Five Dumbest Things on Wall Street: April 11

4. Another AOL Merger? Really??

There's an asset bubble bursting in the financial markets, and America's aging media moguls are swapping Internet assets and trying to close a blockbuster merger that involves AOL.

No, we're not revisiting days of yore, this actually happened this week.

On Thursday, The Wall Street Journal reported the latest wrinkles in Microsoft's MSFT desperate attempt to acquire Yahoo! YHOO. An offer made so the two old men could better compete with Google GOOG. For it's part, while it explores a possible search advertising pact with Google, Yahoo! is also discussing a deal to combine its Internet operations with Time Warner's TWX AOL.

This could hardly be what Bill Gates' hapless successor at Microsoft, Steve Ballmer, had in mind when he offered to acquire Yahoo! over two months ago in a cash-and-stock deal once valued at $44.6 billion, or $31 a share. The offer is now worth $29.24, according to the Journal, because Microsoft's stock has declined.

"Any definitive agreement between Yahoo and Google would consolidate over 90% of the search advertising market in Google's hands," said Microsoft in a statement. "This would make the market far less competitive."

Perhaps more accurately, such a deal would leave Microsoft far less competitive. Analysts on Wall Street estimate that Yahoo! could boost its cash flow more than 25% annually by outsourcing all its search advertising to Google.

Like all the cyber geeks in Silicon Valley, Yahoo!'s founder Jerry Yang despises Microsoft. So perhaps part of this flailing about ahead is Yang wanting to score trysts with Google and AOL before a forced marriage with the software giant from Redmond, Wash.

For his part, Ballmer has been reduced to groveling at the feet of News Corp. NWS CEO Rupert Murdoch. The Journal reported that Microsoft and News Corp. have each discussed with Yahoo the possibility of a three-way alliance, and News Corp. "might put up some cash as part of the deal."

The alliance would combine three of the Web's most vaunted properties -- News Corp.'s MySpace, Microsoft's MSN and Yahoo! -- just like the ill-fated Time Warner-AOL merger was supposed to create a new media powerhouse with all its "synergies."

Dumb-o-meter score: 79. All of these proposed deals sound synergistic with the worst deal in the history of corporate America.