Linens N' Things was one of the first retail-sector casualties of the recession, with the home-goods chain filing for bankruptcy protection last May. However, fans of the retailer now have cause to celebrate -- Hilco Consumer Capital and Gordon Brothers Brands LLC announced today that they will relaunch Linens N' Things early this year, after a joint venture between the two firms acquired the chain's intellectual property rights.

Voting continues in our Best & Worst in Money 2008 feature, and it looks like early favorites include falling gasoline prices, Wal-Mart, Joe the Plumber, and former New York Governor Eliot Spitzer. Did they get your vote?

Close races include the Breakout Person of the Year, in which vice presidential contender Sarah Palin and Olympic gold medal winner Michael Phelps duke it out for first place, while poor Neel Kashkari, who is in charge of the U.S. Treasury's financial relief funds, is in last place with only about 6% of the vote.

The Most Disturbing Consumer Trend is another close race, with plunging retirement accounts and falling home values virtually a tie. It's also a very close race between Wall Street and Kmart for Most in Need of a Makeover. Not much interest in making over Starbucks (NASDAQ: SBUX), however, as it has only about 4% of the vote in that category.

Lower fuel prices are clearly the most popular Silver Lining to the Recession with about 62% of the vote so far. Joe the Plumber, with 57% of the vote, has a clear lead over distant second place Rev. Jeremiah Wright as the Most Notable 15 Minutes of Fame. And disgraced New York Governor Eliot Spitzer leads the Biggest Fall from Grace category with about 56% of the vote.

The New York Times reports that Bennigan's -- an "Irish-themed bar and grill" -- closed its 200 U.S. sites, throwing hundreds out of work. When you combine gasoline prices over $4 a gallon, higher food prices, and declining incomes, people change their economic behavior. That is particularly true when people can no longer use the equity in their homes to cover the gap between what they want and what they can afford.

In April, I posted on the recession diet, which is the way that consumers are coping with the squeeze on their budgets. They have staycations, they don't drive to or shop at the mall, they eat at home, and they buy more pasta and consume fewer vegetables and steaks.

It's great news that gasoline prices have come down recently -- in some cases as much as 20 cents a gallon. But it's not clear whether that will be enough. In any case, the Times provides a nice list of those restaurants and retailers that have filed for bankruptcy in the wake of the recession diet:

• Bennigan's
• Steak & Ale
• Mervyn's, mid-tier department store chain
• Steve & Barry's, a fashion retailer
• Linens 'n Things
• Sharper Image

I think there will be more such bankruptcies and I plan to look at publicly traded companies in these industries to see which are the likeliest candidates. If you have ideas you'd like to analyze, please post your thoughts below.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Bloomberg News reports that vacancies are rising fast. It notes that the average vacancy rate at neighborhood and community malls rose to 8.2%, up from 7.3% in 2007 and the highest level since 1995. And at regional and super-regional malls, vacancies increased to 6.3%, up from 5.6 % in 2007.

Sam Chandan, chief economist of research firm, Reis Inc., told Bloomberg that the amount of retail space being abandoned, "consistent with store closures, is at its highest level in almost 28 years." What's going on? Retailers --such as Linens 'n Things, Sharper Image, Lillian Vernon, Bombay and Levitz Furniture -- have filed for bankruptcy.

Why so many bankruptcies? It could be that with housing prices down 15% and 3 million mortgages in foreclosure people can't borrow the money they formerly used to purchase the goods that these malls sell. With consumer demand dropping and vacancies on the rise, it's surprising that rents are increasing at all.

It's the end of The Sharper Image era, with a consortium of investors agreeing to buy the company for $49 million, a reduction from the earlier agreed upon price of $51.25 million. At its peak, Sharper Image had a market capitalization of more than ten times that amount.

The company can still earn up to an additional $1.5 million depending on the success of the deal, but the earn-out is unlikely to be achieved. The company filed for bankruptcy in February, and the cash from the sale will be distributed among the creditors, with stockholders expected to receive nothing. The buyers include Gordon Brothers Retail Partners LLC, GB Brands LLC, Hilco Merchant Resources LLC and Hilco Consumer Capital LLC.

MAJOR PAPERS:

• The Wall Street Journal reported that KKR Financial Holdings LLC (NYSE: KFN), a unit of Kohlberg Kravis Roberts, revived concerns of a credit crunch after it asked for a restructuring of billions of dollars in short-term debt.

• According to sources, the Chicago Tribune reported that Deutsche Lufthansa AG (OTC: DLAKY) could look to take an equity stake in a merger between Continental Airlines Inc (NYSE: CAL) and UAL Corporation's (NASDAQ: UAUA) United Airlines.
• The Associated Press reported that the pilots' unions of Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) are unable to agree on how seniority for the companies' pilots would work under a combined carrier. The impasse puts the deal in "serious jeopardy," inside sources reported.

• Electronics retailer Sharper Image Corporation (NASDAQ: SHRP) has filed for bankruptcy, citing declining sales and profitability, Bloomberg reported.

They added about $13 million to the company's market cap -- an amazing return on a total of $400,000 worth of buys by insiders -- a "creation of value" equaling a return of about 3,200%. Warren Buffett, eat your heart out!

Folks, here's the thing: Insider trading is illegal. If you think that this "vote of confidence" is indicative of anything material, then you just bought stock in a company where 6 executives, including the Chairman and the CEO, should be under SEC investigation.

