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In the latest installment of Clarkonomics, Clark examined Countrywide's decision to modify the loan terms affecting tens of thousands of homeowners facing foreclosure. The mortgage lender was one of the prime exponents of weirdo exotic loans across the country. Now 80,000 homeowners will be offered a refinance option so they can go into fixed loans and keep their payments affordable. Countrywide is not doing this out of charity. It's pure capitalism at work; lenders lose money when they foreclose. Meanwhile, sales of homes are declining. A new study shows that used homes sales have dropped to their lowest pace since recordkeeping began. There's a glut of houses on the market and the average one will now sit for 11 months before being sold. Keep in mind that much of what Clark is talking about does not affect most Americans because they're not planning to move or sell anytime soon. There's so much focus on the losers in the housing market. But the winners include buyers, particularly first-time homebuyers, and those who are very careful when buying distressed property. This latter group does not include the "Dare To Be Great" set, but rather those who stick to the fundamentals. You must buy below fair market value, know the neighborhood and have the property inspected. Be sure to know exactly how much you want to pay and not exceed it. Don't get caught in the heat of the moment if you're at an auction of distressed property. You want to buy with ice water in your veins!

There's a big change coming to the rules governing your 401(k) in January. In the past, many people were passive in their investment strategy. They might enroll in a 401(k) and have the deductions taken from their paycheck, but they would be very hands-off when it came to deciding where to invest their money. So employers would automatically default the funds into stable value or guaranteed income funds. While these funds may sound good, they're really like puny savings accounts. You need to beat out inflation when you're planning for the future -- and parking it in savings is not the way to go. Under the new rules, if you can't decide how to invest your money it will be put into the stock market unless you tell your employer otherwise. Clark knows that many people are reflexively afraid of the stock market. You can definitely get burned with stocks in the short run, but they're great for long term. Owning a business is one way to get ahead in life, and stocks allow you to own pieces of businesses. When it comes to your 401(k), Clark really likes targeted-retirement portfolios. With these options, your money is put into various investments over the years based on your age and target retirement date. So when you're in your 20s and 30s, you might be heavily invested in stocks. As you reach your 40s, 50s and 60s, you'll be put into more conservative investments. That way you're able to make a lot of money early on and protect it as you get older.

Merrill Lynch -- the largest financial house in the United States -- has just written off $8.5 billion in losses stemming from weirdo exotic investments that didn't work out. Clark makes no bones about having issues with Merrill Lynch. He believes they've fought being a good corporate citizen for years. Specifically, they've battled against their brokers being fiduciaries. What this means is that Merrill's stockbrokers aren't required to help make the smartest investment choices for you; they just need to steer you toward "suitable" investments. The investments they push you towards, however, can be very lucrative for them. And there's no telling where you'll bottom out once you go down that slippery slope of ethics. For instance, one Merrill broker had a senile elderly couple as customers and put them in variable annuities. The broker made $600,000 and Merrill made $2.5 million on the deal. That was just plain unethical, and a jury assessed a six million dollar penalty against the financial house for wrongdoing. But instead of acknowledging their mistake, Merrill is still fighting the verdict.

You have the choice to use fee only or full commission brokers to help you invest your money. But it's obvious that there's a risk of compromised ethics when you go the full commission route. Clark isn't saying that there aren't decent people working at Merrill Lynch. The problem comes when brokers are held to a lower standard of ethics -- it creates a real "buyer beware" mentality. Any spokespeople from Merrill Lynch who dispute Clark's characterization of the company are welcome to discuss it on the show.

Over the past few weeks, Clark has been talking about the fact that now all three credit bureaus are allowing people in all 50 states to freeze their credit. TransUnion was the first to announce the policy, followed by Equifax and Experian. The Wall Street Journal now reports that credit freezes are accelerating in popularity. This is impressive considering the bureaus aren't making it very easy to find out about credit freezes. Here at ClarkHoward.com we've compiled Clark's credit freeze guide to help you navigate the process. The bureaus would rather make money by selling you alerts (after the fact of an ID theft); the freeze, meanwhile, is a preventative measure. Unless you are a documented victim of ID theft, you'll have to pay to freeze your credit. Just beware that when you want to apply for new credit, you'll have to pay again for a temporary thaw. There is some concern that credit freezes will prevent people from impulsively applying for new credit. But Clark thinks that's a good thing!