The automakers are in the midst of their begathon appeal to Congress and the president. While political talk show hosts have been all over this story, Clark wants to discuss it from an economic perspective.

GM sales are down some 40%, Chrysler is down some 50% and Ford is down around 30%. The American people have spoken -- day after day, purchase after purchase -- and said they don't want the products the Big 3 are making.

This is not, however, a diatribe about the American worker. It's really general management that has failed. Case in point: There was a GM plant in Fremont, California, that was just about the worst plant since the days of the Yugo. Toyota took the plant over; hired back the exact same workers who were employed there under GM; and it went from worst to first within 2 years. Again, there's nothing wrong with the American worker; it's management that's at fault.

Now we have the Big 3 coming to us and begging to get them out of their management failures. GM says it could fail in a matter of weeks. They're trying to create a sudden sense of urgency.

Capitalism allows you to file for bankruptcy, reorganize in Chapter 11 and try to make a go of it again. That's how the system should work. It should not entail us being told to empty our wallets because the Big 3 didn't make cars that we wanted to buy.

In capitalism, if a business is allowed to fail, the marketplace allows other more efficient businesses to survive. We pervert the system by bailing out manufacturers who have inefficiencies. Of course, the Big 3 will cloak themselves in the American flag during their begathon, but what they're really looking to do is put capitalism in a straightjacket.

CLARKONOMICS: Back in late winter, Clark originally said that we were in a recession. He was stunned at the time because he was catching flak from listeners who felt his comments were politically motivated. They weren't.

Then in April, Clark participated in a debate with nationally syndicated talk show host Neal Boortz and WSB-AM radio personality Herman Cain. The penny-pincher felt it was self-evident that we were in a recession, primarily because he hears calls from you day in and day out. The 2 politicos, however, swore up and down that everything was great with the economy.

Now, The National Bureau of Economic Research (NBER) has officially declared that we are in a recession and it began back in December 2007. Some predictions suggest that the recession will likely last through 2010. That news immediately caused the stock market to drop like a rock.

This will be the longest recession since World War II. Unemployment is still, by historical standards, favorable at 6.5%, though we could hit 9%.

So what actions should you be taking? Clark could trot out the usual platitudes -- start saving; don't buy on credit; and reduce debt -- but he'd rather illustrate it with the following example.

This is more than just flossing your teeth. The dentist tells you to do that everyday for optimal dental health. But until your teeth start falling out, you might not heed the advice. Well, Clark wants you to consider this a time of complete and utter tooth decay.

CLARKONOMICS: The federal government over Thanksgiving put up more money for the bailout. According to Bloomberg, funding for the federal bailout in total now stands at $8.5 trillion. That's 8,500 billion dollars!

Meanwhile, mortgage rates are down and may even go lower. There's a real possibility we'll see rates in the range of 4% for a 15-year fixed and around 5.25% for a 30-rate fixed. If you're in the mid 6% range or above, now may be the time to refinance. Of course, you'll need to have a decent credit score and some equity to do so.

The feds also hope to loosen up the student loan market, the car loan market and borrowing for small businesses. In related news, Clark isn't happy that the feds are trying to figure out a way to loosen up money in the credit card market. They're trying to get us out shopping with borrowed money. Just say no!

Should you stop contributing to your 401(k) or other retirement account and sell everything you've got? That's a question that Clark hears from people multiple times a day.

Barron's recently ran a story comparing our current market situation to the 1930s. These kinds of stories create anxiety that is not necessarily a bad thing when it comes to investing. During the last 20 or 30 years, we'd gotten to a place where we practically expected that money will grow if you just pop it in the market. This is now the first time many investors are experiencing rough seas.

Retirees are particularly scared about their holdings declining before their eyes. So many people at the studio have asked Clark to talk to their elderly parents and set their minds at ease. Clark's own mother-in-law even calls him a Pollyanna!

If you're still in the working years, the antidote for anxiety is simple. Stop trying to figure out if we've hit the bottom and stop trying to find safe havens for your money.

As an aside, Clark says the speed with which oil and gas prices have declined is actually a negative indicator. It may feel good when we fill up at the pump, but the decline is not for a good reason. A good reason would be that we have a new economical method to fuel our vehicles, and he still believes this will happen.

So why would the penny-pincher still encourage you to put money into your retirement plan month-by-month and paycheck-by-paycheck? Even in the darkest days of the '30s, people who continued contributing eventually made big money. They simply bought more shares at lower prices.

One tip for our older listeners who have retired: Do not sell out all your holdings. If you are truly worried, try doing reverse dollar cost averaging. That's where you take out a little money each month. By still leaving the bulk of your money in the market, you won't miss the recovery. But you will lower your exposure in increments and that may give you some psychological peace.

CLARKONOMICS: A recent survey of economists finds that they unanimously agree that there is a recession and it began back in April. However, they disagree on how severe things will get going forward. Some economists think unemployment will rise from our current level of around 6.5% to 7.5%, while others think it could go up to 10%. That's a gloomy outlook either way.

You probably know someone who got laid off. It may even be you. People often ask Clark how long the tough times will go on. Many Americans weren't old enough to remember the recessions of the early-to-mid '70s and the early '80s. Both represented a new low and were the worst since the Great Depression.

But modern recessions -- even when they have significant unemployment -- tend not to last too long. In fact, economists think this current one won't be extra long because of all the bailout money being pumped into the economy. The best guesstimates are that tough times won't last longer than mid-to-late next year or until 2010 at the latest.

Looking from a historical perspective, we had a recession that started in 1873 and lasted for 6 years. The duration was so intense because there were no financial instruments available to shorten the length and severity. No food stamps, no unemployment compensation, no bailouts. Today, we have modern adaptations to prevent a complete meltdown.

In looking for new angles to cover the recession, reporters have begun talking to shrinks about the panic their clients are feeling. Clark doesn't want to belittle those feelings, but if you are dejected, remember that you still probably have food to eat and access to shelter (even if your own home is in foreclosure).

So, yes we will have more difficulty going forward, but you've got to be realistic about the degree of difficulty and have some perspective on it.

CLARKONOMICS: As you've probably heard by now, Citibank has announced 52,000 layoffs -- enough people to fill a stadium. The company is also raising interest rates on their credit card customers because they need the money. Most customers have reported an average 3% increase in their rate.

