Thursday morning headlines

Market slumps: Dow is down about 80 points in early trading. Is this about a ratings downgrade for Greece or financial reform or are investors just ready for a break?

Why Karatz was convicted: Jurors decided that the former CEO of KB Home did not intentionally defraud shareholders, but they found him guilty of lying about the backdating of stock options. From the LAT:

"It was sort of like Nixon with Watergate. There was no evidence that he planned it, but he certainly covered it up," said juror Ron Dick, a 72-year-old retired aerospace worker who lives in Harbor City.

Karatz sentence: He faces anywhere from probation to 80 years in prison, neither of which is likely. Sentencing is scheduled for September. "The jury got 80 percent of it right," said Karatz attorney John Keker, who is ready to appeal. The jury acquitted Karatz on 16 of the 20 charges.

Goldman case gets tougher: A former executive with hedge-fund firm Paulson & Co. told SEC investigators that a third party working on the Goldman Sachs mortgage deal had been informed of Paulson's plans to go short. That could take the wind out of the SEC case. (WSJ)

Talking pension reform: L.A. Mayor Antonio Villaraigosa says he'll push for a November ballot measure that scales back the retirement benefits for newly hired cops and firefighters. They can be changed only with voter approval. From the LAT:

Organized labor's resistance to such proposals is expected to be intense. When city officials earlier announced they were considering a similar plan for the June ballot, opposition from labor derailed it. Labor leaders argue that the city would not see savings from such a plan for decades, if at all. They also warned that that creating two classes of workers -- one that gets a more generous retirement package than the other -- would harm worker morale.

Fed makes big money: To hold down long-term interest rates, the central bank greatly increased its holdings of Treasury securities and acquired mortgage-backed securities and debts owed by Fannie Mae and Freddie Mac. A total of $47.4 billion was transferred to the Treasury Department last year. (NYT)

Airline talks end: So much for a merger of United and US Air. Details to follow.

Sheraton Universal up for sale: L.A. developer and landlord Lowe Enterprises paid $122 million for the 20-story hotel at the top of the market in 2007. Now, it could fetch around $90 million. (LAT)

Getting angry at MSNBC: Guest host Donny Deutsch had a weeklong show about angry media commentators cancelled after an unflattering mention of the cable network's Keith Olbermann. From the NYT:

Four people briefed on MSNBC's decision said that Mr. Olbermann was angered by the segment, and that his displeasure prompted the cancellation of the "America the Angry" series. But in an e-mail message Mr. Olbermann said that account was untrue; he wrote that Phil Griffin, the president of MSNBC, "phoned me yesterday enraged at what was on that show and I didn't disagree with him."

Koo Koo Roo parent files Chapter 11: Magic Brands, which also owns the Fuddruckers chain, has agreed to sell most of its assets to a private-equity firm for $40 million. Two Socal Fuddruckers will close as a result of the sale. (LAT)

Kindle at Target: Amazon's popular e-reader will make its brick-and-mortar debut this weekend at 102 locations in South Florida (wider availability to follow). The wider distribution comes as Apple's iPad threatens to eat into sales. (Digital Daily)