While experts are declaring we have been in a recovery since June 2009, it seems that the rest of us aren't so sure. Despite the newest in a long line of frauds being revealed and the employment rate stumbling, the stock market might inspire some hope among traders. (Missed last week's Water Cooler Finance? Catch up by reading The Post-Stimulus Slump.)
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The Biggest Rogue Trading Scandal
Jerome Kerviel, a 33-year old former trader at Societe Generale, was found guilty on all counts in court this week. According to the Associated Press, the court ruled that Kerviel must repay the 4.9 billion euro ($6.7 billion) and serve at least three years in prison.
The unexpected twist is that there is no hidden bank account where the stunning amount of cash was squirreled away; in fact, it appears as if Kerviel didn't gain financially at all from the fraud, save looking like a star trader in the eyes of his employer. Many are arguing that Kerviel is being made an example of, and that the blame should be distributed more appropriately on his former bank employer.
Whether Kerviel is a criminal mastermind or the unfortunate scapegoat for a larger flaw in the system, this fine is being described as "symbolic" because no one expects him to pay even a small part of it. After all, consider how long it would take you to pay back $6.7 billion dollars, especially considering the jail time and the stigma of fraud hovering over you. (Learn more about famous rogue traders in The Biggest Stock Scams Of All Time.)
Rise of the Robo-Signers
If you have recently entered foreclosure proceedings, you just might be in luck. According to the Wall Street Journal, the first major legal action against the "robo-signers" was filed this week. There is a set procedure wherein mortgage loan documents must be reviewed and deemed eligible before entering foreclosure. The latest question of fraud-or-not is being asked about employees allegedly authorizing thousands of foreclosures without first reviewing the loan documents.
Because of the allegations, GMAC Mortgage Co. stopped foreclosure processes in 23 states until the issue is resolved. Bank of America followed suit on Friday with a hold on all foreclosure sales across the U.S., the Wall Street Journal reported.
Still Jobless? You're Not Alone
September was a little better if you work in the private sector, but overall 95,000 jobs were lost in the U.S. last month, largely due to government cutbacks as the census ends and 77,000 of the temporary workers brought in for the project are let go. The jobless rate remained at 9.6% according to the BLS, which translates to 14.8 million people without employment. (For related reading, take a look at Why The Jobless Claims Report Doesn't Really Matter)
Less Jobs Mean Hopeful Markets?
On Tuesday, stocks rallied to a five-month high among growing belief in economic recovery and growth, according to the Wall Street Journal. On Friday, the Dow closed above 11,000 for the first time since May. The disappointing employment numbers from September seemed to have inspired hope that the Fed will do something to stimulate the growth everyone is so desperately seeking.
Stephen Bernard of the Associated Press reported that the Dow closed up 0.5%, the S&P 500 gained 0.6% and the Nasdaq finished up 0.8%.
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At Least There's Technology
If the state of the economy has left you feeling blue, fear not: Google and Logitech have a new toy for you. The Logitech Revue is a set-top box, the first product that uses Google as the (internet-based) TV provider. According to Logitech's website, Google TV allows you to "access videos, shows, apps, and sites from the web in addition to all of your usual TV channels - even some DVRs."
Instead of compressing your TV shows into an iPad, video mp3 player or smartphone, this technology brings the apps, videos and internet browsing to your TV. The Revue is listed for pre-order at $300.
The Bottom Line
The economy and stock markets continue to putter along, with some months showing signs of promise and others dashing those hopes. The best thing you can do is not act to extremely in either direction and just ride out the storm. (Learn more about getting through the rough times in 4 Ways To Weather An Economic Storm.)
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