It almost goes without saying that we'll see more layoffs and hours being cut back with other employers. So where's the positive news?

Well, even if we hit a 9% unemployment rate, that still means more than 90% of us will keep our jobs or be able to find new jobs in a reasonable time-frame.

But the even bigger news is that companies are budgeting raises for 2009 at the same level as they were for 2008, according to a Business Week survey of employers. Because inflation is expected to be minimal in 2009, that means that the average pay raise will exceed the rate of inflation!

Still, be realistic about where you work. If you know the axe could fall, it's incumbent on you to get your financial house in shape ahead of a possible bloodletting. If you're in a 2-income household, can you dial back on lifestyle and save one of 4 checks coming in each month?

Clark became unexpectedly choked up last night around 11 p.m. ET when the networks projected that Sen. Obama would in fact become President-elect Obama.

The penny-pincher has so little in common with Obamanomics, but he was very touched by the moment. Clark was moved by McCain's elegant, classy concession speech and his vow of unwavering cooperation. Then Obama spoke in Chicago's Grant Park and extended an olive branch to Sen. McCain. When everything was said and done, both men were gracious to each other.

As an American, you can't help but be proud about what a great country we are.

Many of you may feel wounded because your candidate and party lost. But unlike in other countries, nobody takes to the street to do a military coup and seize power. We are a beacon of hope and opportunity in the world. In addition, we have also exported so many great things around the world. People look at us and know that giving an individual the ability to succeed or fail as a capitalist is the ultimate ticket to creating wealth.

While Clark does not subscribe to Obamanomics, he is a longtime disciple of Britain's former Prime Minister Margaret Thatcher. Through her force of will and ideals, the Iron Lady caused an awakening that brought Britain out of a major economic slump in the '70s. How did she do it? By reducing taxes and creating marketplace incentives for people to get working.

Clark does not believe for a minute that Obama's leadership will create a pre-Thatcherian wasteland on our shores. Obama has a great ear for what people want and what our society is all about. There's no need to pack your bags and look for a new place to live.

So why exactly did Clark choke up when Obama won? You have to understand that he grew up in the Deep South and lived through the battles over segregation for which Dr. King gave his life. Clark could never have pictured growing up as a child that we would have an African-American man as president-elect. He salutes our nation's triumph of moving beyond the prejudices of the past.

Two months ago, the nearly unthinkable happened when the Reserve Fund "broke the buck" by devaluing shares below $1 within its family of money-market funds. What a shock that was to those who had traditionally thought of money-market funds as an ultra-safe place to park cash. For more on the background of this story, see the explanation Clark offered last month.

Now comes word that the Reserve Fund is giving back a mere 50 cents on the dollar. They may eventually pony up another 45 or 47 cents. So people will likely lose 3% or 5% on something that was supposed to be completely safe.

However, heed these words: Other than the Reserve Fund, your money is A-OK in most money-market funds. After all, they're now federally guaranteed. And with Ameriprise Financial, for example, they'll generally make up the 3 or 5 cents on a dollar that their customers lost on the Reserve Fund.

But there's no denying that the Reserve Fund's blunder took a psychological toll on investors. The important thing to know is that it's OK to get back on the horse.

Going back to May 2007, Clark went berserk about the Circuit City CEO who decided to fire experienced employees and managers in order to cut costs. Clark was outraged at the inhumane way the company treated loyal longtime employees.

It didn't take an analyst to see what the result of the move would be: Customers walked when they couldn't get any decent help in the stores. Now Circuit City is barely alive and Clark doesn't see how they'll get out of this jam. After all, many suppliers aren't shipping merchandise to them anymore -- because they know the company is on its last leg.

Retail is entirely self-cleansing. If you don't meet the needs of your customers, you cease to exist. Circuit City is simply getting what it deserves.

Remember, you're nothing without your employees. Businesses have to romance their workers, so that their workers will romance the customers. Managers should use specific individualized positive reinforcement when dealing with employees. Clark compares it to the process of raising a child; you've got to nurture, encourage, support and discipline that child with specific examples.

By now you've probably heard the report that consumer confidence is the lowest ever since surveying began during the presidency of Lyndon Johnson.

Clark believes we are in difficult times, but not dire times. Of course, the endless media coverage would convince you otherwise. For example, it's now common to hear a lot about the Volatility Index (VIX) -- even though only a small percent of Wall Streeters ever knew about this previously. Talk about creating a perception of doom and gloom.

Clark has said that he expects our nation could spend 7 to 12 years working our way out of the funk. We spent like crazy -- and borrowed to spend -- on an individual, corporate and government level. To some extent, this is a worldwide contagion.

But before you accuse Clark of contributing to the doom and gloom, you've got to realize that he does not mean 7 to 12 years of daily doom and gloom. Rather, he means we'll have a continuing drag effect on our economy. Think of running with weights around your ankles; you can run, but it sure is difficult. That's exactly how Clark expects us to financially wheeze along for the next 7 to 12 years.

Yes, the news feels rotten and there's more to come. But we are not as a country facing The Poseidon Adventure with a tidal wave that's about to sweep us away.

Those of us who are having a tough time must rely on family, friends and religious organizations. Also, there will be a push when the new Congress convenes to offer extended unemployment benefits. The great thing about our country is that we don't just leave people out on a limb.

If your family is facing tight financial times, it's important to talk with your children about the situation. The key is to have an informative conversation with your children -- without engendering fear.

Of course, this scenario doesn't always play out the way you'd like it to. Clark recalls hearing the following story back in the early '80s: When a father lost his job, both parents sat down with their 2 teens to talk about the sacrifices they'd have to make until he found work again. The parents felt they really got their point across; the kids were engaged and asked great questions. But shortly after, the daughter came back and asked for $20 to go to the mall!

The teens obviously missed the message. We've lived through a period of unprecedented affluence for our children. We are a nation that spends like crazy on kids in their formative years. Consider the Air Jordans phenomenon. The iconic athletic shoe goes for anywhere from $185-$230!

CLARKONOMICS: In past weeks, Clark told you how the world of money-market funds was rocked to its core when the Reserve Fund "broke the buck" by devaluing shares below $1. It was the first time ever in 28 years that a money-market fund made that misstep.

