Wednesday morning headlines

Stocks fall sharply: The Dow is down more than 120 points in early trading. The presumed cause is weaker-than-expected retail sales for April, although the tumble might revive the argument by Paul Krugman and others that the markets had been pricing in a rapid recovery that probably won't happen.

CA foreclosures fall: The state posted a 10 percent drop in April from the previous month, but a 42 percent increase from a year earlier. California still had the nation's third highest foreclosure rate, with one in every 138 housing units receiving a foreclosure filing. As usual, several California cities ranked high up on the foreclosure list(Riverside-San Bernardino was at No. 5) From the RealtyTrac CEO James Saccacio:

"Much of this activity is at the initial stages of foreclosure - the default and auction stages - while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008. This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria. It's likely that we'll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months."

Trouble at local banks?: This time it's sour commercial real estate loans and the potential victims are smaller regional institutions that had been on a lending binge. From the LAT:

Seriously overdue loans against commercial developments have shot up dramatically in recent months, as delinquencies snowball on construction loans and mortgages for office buildings, malls and apartments. That's bad for giants like Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. But it's even worse for smaller banks, which stepped up lending to local developers and businesses as a way to stay afloat after the national institutions grabbed big-ticket consumer businesses such as home loans, credit cards and checking accounts.

Port traffic taking big dip: Expect a 13.5 percent drop in 2009, according to an EDC forecast, though a rebound is expected next year. Trade at L.A.'s ports peaked at 15.8 million units in 2006 and fell to 14.3 million units by the end of 2008. (Daily News)

L.A. investor pleads guilty: Julio Ramirez Jr., a former employee of Wetherly Capital Group, allegedly gave kickbacks to a top political advisor of former NY Controller Alan Hevesi. It's the latest development in a probe of pay-to-play corruption at a New York state pension fund, From the LAT:

Ramirez has been heavily involved in Los Angeles politics for years. He worked for the unsuccessful mayoral campaign of Woo, then a city councilman, in 1993. He switched sides four years later, serving as campaign manager to the 1997 reelection campaign of Riordan. Ramirez, who had worked for Hahn when he was city attorney, volunteered for his mayoral campaign in 2001.

Billions pulled from Madoff firm: Around $6 billion was taken out in the three months before the scamster was arrested in December (and $12 billion for all of 2008). The Madoff trustee filed two lawsuits seeking the return of $6.1 billion. (NYT)

Vegas brings back slogan: Once more, it's "What happens here, stays here." The Las Vegas Convention and Visitors Authority had tried to broaden its marketing message in recent years, but with the local economy in the tank it's back to the Sin City approach. (WSJ)