The city of Vallejo, Calif., has gone bust. This San Francisco suburb, with a population of about 125K people, fell into a budget squeeze as tax revenues decreased dramatically because of the housing slump. Like many local governments, Vallejo didn't dial back on spending when the revenues decreased.

It's critical for citizens to let local politicians know that you can live with less government -- rather than having to pay higher taxes to maintain a familiar status quo. In fact, government has historically been "smaller" during much of our nation's history. It's only been during the last third of our history that spending spiraled out of control.

In related news, Clark recently read a Wall Street Journal article that detailed how banks are breaking the law by not paying backlogged HOA fees once they assume ownership of a foreclosed townhouse or condo. This is inexcusable. Congress is making noises about reining in this practice, but there's been no movement. Local government needs to put its foot down and pass punitive measures if banks don't do the right thing.

Clark recalls when one of his show staffers lived near a "ghost house." This property remained unsold and woefully unkempt for 2 years after foreclosure. Needless to say, it really depressed property values in the neighborhood. Again, local governments have to be vigilant in making sure banks properly maintain homes they've brought to foreclosure.