Great panic ensued among investors. After all, money-market funds have long been considered just about the safest place to stash cash. The Reserve Fund's blunder was tied up with the collapse of Lehman Brothers, which had been funneling the Fund's money-market dollars into some very goofy investments.

When investors got wind of what was going on, they tried to pull billions out all at once. That move effectively froze everything. To this date, customers have still only gotten back 97 cents on every dollar.

As the panic spread, people started pulling money out from other money-market funds like mad to the tune of one-half trillion dollars. So the feds initially put in place some temporary protection for money-market funds through September. That coverage has now been replaced with a new program to federally guarantee the funds through April.

Clark wants you to know that he has several money-market funds and did not make a single change through all the turmoil. The reality is that it was a fluke and he doesn't believe it's a signal that the very structure of money-market funds is unsound. So rest easy, America. You can feel OK putting your money back in.

Sometimes it seems like the financial Earth is moving beneath our feet. A recent ABC News poll reveals that 1 in 6 of us say we're in a great deal of financial pain. 3 in 10 won't open statements from our retirement or investment accounts; 2 in every 3 of us fear for our family's financial future; and 9 in 10 are worried about the direction of the economy.

These times are tougher and scarier than anything many of us have seen. Unemployment may even rise into the double digits. But Clark wants to set some perspective. Let's say we go to a worst-case scenario with the unemployment rate at 11%. That still means 89% of us have our jobs. Of course, that's no help if you're the 1 in 10 that's out of work. Still, you've got to realize that this is not the end of the world.

Clark wants to draw the distinction between tough times and dire times. Those under age 40 are probably clueless about dire times -- because such times predate their working career.

Meanwhile, Smart Money reports that Clark's beloved target-retirement funds are down. Fidelity's 2010 fund is down 21%; Vanguard's 2010 fund is down 19%; and T. Rowe Price is down 23%. That's extremely scary if you're on the precipice of retirement and you're down that much in a moderately conservative portfolio.

There's no telling when the economy will stop ailing. But realize this: Your money will recover over time, especially if you're younger. Time, to paraphrase Mick Jagger, is on your side.

Of course, you know you're hurting when you're afraid to open your quarterly statement. You just have to keep in mind that it's called investing because there is an element of risk. The key is to build your portfolio so the risk is right for your time in life.

Today is the day that Clark contributes to a variety of mutual funds through automatic paycheck deduction. He did it last month, and he'll do it again next month and the month after that. The point is that nothing has changed. Yes, his portfolio is down. But right now he benefits through buying more shares for the same price. That's a recipe for creating wealth over time.

For several days, Clark couldn't work because he had a bad case of laryngitis. He came down sick just as our government did a partial nationalization of the 9 largest U.S. banks…and he was mute. Talk about torture!

Many of you have gotten down on the penny-pincher about his belief that the partial nationalization was the right move. In fact, he believes that it was wise of the feds to require that the banks take the bailout instead of making it voluntary.

One benefit of the move is that traditional non-interest bearing business checking accounts -- the kind favored by small and midsized businesses -- will now be covered up to an unlimited sum of money.

Of course, this partial nationalization is not like waving a magic wand that will make everything better. But if it encourages lending to businesses that can in turn make profits, that's a good thing.

Yes, there is an irony in the fact that right now we've got to be socialists to be capitalists. But in retrospect, Clark believes this will be seen as a good move. He is worried, however, that we'll forget about this episode of American history too soon. If we learn anything from all of this, it should be that we need more cops on the beat to protect us from the excesses of capitalism.

During the past few weeks, Clark has been telling you that the United States had several financial calamities throughout the 1800s. It's been more than 30 years since he studied that material in college, so he brushed up on his history to give you a feel for where we are today.

Today, our unemployment rate is above 6%. It may climb to 8.5% or higher. That means 9 million Americans won't be able to find work immediately. But it will not be a time of starvation.

During the crash of 1893, unemployment was around 20%. There were no food stamps, no welfare and no medical assistance. You were on your own, left with the kindness of strangers.

Modern American industry started around 1830. Over these past 178 years, we have had one difficulty followed by good times, then another rough patch followed by another smooth patch, so on and so on. But we will not have 20% unemployment or mass starvation.

Clark could bore you with the stats, but the point is if you read the history, yes, there are parallels to the past -- excessive spending, corruption, speculation -- but you can't extrapolate and say that because we were in a Great Depression in the '30s, we'll automatically be heading into one again. You are only condemned to repeat history if you fail to learn from it.

Clark would love to have been able to talk to Paulson several weeks ago and tell him that we should give the banks a cash injection -- in return for taxpayers having non-voting ownership of banks. And those banks that are beyond hope? Shut them down, that's why we have the FDIC.

The funny thing is that it looks like this will happen in lieu of the original plan for auctioning of toxic securities. We will likely have a joint operation with the British, as both nations figure out which institutions to pump up and which to let fail. In both cases, it will be in return for taxpayer ownership in the failing banks.

Yes, you can say this is socialism and nationalism, and you'd be absolutely correct. But the prior Paulson plan that got shot down had a fatal flaw -- the only way to make it work was to rip-off American taxpayers. We were going to overpay the banks for their junk.

Over the weekend, there will be something of a world economic summit in Washington. Historically, it's been very rare to have finance ministers from different nations get together and coordinate policy. But the real problem would be if the ministers were sitting on their hands and just letting the chips fall where they may.

If it sounds like Clark is pooh-poohing his natural Libertarian tendencies, well, he is! There is great danger when the banks can't function. Capitalism requires the flow of capital -- or you have arterial arrest in the body financial.

We've reached capitulation where professional and casual investors alike are selling their holdings. They're running for the hills and getting into CDs, saving accounts and other safe harbors.

But capitulation is the stepping off point for phenomenal opportunity. When everybody's given up, this is when real money is made over the long haul. Here's a breakdown of what you should be doing based on your age.

If you're 20-49 years old, stock prices are at levels not seen in 30 or more years. In a word, they're a deal to buy. Of course, Clark wouldn't recommend that you pick individual stocks. Go for index funds instead, such as the Total Stock Market Index or Fidelity's 4-in-1 fund. The latter one is great if you want a piece of the international pie. Remember, diversification and dollar-cost averaging (contributing every paycheck) are your friends. And the markets will heal and reform themselves -- barring complete nuclear annihilation of the human race.

