Friday morning headlines

Bear Stearns in free fall: Wall Street is really nervous this morning after word that J.P. Morgan and the Federal Reserve Bank of New York stepped in with emergency funds to keep the investment bank afloat. You wouldn't see this kind of involvement unless there is real concern about whether Bear could continue to meet its obligations. Bear Stearns executives had been trying to reassure markets that they were all right. From the WSJ:

"We have tried to confront and dispel these rumors and parse fact from fiction," CEO Alan Schwartz said in a release. "Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."

Good news on inflation: Consumer prices stayed flat in February, in part because the record-high gas prices of recent weeks weren't included in the data. But prices in health care, clothing and housing were also under control, which has to be a relief for policymakers. Lower inflation may open the door for the Fed to cut interest rates more aggressively at its next scheduled meeting on Tuesday. Rate cuts promote growth but devalue the dollar, pushing prices higher. (NYT)

Speaking of gas: Not that anyone needs the Auto Club's weekly survey to illustrate the obvious, but the average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $3.592, which is 9.4 cents higher than last week and 51 cents more than last month. California refinery operations appear to be in good shape; it's the jacked-up price of oil that keeps pushing up prices.

Port talks start Monday: Jobs, employee safety and port emissions are the top concerns for 26,000 workers represented by the International Longshore and Warehouse Union. The ILWU's current six-year contract with the Pacific Maritime Association is set to expire July 1, so these early talks could signal an interest in avoiding any strike talk. But shippers will probably want a break on health care costs - and that might be a problem. (Daily Breeze)

Union and hotel to negotiate: Unite Here Local 11 and the Westin Los Angeles Airport Hotel have agreed to end their two-year dispute, with the hotel accepting the union as the bargaining agent of its workers. For the past two years, the union has led pickets in front of the Westin and the Hilton Los Angeles Airport. The agreement ends Unite Here's boycott of the Westin, which will be added to the union's national list of recommended hotels. (Daily Breeze)

Governor pushes for budget deal: Faced with a projected $8 billion budget deficit, Gov. Arnold Schwarzenegger wants lawmakers to begin considering spending curbs and budget reform. "I proposed my budget on Jan. 10. Now it's two months later and no one has come to my office even though my door is open," Schwarzenegger told the Daily News. "I've invited them and said, `Come down as quickly as possible because we need to resolve the problem now, not in July.' No one came down and talked about it. "So it's still all the kabuki. They're doing the song and dance." The governor said he would be open to considering closing some tax loopholes.

Shandling takes the stand: Testifying in the Hollywood wiretapping case, Garry Shandling was asked about Anthony Pellicano's work for Brad Grey, who was defending a $100-million lawsuit by the comedian (and who now runs Paramount). Prosecutors say Pellicano received information illegally from police databases about Shandling and several witnesses in that lawsuit. Shown printouts of those database runs, Shandling said, "This bothers me as much as the first time I was shown this." From the NYT:

Mr. Shandling, who had never testified publicly before about Mr. Grey, said he had learned “something was askew” in his relationship with Mr. Grey after his accountant noticed that Mr. Grey was improperly taking commissions on some of Mr. Shandling’s writing and acting fees. The accountant “couldn’t get an answer” from Mr. Grey, he said, and when Mr. Shandling hired a lawyer, Mr. Grey grew menacing. “Mr. Grey called me late at night,” Mr. Shandling said. “He threatened me, if I kept going — looking into my own business — that he would make my life miserable. Which confused me, because he was my manager.”

[CUT]

In a statement Thursday, Mr. Grey said he was “extremely saddened” by Mr. Shandling’s testimony, calling it “very different than what I remember and what I know to be true.” When Mr. Shandling hired a lawyer and filed suit, he said, “our friendship was overtaken by a legal process that was directed by lawyers.” His own lawyer was Bert Fields, a frequent Pellicano client. Mr. Grey added that Mr. Shandling “remains one of the most talented people I have known, and I wish him only the best.”

MGM hires new film head: Mary Parent will oversee the studio's production, distribution, marketing and business affairs. MGM CEO Harry Sloan said he wanted to confirm the company’s “position as a competitive player alongside other major Hollywood studios.” Parent was most recently a partner with Scott Stuber in a production company whose credits include “The Kingdom” and “You, Me and Dupree.” (NYT)