CNBC is airing a special on the business behind the Kentucky Derby, where the best three-year-old thoroughbreds compete at Churchill Downs in a mile-and-a-quarter race with a $2 million purse. Here’s a bit from the CNBC website:

The Kentucky Derby is the longest running sports event in American history. Now, a cherished pastime is a multi-billion dollar industry. From the champions to the big business of on-line betting, the Run for the Roses has become the icon of American horse racing.

CNBC Originals takes you inside the winner’s circle where legends are born and millions are made.

Catch the special tonight, Thursday, April 30th at 9pm eastern time. If you miss it tonight, check your local listings as CNBC always runs these specials several times over the following days.

From CNBC.

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From CNBC’s website:

CNBC takes you aboard a city at sea where passengers are enticed to spend big money…but can this fast growing segment of the travel industry navigate the rough seas of a slumping economy and stay afloat? Correspondent Peter Greenberg takes you cruising for profits.

Check your local listings for showtimes.

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Tonight CNBC is (re)airing an amazing show called “Marijuana Inc.: Inside America’s Pot Industry.” CNBC has aired the special a couple times now, but if you’ve missed it, or haven’t heard of it yet, you should check it out. It’s an interesting look into what CNBC calls a “thriving industry…raking in what’s estimated to be tens of billions of dollars nationwide.”

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According to an article by the Financial Times, Alan Greenspan has converted to the dark side of those promoting nationalization of private assets, specifically banks. The article quotes Greenspan as saying “The US government may have to nationalize some banks on a temporary basis to fix the financial system and restore the flow of credit.” This coming from the former 19-year Chairman of the Federal Reserve and the man viewed by many as the champion of laissez faire capitalism. The ship is definitely sinking.

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The sluggish economy is certainly affecting a lot of people these days, and if it’s not affecting you directly, you’re probably cutting back a bit on spending just to be on the safe side…good for you. Nonetheless, we can’t stop shopping completely…we have things we need that just can’t wait. So how do we save money on the things we need to buy? How about asking?

It’s as easy as asking the right questions

It’s so simple, most people don’t even think about it. Next time you’re out shopping for something, try asking if you can get it for less. What you’re shopping for really determines how you ask, so let me give you an example so simple I almost forgot to do it myself.
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U.S. retailers are expected to file for bankruptcy protection after a poorly performing holiday buying season according to the Wall Street Journal This Morning Podcast. Some of the retailers expected to file are retailer Loehmann’s, pharmacy Duane Reade, and jeweler Finlay Enterprises.

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Business week has an interesting article about FHA loans, which they refer to as “the new subprime.” These Federal Housing Authority-backed loans are designed to encourage homeownership by helping people with modest means qualify for a loan.

Washington, in the midst of the mortgage meltdown, has loosened requirements for such loans and it’s Businessweek’s contention that this is where many of the predatory lenders have moved toward.

Businessweek’s article covers one such lender, a company called Premier which, after filing for bankruptcy protection in the wake of federal indictments in 2007, has issued more than 2,000 taxpayer-insured FHA mortgages – $250 million in total.

Apparently, Premier failed to notify the FHA of its bankruptcy filing, which is required by law, but once again, existing regulations are not being followed up on, leaving the bill in the taxpayers lap.

Read the original article here.

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The Labor Department released its monthly jobs report this morning, and number certainly don’t look promising. The good news, however, is nobody thought they would look promising, so it’s no shocker. In fact, analysts polled by Reuters were predicting heavier job losses.

December Unemployment at 7.2%

December’s jobless rate came in at 7.2%, up 0.4% from November’s 6.8% rate. December’s number marks the highest unemployment rate in nearly 16 years.

November, October Job Losses Revised

November’s job losses were revised to show a 533,000 loss, and October’s numbers were revised to 423,000 from 320,000.

December Job Losses: 524,000

December saw 524,000 jobs lost, bringing the total reduction in U.S. non-farm payrolls in the four months through December to 1.9 million. The services sector got hit the hardest with a staggering 273,000 jobs lost, contributing a great deal to the 524,000 total.

2008 Totals:

Total jobs lost for 2008: 2.6 million. That number represents the largest decline since 1945.

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According to an ADP report released today, December saw the loss of 693,000 private, non-agricultural jobs in the United States. November saw 476,000 jobs lost.

Forecasts saw the numbers to be a bit better, ranging from 250,000 to 550,000 jobs lost.

Important to note, however, is that December is the first month the ADP has implemented a new methodology, which is supposed to provide a more accurate picture of the labor market.

According to Sal Guatieri, senior economist at BMO Capital Markets, “The new methodology uses the raw ADP figures, plus data on jobless claims and previous payrolls, to model current payrolls, resulting in a much smaller error compared with the previous method which relied solely on the ADP figures.”

While this is so, spokemsan for the ADP report, Joel Prakken, told CNBC that the economy is struggling at a pace not seen since 1981 or perhaps even World War II.