If you're in your 50s or 60s, your portfolio should include more conservative elements such as bonds. For example, Clark has about 37% of his money in bonds; 62% in various stocks, large, small and international; and a fraction in commodities and cash equivalents.

When you're 70 years of age or older, you'd obviously want to be very conservative with some moderate-risk investments. But even so, you'd want to have perhaps 30% of your money in stocks. That will allow your money to grow and outpace inflation as you live longer.

In today's special edition, Clark began by saying that he's concerned CNBC is running a 'Wall Street in flames' graphic. That kind of thing may be good for ratings, but it's not a good message to send. What we really need are voices of calm instead.

Yes, we will have a contraction in the economy. That means the size will temporarily shrink -- resulting in layoffs, company failures and more. But we will come out on the other side just fine. Capitalism is self-cleansing.

We Americans don't know how to process the info about market instability because we've never seen it before. Most Americans have never lived through difficult times. We all know faintly about the Great Depression, so we draw that as our only historical parallel.

In 1973-74, Clark recalls being in Washington D.C. and seeing people sleeping in cars while sitting in endless gas lines. We had unemployment, we had inflation. Anybody under age 50 is clueless about the history of that time.

Likewise, remember the severe times in the early '80s? The misery index -- the combo of inflation and unemployment -- topped out at 20% at that point.

Each time, we convinced ourselves that capitalism was done and America's best days were in the rearview mirror. But those who sold all their holdings never benefited from the eventual recovery.

The Federal Reserve has teamed up with the central banks in various countries as part of a concerted effort to lower interest rates worldwide. Communist China and the Europeans joined in with us in this lockstep attempt to restore faith in world currencies.

Anyone who is in a floating interest rate loan -- such as a HELOC -- will benefit from the Fed's latest cut. Most credit card customers won't benefit because the banks have written that out of their terms of service for cardholders. Mortgages, meanwhile, are not affected by the rates that the Fed controls -- so this doesn't mean you'll qualify for a lower mortgage rate. Yet Clark believes better mortgage rates are coming, unrelated to the Fed's cuts.

In a more shocking development, our government has gotten into the banking business by lending directly to American corporations. Just look at the Fed making loans in commercial paper. Anybody who is a Libertarian has got to be doing the Linda Blair right now!

Does this signal the beginning of the end for U.S. capitalism? Absolutely not -- the system has just received a deserved black eye. The reality is that we don't have a better way of creating jobs and wealth than capitalism.

We just have some serious housecleaning to do -- the AIG execs having a toga party in California; the guy from Lehman Bros. guy arguing with Congress over why he should have a bigger compensation for failing. If the average person got fired, they'd be ushered out by a security guard. You wouldn't even get to clean out your desk!

Clark recently provoked heated listener response when he revealed his portfolio was down 3.8% for the year. Some thought he was lying through his teeth, while others thought he was lying about how his portfolio was invested.

Well, you wanted clarification, you got it.

The 3.8% figure was only through Aug. 31. Today, Clark pulled up his account again and saw…drum roll, please…that he was down 10.06% through October 8. Do you feel better now?

Many of you have asked for Clark to again detail his investments. Because of his age and income level, Clark has 37.5% in tax-free municipal bonds and bond funds. The other 62.5% of his money is divided out among big company stocks, small companies and international markets (Europe, Japan, Australia and New Zealand). The biggest hit he took over the year has been in his international holdings.

But consider this: If the average 401(k) is down 20%, why is Clark only down 10%? In a word, dollar cost averaging. Each month like clockwork, he buys more shares at a lower price. When the market recovers, his gains won't keep pace. But he reduces his risk by putting money in over time -- instead of all at one time.

Let's take this opportunity to get a little market perspective. Syndicated financial columnist Kathleen Pender reports that there have been 18 bear markets (defined as a 20% drop) since the modern market era started some 80 years ago. The average bear market decline has been 36% -- which is exactly where we're at right now.

Since the Great Depression, the market has fallen by 50% or more in 4 individual instances. Remember the last time that happened? It was in 2000-2002! That was just 6 years ago. So it's good to keep perspective. Clark believes we are much closer to the bottom than we might realize. You know you're bottoming out when everybody is afraid.

According to a recent CNN poll, more than two-thirds of Americans think we're headed toward the next Great Depression. Clark for one will be shocked beyond the pale if this happens. The truth is that our 24-hour news cycle has a way of frightening us to drum up ratings. But there's no need to go the "survivalist route" by stockpiling food in the event of a financial apocalypse. If Clark is wrong, he'll go hungry, right?

Today's big story was that the Federal Reserve will buy up commercial paper, which are unsecured short-term promissory notes. The move came after some blue chip companies like AT&T had trouble borrowing money for their day-to-day expenses. Likewise, GE needed an infusion of cash from Warren Buffett.

So the Fed essentially nationalized the commercial paper market -- even though you'll never hear them express it in those words. Still, the end result was the same; taxpayers are backing short-term corporate borrowing. This is yet another step toward stability or socialism, depending on your point of view.

Precisely because we're taking so much action, Clark does not fear a contagion leading to a new Great Depression. Moreover, we don't have any modern versions of Hitler running around seizing power after the Weimar Republic collapse -- remember those dramatic photos of people bringing barrels of currency to buy a loaf of bread? The only nation that Clark thinks qualifies in that respect might be Zimbabwe.

Meanwhile, the headlines coming out of Europe are unsettling if you watch CNBC or read the financial press. European banks present a unique challenge: They operate across borders, yet they're in the bailiwick of an individual country for a bailout. That means a coordinated bailout is not as easily done over there as it over here. For the first time, however, the Europeans did come up with a system to ensure bank deposits across Europe.

There is a question Clark is repeatedly hearing from callers on the show and during his appearances across the country: Should I just call a timeout and stop contributing to my retirement fund or other investment account?

The answer is no. If you are in your 20s, 30s or 40s, nothing for you has changed at all. Today's turmoil actually benefits you over the long haul.

New statistics from Vanguard show that the average amount people are saving is just over 7% of pay. But you need to save at least a dime on a dollar for long-term financial security.

