report) have given markets a reason to cheer..at least temporarily. But Belgium, France, and Luxembourg have given lender Dexia a one-year guarantee on new loans and deposits, which helped a stock pummeled by three days of dismal declines (even after a previous bailout package last week). The British government pledged GBP 50 billion to acquire stakes in major British banks, while Iceland's government is struggling to prevent the collapse of its banking system, which powered many European deals before the current crisis (in an ironic aside, the country's president was temporarily sidelined this week due to heart-related issues, requiring emergency angioplasty). In the U.S. , credit markets remain tight, with the fallout now expanding to small business, consumer credit and state financing, but news of the feds considering taking equity stakes in major banks has helped buoy the market somewhat.

But in an ominous sign for future generations, the U.S. debt clock (the rapidly-spinning digital clock in NYC's Times Square which records the nation's rising levels of debt) has been so overwhelmed by the recent rise in national debt...that it has run out of digits on which to record future increases. Fear not, free marketeers...plans are underway to add two more digits next year, enabling recording of debt up to a quadrillion dollars.