So many things out there today, let’s take a look.

It looks like the former Countrywide (who’s on your side!) CEO is being charged with insider trading.

The SEC has charged Angelo Mozilo, the former chairman and CEO of Countrywide Financial, with insider trading.

The SEC also charged the company’s former chief operating officer, David Sambol, and former financial chief, Eric Sieracki, with securities fraud for failing to disclose the firm’s relaxed lending standards in its 2006 annual report.

I’d love to see this man pay for running Countrywide into the ground, all the while walking off with a fortune.  Based on all the documentation publicly available I have a feeling this is more of a show trial than a serious attempt to convict him.

California’s unemployment fund short by billions

California is in financial ruin.  Much like GM, the problem existed for years – the economic downturn only made the situation worse. Now it seems the state unemployment fund is underfunded.

California is paying out so much for jobless benefits and collecting so little in payroll taxes that its unemployment insurance fund could be $17.8 billion in debt by the end of 2010, according to a new report from the state Employment Development Department.

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To rebalance the system and pay back the federal loan, lawmakers must raise payroll taxes on employers, reduce benefits for recipients, or both.

The condition California is in will be the template for what the nation will soon be facing.  No one wants to admit it, but it’s coming.  Taxes going up, benefits going down and more people hurting.

Delphi Salaried Retirees to Lose Pension Benefits

Delphi, the largest auto parts maker who also is in bankruptcy, has some very bad news for retirees –  Your pension, much like your career, is history.

For these salaried retirees, and thousands more like them, the latest news from Delphi only adds more insult to injury.  The bankrupt parts-maker now wants to get rid of its under-funded pension plan for former white-collar workers, meaning the Federal Pension Benefit Guarantee Corporation will take it over.

This comes after the retirees had already lost their company health care and life insurance, benefits they were now having to pay for using those soon-to-be-shrinking pensions.  But what has them even more upset, the notion tax dollars are bailing out GM and its workers and retirees, as well as helping the automaker take over some of Delphi’s assets.  Retiree Charles Cunningham of Howland claims collusion is taking place, telling us, “It’s because of the UAW relationship with the current Administration in Washington.”

This is a poor position to be in, no doubt, but the PBGC will be taking over the fund.  This means the retirees will still get – some – money, even if it is just a fraction.  Something is better than nothing, even if it’s just beer money…right?

Another side the consumer is holding back – US retailers report May sales declines

This is no surprise.

According a Goldman Sachs/ICSC tally, overall same-store sales fell 4.6 percent, worse than the 3 percent drop predicted.

The lower-than-expected results did not include Wal-Mart stores, which in recent months has boosted total results but has stopped reporting monthly figures.

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Results are a “clear indication that the consumer is not stampeding back to the stores, they’re still being very careful,” said BMO Capital Markets analyst John Morris. “I think the initial panic is over, but now the tough work begins. We’re entering a slow summer period when there’s not a lot to attract consumers into the stores.”

I’m still waiting for the retail bankruptcies to kick in.

We had talked about this in the past but the press is now really starting to take notice – the poor holiday sales this Christmas will force closings and bankruptices in the retail market.

“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.” 

Sales dropped roughly 2% from last year, which is double what was expected AND is the worst drop since data collection was started in 1969.  You notice there are a lot of “worst drops” in this recent recession, no?

What is eye opening out of the data is in the number of stores that actually closed in 2008: 151,000.  That is a staggering amount of stores, but from what I see on a daily basis I haven’t really seen too many stores close down in my area.  It is predicted that an additional 73,000 retail stores will close down in the first half of 2009.

This all will lead to retail bankruptcies, followed by retail real estate management companies going into bankruptcy…  The fun is just beginning.

Let’s face it – you were not spending money this Christmas.  

You got your gifts for those you love, and you made sure everyone you wanted to have something was taken care of but you sure were not spending like you you have in the past.  Last Christmas I bough a flat screen TV for my parents, this year they got gift cards….

It’s OK to admit it, there is nothing wrong with making sure you have money when you are not even sure you’ll be employed in the next six months.

What we all know was finally confirmed by retails – traffic the weekend before Christmas fell 24% and sales fell 5.3% compared to last year.  That is the biggest drop on record and a major ouch for an industry that expects to pull in roughly 50%  of their sales during this period of the year.

Acts of God also impacted retailers before Christmas.  In the two weeks leading up to the holiday there were a number of major snowstorms in North America and temperatures dropped to almost 0 for days on end. While people sure didn’t have money to spend the weather didn’t help the cause either.  

So do we start the Bankruptcy watch on the retail sector?  Who is to go first?  

What a number of people seem to be ignoring, or simply not thinking through, but what happens when these retail companies go under?  Their locations are empty.  People are not running out trying to start businesses in this economy, so what will happen to the location that is sitting empty? To realistic options come into play.

1. The company going under will sell the property for pennies on the dollar simply to pay back creditors
2. The company that went under will have to break contracts with the real estate investment trust, the organization that actually owns the property, which will cut into the REITs cashflow. 

Depending on the financial strength of REITs specializing in retail property, we may know where our next wave of bankruptcies make take place. (After retail, that is!)