Life often gets in the way of neat little plans to save a dime on a dollar. Still, you must set your priorities. Live in a smaller house, drive your car until the wheels fall off or do whatever else you must do. And be sure to fund your retirement before you fund your child's education.

If you are in your 20s, 30s or 40s, be sure you're invested primarily in stocks and then some bonds as well. If you're in your 50s or 60s, you may want to have up to 40% of your money in bond choices and less in stocks.

For those who are wondering, Clark's holdings are down 3.8% over the last 9 months. Why so little? Because he's diversified!

Maybe we should rename the show Clark's Financial Hour because there are so many events right now that could affect your wallet!

The Labor Department reported the biggest 1-month decline in jobs in 5 years. Jobs are getting harder to keep and harder to find. Clark believes this is all part of the unspoken recession that we're in.

Yet in the midst of all the negativity, there are some real out-of-left-field positive developments going on. For example, Wells Fargo has made an offer for the failed Wachovia that completely takes taxpayers off the hook. Before the offer, we could have been responsible for up to $270 billion. Now even stockholders that were wiped out before will receive some value for the stock! This is perhaps the first time a failed enterprise came back from the dead with some market value at no risk to taxpayers. The only ones not happy about the Wells Fargo deal is Citibank -- which had been in negotiations to acquire Wachovia for itself.

Many rough patches still remain for Wachovia. The bank had a fund that was valued at just under $10 billion designed for private schools and universities that is now frozen. That means some schools can't pay their bills and may not be able to pay their own staffs!

Likewise, in the world of state government, California's Arnold Schwarzenegger has had to go hat in hand to seek a $7 billion handout from the feds. The state simply can't meet payroll.

There are many aspects that point to a nervous breakdown in our financial world. But it's just fallout from the excess in spending and borrowing that we've been doing for a long time. Clark is not in a panic and hopes you feel the same. You've got to control your own financial life instead of worrying about the parade of unfriendly headlines.

The bailout bill finally has the votes it needs and Pres. Bush's signature on it. So does that mean everything will just work itself out now? No way, not any day. This is just part of the process of starting to heal the markets.

Clark's hope is that the bill will restore confidence in some segments of the market that were shut down. For example, nobody wanted to underwrite mortgages and car loans (unless you were at a credit union for the latter). Hopefully that will now change, though we will continue to have higher unemployment coupled with more angst and uncertainty for your wallet.

If Clark had his way with the bailout, he would have given taxpayers ownership of Wall Street -- much like the government did with the $85 billion takeover of AIG. And there wouldn't have been any severance for the CEOs.

Unfortunately, Clark's role is as a pontificator -- not a legislator.

During the course of his appearances, Clark is used to being asked questions about everyday consumer issues -- cars, credit cards, cell carriers, etc. But now people only want to talk about the economy and the bailout.

The Senate has passed the rescue plan by holding their noses collectively. In a symbolic gesture, both Democrats and Republicans walked out together after the vote to show solidarity. The House is also expected to hold its nose and pass the bill, which has been padded with so-called "sweeteners."

As part of the new deal, the FDIC limit may be raised from $100,000 to $250,000. Let's understand why that provision has been written into the bill. You've heard of a run on the bank, right? Well, Washington Mutual and Wachovia both experienced a "walk on the bank" in their last days.

That's where people who had money in excess of $100,000 heard the news about possible bank failures and decided to diversify their money among other institutions. They didn't completely pull all their money out of WaMu or Wachovia; they simply took out enough to protect themselves in the event of a collapse. But when enough wealthy people do a "walk on the bank," it can be disastrous. The move to raise the FDIC limit to $250,000 should prevent the need for any "walks on the bank" in the future.

As always, Clark's advice for these tough economic times is as follows: Focus on what you need to do to protect yourself. You don't need Clark to tell you that you should reduce debt in your life so you have some wiggle room in the event of a layoff or other economic blow.

As an American, Clark is frustrated by the strident polarization in politics and on the airwaves during these past few weeks. When the chips are down, people can either overcome their differences and work together, or magnify their differences and have a complete breakdown of trust.

The latter has happened several times in our nation's history. On the eve of the Civil War, our country split in two and there was enormous self-inflicted destruction and death. After the market crash of 1929, there was another breakdown in trust. History buffs can ponder the fact that borrowed money and speculation fueled the crash of 1929 -- and that's the same thing happening today!

By way of contrast, we've also overcome differences at many times throughout our history. Clark thinks back to when George Washington chose to stand down after a second term instead of becoming a dictator. Several decades later, the Supreme Court stood up to the president and created a viable third branch of government. There were also the financial crises of 1907, 1987 and 1998 when we pulled together to avert a meltdown.

Today, the breakdown in trust across the political and media spectrums has created an "us vs. them" mentality. As an independent who voted Libertarian during the last two presidential elections, Clark doesn't have a vested interest in partisan politics on Capitol Hill. Nor does he have a hidden political agenda -- though many posters on Clark Stinks seem to think he does.

Clark is concerned that we've depersonalized those who don't believe the same things we do. McCain, Obama, Palin and Biden all strike him as decent people and good Americans, though he may disagree with them on certain issues. But he finds it repulsive that people question the candidates' loyalty to the American way of life.

As a free-marketer, Clark hates that we are looking at bailing out Wall Street. But if we are to bail them out, he likes something clean like we did with AIG where the taxpayers got ownership. Unfortunately, that's not the route it appears we're heading down.

So should the chips instead just be allowed to fall as they may? No, capitalism requires a functioning capital sector. We need to prevent the world's financial systems from going into a deep freeze. Therefore, we need a bailout -- even though Clark doesn't like the current rescue plan.

Based on what he's saying here, Clark could never be re-elected as a politician, and you as a listener may be so mad that you'll never listen to him again. So be it. He firmly believes we must preserve our capitalist system -- even if that means going with the "least bad option" today.

Our financial marketplace has undergone a transition and been re-made in the image of the 3 remaining giant monster mega-banks. But there are still a ton of community banks out there that offer personalized banking, plus great deals on savings and CDs.

MoneyAisle.com is a website you can use to help get the best deals. It's an online auction marketplace where small banks compete for your business.

