The general malaise in the financial services sector — and the US economy in general — has pretty much put the kibosh on any big mergers here (unless, of course, there’s a failed investment bank that needs to be bailed out). The news is a continuous drumbeat of recapitalizations, losses, and further collapses.

But that doesn’t mean they can’t get together Down Under, where subprime mortgage foreclosures haven’t hit as hard. Earlier this week, one of Australia’s biggest banks, Westpac, inked an agreement to buy smaller rival St.George Bank for more than $17 billion. And like any big business deal, it’s not without its drama.

Not coincidentally, Gail Kelly, who has been Westpac’s chief executive for less than four months, led St. George Bank for five-and-a-half years before moving to the larger firm. And Australian law prohibits its “Big Four” banks (National Australia Bank, Commonwealth Bank of Australia, ANZ, and Westpac) from merging with one another. Conveniently St. George is the fifth-largest bank, and the combination of it and Westpac would not only be one of the largest mergers ever in Australia, but would also create the second-largest financial institution in the country by assets (behind NAB), as well as its largest home lender and asset manager.

Predictably, Australian regulators are dubious, concerned not only about the size of the companies involved, but also that such a large merger could trigger a wave of consolidation in an industry already dominated by four players. For their part, Westpac and St. George are saying that the smaller bank would maintain its identity after the merger in hopes of getting the government’s blessing.

The Securities and Exchange Commission today brought civil charges against two current and two former executives of Broadcom in the stock-options backdating case against the chip maker.

“The SEC alleges that, through this scheme, the four officers made it appear that the options were granted at times corresponding to low points of the closing price of Broadcom’s stock — despite the fact that the purported grant date bore no relation to when the grant was actually approved. This resulted in artificially and fraudulently low exercise prices for those options. The SEC also alleges that the unrecorded compensation expenses and hidden backdating practices led Broadcom to provide false and misleading disclosures to Broadcom’s shareholders in filings with the SEC through 2005,” the commission stated.

Facing the civil charges are Henry Samueli, Broadcom’s chairman and CTO; Henry T. Nicholas III, the company’s former president and CEO; William Ruehle, its former CFO; and David Dull, the chip maker’s SVP and general counsel.

Broadcom recently agreed to pay $12 million to settle the SEC’s charges against the company for covering up more than $2 billion in expenses for stock options that should have been charged against the company’s earnings over a period of five years.

Another chip maker, Marvell Technology Group, has also settled its backdating case with the SEC, paying a penalty of $10 million.

The SEC acknowledged the assistance of the U.S. attorney’s office for the Central District of California and the FBI in building the civil case against the Broadcom Four. Stay tuned to see if federal criminal charges follow.

Pharmaceutical makers have created a huge trend by buddying up with biotechnology companies in recent years to boost their development pipelines, but they have also made a point of fraternizing with the “enemy” (i.e. generic pharmaceutical manufacturers) to get ahead.

Pharmaceutical companies across the board are struggling to cut costs and boost profits in the face of rising generic competition. Yet at the same time, some of them are forming partnerships with the same generic producers that they regularly face off with in court over drug patents.

Merck & Co. announced Monday that it had signed a 5-year agreement with Ranbaxy, a leading generic drug company, to co-develop anti-infective drugs including antibacterial and antifungal products. The two companies, ironically, have recently been involved in patent litigation over Merck’s Zocor and AstraZeneca’s Nexium (from which Merck receives royalties). This is not the first of such bizarre marriages between rivals — Ranbaxy is already working with pharma giant GlaxoSmithKline on several drug candidates.

So why would pharma companies trying to defend their patents against generics want to work with their opponents on new formulations? That’s where the process comes full circle — generic companies located in booming contract manufacturing regions (like Ranbaxy in India) employ talented chemists and can provide cheaper research and manufacturing services, thus saving pharma companies’ precious research funds. The process is also a win for generic drug firms who make an easy profit off the contracted work.

Pharmaceutical firms will also sometimes settle litigation by forming partnerships to manufacture generic versions of their own blockbusters, thus at least getting a piece of the pie after generics come into play. Merck itself has an agreement allowing Watson Pharmaceuticals to market an authorized Fosamax generic, and Ranbaxy recently reached authorized generic agreements with AstraZeneca after the two companies battled over Nexium’s patent.

All of these wacky moves aim to win the ultimate battle of profit vs. loss, and as the pharmaceutical and generic kings line up their game pieces, it will be interesting to see which players win the fight.