According to the report, the goods-producing sector saw employment declines hit 220,000, the 23rd consecutive monthly decline. The manufacturing sector saw job losses reaching 120,000, marking the 27th month of decline out of the previous 28 months.

Firms with 500 or more employees saw a drop of 91,000 for the month, medium-sized firms saw 321,000 jobs lost, and small firms (those with less than 50 workers) saw a drop of 281,000.

Construction saw its 21st month of continuous decline at 102,000 jobs lost for the month.

ADP National Employment Report

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CNBC has a pretty interesting series called American Greed, during which they detail legendary white collar crimes and how they were planned and carried out. Tonight (Wednesday, Jan 7th, 2008) at 9:00 pm American Greed covers the story of Matt Cox, Rebecca Hauck, and Alison Arnold, who engineered a classic mortgage scam that took advantage of the delay between funding and recording of mortgage transactions.

Ringleader Matt Cox made off with around $12 million and, in a telephone interview with CNBC, explains the details of his crime.

Check out CNBCs American Greed site here. Their site lists showtime at 9p | 1a ET, but I’m on the east coast and my guide has it listed at 10:00pm, so you may want to set your DVR so you don’t miss it, or check your guide.

Mat Cox - Mortgage Broker & Ringleader

Alison Arnold - The Ex-Girlfriend

Rebecca Hauck - Partner-in-crime

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The Federal Reserve released the meeting minutes from its December 15^th and 16^th meeting when it cut the target Fed Funds rate to between zero and .25%. The minutes can be viewed online here.

FOMC considers not releasing an explicit target

The minutes show that there was some initial resistance by committee members to slash the Fed Funds rate to such a low level. Certain FOMC members were in favor of not releasing an explicit target rate thinking that would “give banks added flexibility” in determining interest rates. Other members, however, expressed the opinion that such a step would only serve to confuse things.

Historically low rate believed to have more positive effects than negative

According to the minutes, “Most participants judged that the benefits in terms of support for the overall economy of federal funds rates close to, but slightly above, zero probably outweighed the adverse effects.”

FOMC members’ outlook good

From the minutes, it’s clear that, while the members believe the Federal debt, which recently passed the $2 trillion mark, would likely remain at a high level for some time, they have an overall positive outlook on the economy as a whole, stating that recent policy actions leading up to the meeting “should help over time to improve credit conditions and promote a return to moderate economic growth.”

Interestingly, most committee members saw increasing inflation as a generally low risk at this point, while some even went so far as to worry about “uncomfortably low” inflation levels. Committee members suggested quantitative targets for an increasing reserve base could be effective in staving off potential deflation, as well as communicating to the public the Fed’s determination to avoid such a problem.

Potential for deflation?

The members suggested the potential for deflation, which is notably inconsistent with most predictions of coming inflationary pressures on the economy. Unfortunately, the minutes don’t explain the disparity.

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Due to current economic conditions, mortgage rates have hit an all-time low. If you’re looking to refinance, now may be the best time.

Especially considering the Fed recently cut the Fed Funds rate target to 0%, which signals that we’ll almost certainly be facing some serious inflation in the near future as a result. And, as everyone knows, rising inflation equals rising mortgage rates.

You can check out a few of your mortgage options here.

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On July 30th, 2008, President Bush signed into law the Homeownership and Economic Recovery Act of 2008, also known as HERA, that put into effect a number of changes to the way the mortgage system operates.

Licenses Required for Mortgage Originators

For the first time, mortgage originators are now required to be registered and licensed on the national level. This is a big change over the past when originators could, quite literally, be pulled off the street, handed a phone, and selling mortgages in the same day. Obviously, this appears to be a step in the right direction in overcoming mortgage fraud, and it’s something the National Association of Mortgage Brokers has been a vocal proponent of for some time.

HERA Won’t Be Active Until October 1st, 2009

Like most laws requiring major changes, states aren’t required to have licensing systems in place until the beginning of October, 2009.

Does this mean no more convicted felons in the mortgage business?

A few weeks into my first mortgage job at the height of the refinance boom in Southern California, the police suddenly showed up asking for one of my co-workers. The guy wasn’t working that day, but needless to say, I asked around and imagine my surprise when I was told this guy had recently been released from prison and, apparently, had violated his parole!?

Well, I left that company real quick!

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U.S. Treasury Secretary Henry Paulson has requested that Congress give him the remainder of the $700 billion TARP funds approved in the hopes of steering the U.S. Economy away from recession.

The original plan for the TARP money called for Paulson to use the funds on the purchase of illiquid assets from firms in the financial sector. Paulson’s decision to inject liquidity into the financial system has garnered him a bit of unpopularity and what appears as a bit of a premature request for the second half of the $700 billion certainly doesn’t help.

Paulson’s original plan had been to leave the remaining $250 billion in TARP funds for his successor, Timothy Geithner, but the Bush administration made the decision to hand over $17.4 billion to bailout GM and Chrysler, and the government’s finding it’s pocketbook a bit thin in comparison to it’s recent promises.