You simply enter what you have at the site -- say, $5,000 that you'd like to lock up in a 12-month CD -- and the banks bid on your contract. This is a dynamic marketplace that could get you more or less than what BankRate.com says is out there. Remember, he who has the gold makes the rules. You're the one with the money, so shop for the best deal!

In related news, Clark wants to talk about the Reserve Primary Fund (RPF) -- the first money market mutual fund ever to "break the buck" by devaluing shares from $1 to 97 cents.

RPF has now announced partial distributions of money to begin tentatively on Oct. 13. If you're a small business in need of that money right now, some brokerage houses are making loans -- from 0% interest up to 5% interest -- to float you against your own money.

Then beginning Oct. 8, the government will begin insuring money market mutual funds and tax-free money market mutual funds to restore confidence in the market.

It's a new era in banking with 3 giant monster-mega banks -- Citibank, Bank of America and Chase -- rising to dominate the financial landscape. Historically, we've had many banking choices in the United States to avoid concentration of financial power. Canada was really the first developed nation to go the giant monster mega-bank route. As part of the backlash, our neighbors in the Great White North also embraced credit unions like no other nation!

When all the financial mess settles down, Citibank, Bank of America and Chase will together account for about 1 in every 3 deposit dollars in the United States. The relative lack of competition means the banks have no incentive to offer good customer service. But you don't have to do business with them -- even though convenience is king for many people.

Clark thinks we need intense supervision of these 3 outfits so they can't get into any lending foolishness that could undermine our nation.

Meanwhile, Europe is facing 3 bailouts of its own during the last 36 hours. The most prominent has been the Benelux-funded rescue of banking and insurance company Fortis. There were also similar bailouts in Britain and Germany. So is the world on the verge of financial collapse? No, but we've got a lot of homework to do here and overseas.

By now you've heard that the federal bailout plan failed in the House of Representatives. Remember, the first job of a politician is to get re-elected. So it is any wonder that -- weeks before an election -- the pols balked when faced with a bill that was unpopular and little understood by the average person?

Now the inevitable question: What's next? First, Clark believes we are in a recession and it will deepen. Second, this is not the eve of the Great Depression. We may have unemployment, but it will be more like the kind we faced in the '80s -- not the '30s. This is not gloom and doom.

In the post-Civil War years through the turn of the century, we had 8 major recessions in the United States if Clark remembers his history correctly. Then in 1907, we had a credit market failure that had to be corrected by JP Morgan -- the man, not the company.

Any recovery will take a while. We borrowed and spent money that we can't pay back. We have millions of houses to work off as excess. Nothing can recover until the housing market returns to equilibrium.

During the recession in the early '80s, we had mortgage interest rates that were above 20%! But we went through difficult times and recovered. We just have to work off the excess -- too much house, too much car, too much debt, too much government spending.

Working off the excess means our standard of living will be slightly lower for the foreseeable future. So you'll have to live on less of what you make. It won't be pretty or happy, but it is not the Great Depression.

The failure of Wachovia -- the nation's fourth largest bank -- is the next shoe to fall here at home. Let's start with some common customer concerns that Clark is hearing. First, accounts are completely safe, and you can access your funds just as you did before the failure. Second, if you have a mortgage or HELOC with Wachovia, you still must pay on your debt to the same address where you've been paying all along.

The FDIC claims this is not a failure, but that's baloney. Wachovia stockholders -- including Clark himself -- are wiped out. For months, Clark has been blasting Wachovia on air over a variety of issues. Therefore, he felt it would be unethical for him to sell his holdings, and so he too went down with the ship.

We as taxpayers did not pay anything for the Wachovia failure, but our maximum potential exposure could be up to $270 billion under the deal the FDIC arranged with Citigroup. This fact is not being reported widely.

Meanwhile, the federal bailout is designed to prevent a death spiral; credit unions and other institutions now are being granted access to money to bolster our financial system. So where is it safe to put your money? Clark wants to emphasize that it's completely safe to use all of our nation's banks, mutual fund companies and credit unions.

One final word for Wachovia customers: Print out hard copies of all current balances on all holdings. Having current records is your best defense against things getting bungled down the road as Citigroup takes over.

Are you still having difficulty figuring out how all the news today -- and of the past 2 weeks -- affects you?

It's difficult to understand why we should help Wall Street bigs who make an average salary of $300,000. If there's one thing we're united by, it's our anger at the bailout bill. People are understandably skeptical when Pres. Bush had been saying everything was OK with our economy, and then he turned around and dramatically changed his tune.

Clark wants to try to show what could happen in a worst-case scenario if the financial markets continue having a nervous breakdown.

As an example, businesses wouldn't be able to borrow money to expand, which pinches future economic growth. With no access to money, businesses may cease to exist; new startups couldn't get funding; or businesses may survive but not grow. All of these circumstances would lead to lower economic growth, potential layoffs and fewer jobs being created.

Meanwhile, you as a consumer wouldn't be able to get credit to buy something. The business that couldn't sell to you then has lower sales, which circles back around and can lead to layoffs.

We've been getting so many questions about the collapse of Washington Mutual and the rumored instability of Wachovia. And amid all the political theater about bailouts, the Federal Reserve went and pumped $290 billion into the markets to keep them functioning.

Meanwhile, businesses are having trouble getting money. For example, junk bonds -- which are issued when companies of questionable finances need to borrow -- are right at a 15% average. Several months ago, they were firmly in the single digits. That 15% figure signals that the marketplace has gone into a "panic." However, Clark has to qualify that term "panic." This "panic" only has stricken those who do this kind of thing for a living. Clark wants to emphasize that there's no reason for the average person to panic.

The failure of WaMu -- the 6th largest bank in the United States -- has been the largest in our nation's history. So how much money will people lose in insured deposits? Not a cent -- so long as you don't have more than $90,000 on deposit. Use CDARS.com if you are a Daddy Warbucks with money to insure above traditional FDIC limits.

The only "gotcha" here pertains to CDs. The acquiring bank (JP Morgan Chase, in the case of WaMu) must decide whether to honor the existing interest rate or reduce it. However, if you have a mortgage or other loan through WaMu, the rate can't be changed by JP Morgan Chase. Just be sure you have your monthly statements to prove your payoff amount.