Shares of Sharper Image Corporation (NASDAQ: SHRP) soared 45.5% yesterday. Did the company report an amazing quarter? Nope. Did it receive a buyout offer? Nah. So what drove it up? 6 executives bought a total of $400,000 worth of company stock. This was seen as a vote of confidence after the company's stock price has spent the past few years tanking on declining sales, huge losses, and a massive class-action lawsuit brought by consumers who purchase the Ionic Breeze.

BusinessWeek takes an excellent look at just how much uncertainty there is surrounding the company.

But back to yesterday's big gains: They added about $13 million to the company's market cap -- an amazing return on a total of $400,000 worth of buys by insiders -- a "creation of value" equaling a return of about 3,200%. Warren Buffett, eat your heart out!

Folks, here's the thing: Insider trading is illegal. If you think that this "vote of confidence" is indicative of anything material, then you just bought stock in a company where 6 executives, including the Chairman and the CEO, should be under SEC investigation.

And besides, who wouldn't buy stock when the act of buying would drive up the share price 45%?

It's entirely possible that Sharper Image is a good investment. But a few executives buying an average of less than $70,000 worth of stock each isn't any reason to think that.

No one would be particularly surprised that Chinese stocks traded on U.S. exchanges did well in the third quarter. The Shanghai Composite has doubled so far this year, and many stocks like Baidu (NASDAQ: BIDU), the China search engine, have made stunning gains.

In the third quarter, China Eastern Airlines (NYSE: CEA) moved up 112%. China Finance Online (NASDAQ: JRJC) ran up 282%. It is hard to imagine that the Chinese market can keep up this momentum, but analysts say that every quarter.

No one would find it odd that home builders and mortgage lenders were among the big losers in the quarter. Beazer Homes (NYSE: BZH) fell 66% to $8.25. Fremont General (NYSE: FMT), which has a subprime lending operation, fell 63.4% to $3.90. Mortgage lender Novastar Financial (NYSE: NFI) was down 68% to $8.87.

As retail sales fell, specialty store operations took a pounding. Gottschalks (NYSE: GOT) fell 63.5% to $4.34. And, Sharper Image (NASDAQ: SHRP) dropped 63.7% to $4.13.

The toughest part of the quarter is the realization the retail, housing, and mortgage shares could actually go lower during the October to December period.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Shares of Sharper Image (NASDAQ: SHRP) are down more than 20% today as bankruptcy looms due to lawsuits alleging that the company's air purifiers are ineffective.

According to the Daily Business Review, "Financial experts for retailer Sharper Image are expected to testify today that the company could be pushed into bankruptcy if it is forced to pay up to $900 million to settle a class action lawsuit being pushed by 27 state attorneys general and several plaintiffs attorneys."

It doesn't really take a financial expert to tell that Sharper Image doesn't have $900 million to settle a lawsuit. The company has been reporting massive losses in recent quarters, and shareholder's equity has dwindled to around $100 million.

The lawsuit alleges that the company's wildly popular Ionic Breeze air purifiers don't do what they say they do and, in many cases, can exacerbate health problems.

In addition to the company's financial problems, the negative press surrounding the lawsuits has very likely eliminated much of the value of the Sharper Image brand.

Sharper Image might look cheap with its market cap of $65 million. But there's a good chance that it's headed to zero.

Each month, the NASDAQ publishes the number of shares sold short in every stock traded on the exchange. Short sales are fundamentally bets that the stock will drop. The shares are borrowed and must be paid back to the accounts from which they came. If the stock falls, they can be paid back at a lower value. If the stock rises, the shares must be bought at a more expensive price and then be replaced. When a stock moves up sharply, shorts often have to cover their positions quickly to avoid larger and larger losses. They go into the market and buy an already rising stock. This action is known as a "short squeeze."

One measure of short interest is the absolute number of shares sold short and its increase or decrease from the previous month. The figures in this article are for December and are compared to November numbers. Another key measurement is "coverage ratio." That's the number of shares sold short divided by the average shares traded per day. This shows how many days of trading it would take to liquidate the entire short position. A high coverage ratio means the bet against the company has a great deal of weight.

These are the most significant moves in short positions during December 2006 based on an analysis by 24/7 Wall Street:

Microsoft Corporation (NASDAQ:MSFT): Short interest drops sharply as Vista and Xbox appear to be financial winners for 2007.

Yahoo Inc. (NASDAQ:YHOO): The short position drops, perhaps as the market anticipates the launch of Panama.

Jet Blue (NASDAQ:JBLU): With rising fare prices and falling fuel costs, Jet Blue is on the move. The shorts lighten up.

Sun Microsystems (NASDAQ:SUNW): The Sun turnaround story has skeptics with the stock running up hard.

Charter Communications (NASDAQ:CHTR): Loaded with debt and in need of restructuring, the shorts march in.

Earthlink (NASDAQ:ELNK): Trying to move from ISP to WiFi provider is not a pitch the market is buying.

Amgen (NASDAQ:AMGN): Shorts leave as the company's drug pipeline grows.

Dell (NASDAQ:DELL): The big PC maker gets some relief. Can Vista drive up sales, or will the CEO leave?

Sharper Image (NASDAQ:SHRP): Wall Street kicks the retailer while it is down.

Douglas A. McIntyre is a partner at 24/7 Wall St.