Wednesday, October 22, 2008

Who wants tax-free profits?

I'm actually seriously considering investing in Wells Fargo. I can't believe I'm saying that. The thing is, Wachovia's earnings came out last night, and they lost almost $24 billion (not that big of a surprise, really). The thing is, Wells Fargo is acquiring Wachovia. So you'd think a little thing like a $24 billion loss would be bad, but it isn't. Your friends in the "free-markets-forever" government changed the tax code so that Wells Fargo could buy Wachovia at a cheap price AND use all Wachovia's pre-acquisition losses as tax write-offs going forward -- at the same time. That's a pretty neat trick. By my estimation, I will be 50 years old before Wells Fargo ever pays meaningful taxes again.

In the end I just don't think I have the stomach for it; just like I can't bring myself to buy stock in Philip Morris' parent company even though they are paying a 7% dividend and sell addictive drugs that don't decline in recession.

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