Today is being billed as another "special edition" of The Clark Howard Show. Clark realizes this term is overused, but he hopes his listeners notice his general tone of lightness on the topic.

We are not toast, as the media might have you believe.

Clark was at the YMCA working out this morning. A woman came up to him and said, "You said everything is going to OK -- and now it's not!" But the reality is that everything will be OK in the long run.

Having said that, Clark wants to clarify his previous statements about the current state of financial difficulties lasting for 7-12 years. This does not mean that the "mess-a-day" pace will continue all decade long. What it means is that the reckless borrowing of the last 6 years -- both on government and individual levels -- will be a drag on the economy that may last a decade.

This drag on the economy does not mean doom and gloom or even a recession (though Clark believes we're already in one!). But don't expect to see Hoovervilles or apple-selling carts on the street anytime soon. It's not going to happen.

This is a time when average people who normally don't focus on Wall Street minutiae have a lot of questions and that's understandable. Clark could bore you all day with talk of CDOs and SIVs -- just a few of the investment schemes that helped bring about the breakdown in trust between financial institutions and the freeze in credit markets.

One thing is clear: This is a "made in America" mess that we're going to have to clean up. It won't be easy, but it won't be all gloom and doom. Now we have to take on debt to deal with the foolish debt that the wealthy took on with their high-stakes gambles that failed. This is a problem with many layers and the solution won't be as simple as flicking on a light switch.

In the aftermath of 9/11, we were told it was our patriotic duty to buy cars with 5-year loans that we didn't need, and to buy on credit in the stores. But Clark wants to hear the president say that we're living on borrowed money and we have to stop -- beginning in Washington D.C., corporate America and our households across America.

We need to get back to basics.

The financial turmoil has led to a lack of trust between financial organizations and freezing up of the credit markets. As with most things in life, the best way to appreciate the current situation is through the lens of history.

In the 1800s, there was no central money system. Banks printed their own money from state to state and people had to decide if they trusted money from a given bank.

Well, that's where Wall Street is today. Banks don't trust the IOUs they hold from other banks. In all the layers of the commercial paper market, nobody trusts anybody else's paper. This is a key part of the freezing up of the credit market that Bush keeps talking about.

Here we are again with another "special edition" of The Clark Howard Show. We don't say those words "special edition" lightly; Clark doesn't do hype.

The reality is that we've painted ourselves into a corner -- collectively. Yes, you're right to be angry at Wall Street, but there's enough blame to go around to us too. Most Americans borrowed money willy-nilly during the past several years, increasing their levels of personal debt 50% in 5 years! Why? Because people gave us permission to borrow and told us we could do it.

Regarding President Bush's speech last night, it was clear he was eating humble pie and it looked painful. He and his team have presented the Paulson plan, and it was DOA because it didn't hold their Wall Street buddies accountable.

The headlines are enough to make a person anxious. Each time a domino fell, Clark has tried to draw perspective and show why it's not doom and gloom. Yet even though there's this bailout deal in the works, the hurt is not over yet. We got into this mess over time and we have to get out over time. However, getting out does not have to mean mass unemployment, homelessness and starvation.

With headlines blaring "crisis" all the time, you lose perspective. Our 24-hour news cycle purposely plays to minute-by-minute ratings to capture your eyeballs. When the coverage ends, we think the problem is solved. But that's not the case here.

We face a federal budget deficit that limits our options. In fact, it necessitates that we depend on the kindness of strangers (aka foreign nations) to buy up our excess federal debt.

So here's the takeaway for you: You can't control the fact that the federal government spends money we don't have. You can only control what you do in your own household. You must spend only what you make. There is no other long-term choice.

Clark's challenge to you is as follows: Rethink how you handle your money, and focus on living within your means.

A New York Times reporter has traced the sale of just one of the weirdo investments that blew up on Wall Street and helped cause the mess we're in right now.

Here's the scoop: Bear Stearns came up with an investment package called "Bear Stearns Alt A Trust 2006-7" that was valued at $1.3 billion. Basically, they went out and bought more than 2,000 Alt A (liar's loan) mortgages with the average price tag being $450,000. More than half of the loans were made in the bubble states!

Then Bear Stearns took the trust and divided it into 37 different bonds that they split off for sale to investors. So what you had was a situation in which nobody knew how many loans failed; how many were going to fail going forward; and nobody knew how to value these investments. That's why there's so much confusion in the economy.

This scenario was played out over and over again. One person takes a mortgage; it morphs, moves in pieces and slices to investors around the world; and is structured, divided and repackaged. By the time the investments were sold and re-sold and re-sold again -- and then the foreclosures start -- you have a mess that nobody can define or figure how to put a price tag on.

When all is said and done, our collective responsibility for the bailout mania of 2008 will be in the trillions of dollars. But what does that mean for you? Simple -- for every dollar you pay to the government in taxes, less will go to government programs (whether you support them or not) and more will go to service the trillions of dollars of debt the bailout creates!

Clark wants to drill down a bit further and explain what the current economic climate means to you right now.

A consequence of the financial turmoil is that CD rates have pumped up. You can again today earn 5% or more on 1-year through 5-year CDs. Of course, that only means you'll be running in place with the rate of inflation -- but it's still better than where we've been. Meanwhile, an oddball 7-year CD -- an unusually lengthy term -- is today netting 5.4%. (Editor's note: Rates effective on Sept. 25, 2008.)

Clark likes BankRate.com for ferreting out CD rates. He also recommends you check your local paper for ads from nearby credit unions and community banks. As usual, his caveat about staying well within FDIC limits -- do not exceed $90,000! -- stands firm. And whatever you do, don't go to a giant monster mega-bank –- unless you want terrible customer service.

If you household income exceeds $75,000, you might want to consider municipal bonds. That's where you become a bank for local governments and buy up their debt. Because tax rates are almost certain to go higher no matter who's in office come January, tax-free municipal bonds are an attractive option. You can buy individual bonds or bond funds. Clark's recommendation is for the latter to limit your risk.

Another option for high-income earners is a tax-free municipal money market fund. Vanguard is really the granddaddy of tax-free (aka tax-exempt) municipal bond funds. Their funds have lower management expenses than anybody else, so the effective return you get is higher. When it comes to length, Clark recommends an intermediate term.

