Wednesday morning headlines

That post rate-cut glow: Enjoy it while you can. At last check the Dow is up almost 100 points, with Countrywide and KB Home making sharp gains for the second straight day. Besides the Fed's move to cut interest rates, stocks are being helped along by an unexpected 0.1 percent dip in consumer prices for August (the first decline in almost a year). But that was largely due to lower energy prices, and those numbers have been heading upward these past couple of weeks. Meanwhile, Morgan Stanley is taking a $940 million writedown on loans because of the global credit crunch. (Reuters, AP)

Cloning Greenspan?: The general view among the econoclasts is that Bernanke was looking a lot like his predecessor, Alan Greenspan. That is, the new Fed chief decided to risk doing too much rather than too little, especially after the terrible jobs report for August. In doing so, he pushed aside concerns that by cutting rates the Fed would be rewarding bad investment behavior – in this case, investors going after risky subprime mortgages. "The question they had to weigh was, 'Was punishing those [speculators] more important than doing something that they perceived to be in the greater good?'" Greenspan said in an interview yesterday with Fox News. From the WSJ:

As recently as July Fed officials had expected the economy to grow around 2.5% this year. While the Fed has lowered that forecast, the size of its rate cut was motivated more by the wide range of possibilities around that new forecast, due to the still-unknown reaction of business and households to tighter credit markets. The larger-than-expected cut represents insurance against more catastrophic scenarios. The market turmoil is likely to hit housing first and hardest. Investors have grown wary of holding loans from all but the safest borrowers.

We still have traffic: Angelenos spend 72 extra hours a year on the road - 12 more hours than commuters in SF, DC and Atlanta (the national average is 38 hours). But wait - some experts say that the Texas Transportation Institute underestimates the severity of the region's traffic congestion. Texas researchers assumed that traffic is traveling at an average of 35 mph during peak travel times, but we Socalians all know that assumes way too much. The Southern California Association of Governments says that sensors buried in the pavement of major freeways show that the average speed during rush hours is closer to 20 mph. By this measurement, the extra delay is roughly 100 hours per year. Yeah, that’s more like it. From the LAT:

Martin Wachs, a transportation expert at Rand Corp. in Santa Monica, agreed that average delay is not the best measure of what motorists are experiencing. "I am not interested in arcane indices," Wachs said. "I am interested in travel time." "Traffic congestion is worsening gradually and steadily in the Los Angeles metropolitan area and most other large American cities," said Wachs, who headed the transportation research centers at UC Berkeley and UCLA for decades.

Paramount without DreamWorks?: Viacom CEO Philippe Dauman sounded like he wasn't all that worried about the prospect of losing Steven Spielberg or DreamWorks. He told an investment conference that the studio was making plans for a possible future without the director and that his departure would be "completely immaterial" to the studio's bottom line. That’s nasty. Spielberg has been making noises for months about wanting out of the contract with Paramount (it's up for renewal next year). From Variety:

During the conference, Dauman also implied that Spielberg and Geffen would have a hard time finding independent financing and getting a return on an investment. "It's a tough business to get into," Dauman said. "You really have to manage that business carefully and allocate capital carefully." Dauman added that if the duo left and started over, it would require "someone stepping into the Paul Allen role of a decade ago" -- referring to the financing Allen provided DreamWorks in 1995 -- to provide "a billion or two billion dollars."

Foreclosure jump: We're talking about a nearly 400 percent increase in the San Fernando Valley last month, according to Cal State Northridge's Economic Research Center. That works out to 289 families. Among the neighborhoods with the most foreclosures in August were Pacoima (20), Olive View (19) and Reseda (18). But foreclosures pop up just about everywhere. (Daily News)

Angelo Mozilo sees improvement: Now that Countrywide is out of the suprime mortgage business, the company's very rich and very tanned CEO is "very bullish" on the future (he says there have been positive net flows of deposits into Countrywide's retail and commercial banking businesses.) Mozilo also announced plans to double the number of Countrywide financial centers in the next few months to more than 200. The small centers are inside Countrywide mortgage branches. (LAT)

Disney Resort expands: Another 250 units will be added to the Mouse House's luxury Grand Californian Hotel & Spa, including its first 50 time-share offerings on the West Coast. Disney didn't release occupancy levels at the Grand Californian, other than to note that guests have been turned away quite frequently. The expansion has already been approved by the city of Anaheim. (LAT)

Did Lerach get too good a deal?: That's what a WSJ editorial concludes this morning. The class action attorney's plea agreement with federal prosecutors in L.A. calls for up to two years in prison and an $8 million fine. “Remarkably, however, the plea deal doesn’t require Mr. Lerach to cooperate with the prosecution of his former firm or testify against his co-conspirators,” the editorial says. “In light of the multidecade sentences meted out to such white-collar criminals as WorldCom’s Bernie Ebbers and Enron’s Jeffrey Skilling, Mr. Lerach seems to have gotten off easy.” NYU law professor Stephen Gillers called it "a phenomenal deal."

Southwest's new family plan: The airline is ending its policy of allowing people with young children to board ahead of most other passengers (yaaaaay!!!!). "We certainly have had customers express their concerns when they see 20 or so people pre-boarding," an airline spokeswoman told the LAT. It's not all good news for the rest of us: if kids under 5, and those traveling with them, don't get boarding passes in time to be part of group A, they'll be allowed to board after that, before B and C.

Court turns down Kerkorian: The Court of Appeals for the Third Circuit upheld a lower court ruling that the L.A. billionaire is not entitled to damages over the merger of Daimler-Benz and Chrysler nine years ago. Kerkorian, who had demanded more than $1 billion in damages, contended that Daimler-Benz CEO Juergen Schrempp only billed the deal as a merger of equals to lower the transaction price and avoid paying shareholders a "control premium." (Reuters)