The slow-motion collapse of Fremont General is the latest news from the mortgage crisis front; the company has acknowledged that it is out of cash and out of time. The wounded mortgage company is selling its retail banking operations and its loan portfolio, but its shareholders will likely not see a penny, or, as is often the case with bankruptcies, even a fraction of a penny.

Cry me a river, say homeowners facing (or already in) foreclosure. An interesting report from housingwire shows that many homeowners eligible for loan workout or mitigation efforts are not receiving those services. That being the case, it means that some foreclosures could be prevented. Lenders hate foreclosures. They’d much rather be repaid. That’s why it’s in their best interests to work harder with borrowers to keep them in their homes and paying back their loans. We’ve all been hearing a lot more about “jingle mail” — that’s when borrowers walk away from their homes and simply mail the keys back to the banks. Banks hate jingle mail.

Another couple of evocative phrases we’ve been hearing a lot have been “moral hazard” and “skin in the game.” The Fed risked defanging moral hazard when it bailed out Bear Stearns — by not letting the investment bank fail, critics said, its executives were protected from their bad decisions. They no longer had “skin in the game.”

If Bear Stearns was too big to fail, then what about the vast population of homeowners facing foreclosure? Should we bail them out too? Turns out plenty of people don’t like the idea of bailing out homeowners, even though by stabilizing their loans we can stabilize the entire economy (that’s what I mean by being too big to fail). The fact is, critics say, there’s plenty of fraud on both sides of the contract, and how do we know who is morally worthy to save and who we let fail? We want to know that the perpetrators are punished and the victims are rescued.  However, with the high volume of loans, I don’t know how you would even begin to go about sorting it out.

I’ll leave the last word to the one man who can sum it up so well — Dr. Seuss:

“And this mess is so big, And so deep and so tall, We cannot pick it up. There is no way at all!”

Summer movie season kicked into high gear with the release of Iron Man last weekend. It’s a moment that Marvel Entertainment has been looking forward to with nervousness for a long time now, as it’s the first in a long line of recent superhero blockbusters that the company’s financed solely by itself (and distributed by Paramount). It was a gutsy move, and, if Iron Man’s $100 million first weekend gross is any indication, the gamble has paid off. For now.

Ever since the start of the big screen’s recent embrace of Marvel’s comic characters, the company has watched from the sidelines while studios like Sony and Fox have walked away with the lion’s share of profits from the Spider-Man and X-Men franchises, among others. Tired of playing second fiddle, Marvel launched its own studio and announced a line-up of coming features. While it might seem risk free on the surface, it really wasn’t. Most of the big, well-known superheroes, such as the aforementioned arachnid-infused teen and the band of mutants, have already come and gone. This left Marvel to bet the house on Iron Man, a popular character in comic circles but not too well known by the general public, and June’s The Incredible Hulk, a do-over for the not-so-jolly green giant following Ang Lee’s rather horrible and boring version in 2003. (I mean, really, it takes a lot of effort to make such a slam-bang character dull, but Lee managed it.)

So why did Iron Man hit gold with audiences? Because Marvel actually made a good movie. I haven’t seen it yet, but many of my friends have and they’ve all raved. I read tons of movie reviews and they were all very positive as well.  (A brief rant: I love that a summer movie season started off with a well-reviewed movie. I think the big blockbusters often get a bad rap. It’s been beat into our heads so often by the media that the Summer Movie is automatically synonymous with crap that it’s become a self-defeating prophecy. Are there bad blockbusters? Sure. But most of the time they’re fun if you just relax and let them serve their purpose: escapist entertainment. OK. Rant over.)

Iron Man also succeeded because of that simple, yet elusive, ingredient — perfect leading man casting. (Call it the Johnny Depp/Pirates of the Caribbean phenomenon.) Marvel took a big gamble on choosing Robert Downey Jr., a gifted actor but one who’s usually relegated to supporting roles. Not to mention his high-profile drug problems of the past. But he proved worth the risk and deftly carries the movie.

Not long after opening weekend, Marvel announced the inevitable sequel, slated for release in 2010. They also took the opportunity to announce a slew of other projects, everything from a Captain America flick to a Thor movie. While there’s still plenty of development work that needs to be done, Marvel should be careful and take a breath. There’s every bit of a chance that their high will soon wear off soon if the bad buzz on The Incredible Hulk is true, and tossing too many second tier characters onto the screen probably won’t score you Iron Man grosses every time out. (Seriously, no one’s clamoring for that Ant-Man adaptation.)

Still, for now Marvel has plenty of cause to pop the champagne and drink up. Excelsior!