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According to an article by People, Guy Ritchie and Madonna’s separation, though reportedly civil, is resulting in a lump sum payment to Guy Ritchie of between $76 and $92 million. Incidentally, that more than doubles Ritchie’s current net worth. Ritchie is the director of such movies as Snatch, Lock, Stock and Two Smoking Barrels, and his newest film, RocknRolla.

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The Federal Open Market Committee, in a meeting on Tuesday, set a target for the Federal Funds rate of 0 – 0.25%, the lowest rate on record.

This is a sign that the Fed is willing to go to nearly any extent to see that our current economic situation reverses itself.

We’ve reported in the past that the Federal Reserve has a real balancing act to play with regard to the Fed Funds rate; lower it too much and inflation could take off, not enough and the economy won’t turn around. At 0 – 0.25%, it can’t get much lower, so the Fed will no doubt be dealing with inflation issues in the future. This moves signals that they believe stimulating the economy is more important at this point than keeping a check on short term inflation.

What does that mean for mortgage holders? Well, most experts agree that inflation will most certainly be on the rise in the future, and when inflation rises, so do mortgage rates. So, if you’ve been holding off on refinancing into that 30-year fixed for the perfect interest rates, there probably won’t be a better time than now.

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Dave Carpenter wrote an article distributed by the Associated Press about “Steering clear of investment fraud.” He’s got a great explanation of a Ponzi scheme, the scheme that Madoff was running where he bilked investors out of an estimated $50 billion.

Mr. Carpenter explains the most reliable credentials for investment advisers, CFP (Certified Financial Planner), and CFA (Chartered Financial Analyst). Still, Madoff was a legend on Wall Street; a number of high profile charities and corporations were invested with his company. When people with resources like that get bilked out of billions, what’s the average American to do? According to Mr. Carpenter, there are warning signs regardless. Read the article here.

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Former NASDAQ Chairman, Bernard Madoff has allegedly been running a Wall Street ponzi scheme of epic proportions, bilking investors out of an estimated $50 billion.

Madoff is the founder of Bernard L. Madoff Investment Securities LLC and separately managed money for high-net-worth individuals and hedge funds through an investment advisory business he oversaw. Madoff was charged with securities fraud on Thursday after federal investigators called his operation “a giant Ponzi scheme.”

According to The Wall Street Journal, Madoff was buying and selling options, which are orders that allow someone to buy or sell stock at a given price within a given time frame. The orders don’t have to be placed. The Wall Street Journal Weekend Business Podcast for 12/12/2008 states that, while buying and selling options is a viable investment strategy, it would be impossible to execute given the enormous amount of money Madoff was managing.

What is a Ponzi Scheme?

Ponzi schemes operate on the promise of high rates of return with little risk; no different from most investment schemes in that regard. In a Ponzi Scheme, however, portions of new investors’ funds are siphoned off and paid as returns to older investors. Older investors think they’re getting great returns when the money is actually coming from the new investors. In the end little, if any, real investment actually takes place. The scheme is able to operate as long as there is a constant flow of new investors; as soon as new investment slows or stops, there is no longer money to pay the older investors. We may find that this is just how Madoff got caught…with the slowing economy, he no longer had a steady flow of new investments to pay the old investors. This is just speculation of course, nonetheless, this appears to be the largest investment scam in U.S. history, causing irreparable losses to thousands, including many large charities.

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The financial markets have been wiping the floor with investors lately, and, as T-Bill rates hit 0.0304%, investors are moving toward the safety of short-term assets.

Carlos Leitao, chief strategist and economist at Laurentian Bank, calls it a “huge wave of panic,” and likens the situation to investors stuffing money under their mattresses.

The current T-Bill yields mean that a $1,000,000 investment will pay $1,000,076 at maturity, a rate that doesn’t come close to keeping up with inflation.

The situation suggests that investors are liquidating what they view as less-than-safe assets, and investing in treasuries, driving down the yield with such high demand.

Unfortunately, this isn’t the beginning, nor will it be the end of investor timidity.

It’s not just investors, banks too are hording cash for fear of the unknown. According to T.J. Marta, fixed income strategist at RBC Capital Markets, computerized trading systems could be hurting too. “We’re afraid of black-box type systems. They would have gotten buy signals on spread and would have been blown out of the water by now.”

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The Federal Reserve Bank of New York announced Tuesday that it would lend up to $85 billion to AIG (American International Group) in an effort to help the struggling investment giant avoid bankruptcy.

The Fed suggested in a press release that the terms of the agreement aim to protect the interests of the U.S. government and American taxpayers. The press release also stated that an AIG failure could lead to further market fragility and higher borrowing costs. Obviously, the Fed is trying to protect the U.S. taxpayer who, in the long term, may end up paying more if AIG fails than if the government comes to it’s rescue; nonetheless, the question remains if it will really make the difference intended.

Under the deal, AIG is required to sell off some of its assets in order to repay the government loan. The U.S. government stands to receive a 79.9% equity stake in AIG as a result of the bailout.

All of this bailout news and talk of government ownership in private business is starting to make me see red.

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