But realize that while money market funds are a zero-risk account for idle cash, bond fund values change daily -- so the latter choice is not the best bet for short-term money that you'll need anytime within 7 years.

It's no secret that the economy is weighing heavily on people's minds. A new Bloomberg/Los Angeles Times poll shows people are feeling very negative about their own finances.

More than 1 in 4 people feel less financially secure than 6 months ago. Another fourth feel only somewhat less secure. But combined, that means half of all Americans surveyed have a negative outlook! Meanwhile, another 40% feel things haven't gotten either better or worse for them in the last 6 months.

Clark doesn't buy into all the gloom and doom about America's future. Yes, we have messes to deal with and it will take time, but we'll get it together.

On the issue of the Paulson bailout plan, Clark hears you loud and clear, America: They're trying to pick our pockets. He applauds those who won't be made to just roll over and cough up $700 billion with no questions asked. The reality is that the American people should get something back -- like we now own about 80% of AIG since the government bailed them out.

Paulson keeps going on and on about making this "clean." Well, "clean" means "dirty" here.

Clark wants to talk about the in-progress federal bailout of the wealthy people on Wall Street who made really dumb gambles. For years, their gambles were paying off in the Ponzi scheme that was Wall Street circa 2002 and onward.

Now it seems like every financial group wants money from our pockets. But we're not being asked -- we're being told. Paulson is proposing a bailout for all his buddies and says we need to make this clean. What does that mean? That means he wants his Wall Street buddies to be able to sell their holdings at a higher price than they're worth on our dime.

That's not OK. It's wrong for us to be held up by Wall Street bandits.

If we are going to bailout the Armani suit crowd on Wall Street, we should receive ownership in these firms at the very least. Nor should their CEOs get huge paychecks at our expense. A CEO who helmed a company that needs a bailout should be fired and not get a cent.

There's a general feeling in this country that we're being hoodwinked. Clark agrees. Yes, it is necessary for us to save Wall Street. But at the same time, Clark doesn't want us to get ripped off bailing out those who make an average salary of $300,000.

Much of the money they made was ill-gotten gains from the long-shot gambles they made. Yet people don't call Bush or the Federal Reserve looking for a handout when they lose big in Las Vegas, right? But that's what's happening here. They bet wrong in the casino of the market and want us to bail them out no questions asked.

Here's a problem: First, Paulson is Wall Street's man on the inside. Second, these banks, brokerage houses and insurance companies give huge money to key politicians on both sides of the aisle. Your congressman or woman and your 2 senators may be bought and paid for by folks on Wall Street. So the danger is that Washington corruption plays out again with us on the hook for who knows how many trillions of dollars.

Normally, Clark wouldn't talk in this kind of tone with these kinds of words. But right now he's worried about what Paulson and Bush are trying to pull on the American people.

Here we are again with another special live show dealing with what Clark terms the "financial mess" -- because "financial crisis" is way overused.

The federal government has now made a move that's unprecedented in the history of money market funds (MMFs) -- and it's actually one that Clark supports.

MMFs have always been considered a safe place to park your money. If you put $5,000 in, for example, you get $5,000 out -- plus the interest you've earned. But recently several funds "broke the buck" -- following a series of risky investments -- when they devalued shares below a dollar.

People got nervous and started making withdrawals that could have snowballed into a run on the MMF industry. The Bush administration, Paulson and Bernanke responded by going into panic mode. They were terrified that one run would lead to another and usher in a modern version of the Great Depression. So the government did a shocker: They put into place a federal guarantee for MMFs. They also put up hundreds of billions quietly in the event of a run.

Americans have $3.5 trillion in MMFs, so Clark believes this move was necessary. Many people have MMFs as a common alternative to bank accounts. There is now no need to make a panic withdrawal or get out of your MMF. Your money is now 100% safe and federally guaranteed.

The government is nationalizing a significant chunk of capitalism. We're taking responsibility for the irresponsibility of the nation's biggest banks, brokerage house and insurance companies. We taxpayers will back them up in the largest bailout in the history of capitalism. The government is sugar-coasting it and saying it will cost around $500 billion. But the real price tag could be closer to $1 or $2 trillion.

So how will you end up on the hook? The government will have to borrow money they don't have as public debt. You'll be taxed to make up for it. Say they take in $1 billion in taxes. That gets sliced up like a pie with pieces going to Social Security, defense, Medicare, transportation, education, etc. -- except several hundred million will have to go to pay the interest on federal debt. $1 billion in is not $1 billion out.

In the coming days, you're going to be hearing so many pundits comparing the current financial mess to the Great Depression. But Clark wants to make something perfectly clear: This is not the Great Depression. Do not give into the cable TV hype.

During the Great Depression, one-third of Americans were out of work, with others participating in WPA programs. We had waves of homelessness; we had the Dust Bowl days with the failing of agriculture; and we had massive numbers of poorhouses where the destitute were warehoused in giant buildings.

We have nothing like this going on today. Yes, we have financial catastrophe, but we don't have economic catastrophe. The financial catastrophe will be largely contained -- at great risk to the concept of the free market.

We do not have hopelessness. We will have unemployment and weakened world standing because our financial house is not in order, but we are not facing financial Armageddon.

By now you've no doubt heard about the federal takeover of AIG. Clark had a gut feeling earlier this week that the government would bailout AIG. He wishes he had been wrong. Now we taxpayers own a majority share in the 18th largest company in the world.

We were already running the largest deficit in the history of the United States before the bailout of AIG. Couple that with the recent bailouts of Bear Stearns, Fannie Mae and Freddie Mac, and you'll see we're on very unsteady financial footing. How this will all play out for our long-term standing among the world's nations remains to be seen.

For now, let's just focus on what the AIG bailout du jour means to you. AIG policyholders can rest easy because it's been a full nationalization of the company. There's a new CEO and the government is calling all the shots. AIG was lucky; other insurers, however, will be allowed to fail because they're deemed not important enough to save.

Many people wonder how an insurance failure would work and if there are similar protections in place like the FDIC or NCUA. Actually, insurers have state guaranty associations. So if an insurer fails, your insurance and annuities are protected up to $300,000 by the state. But while FDIC coverage guarantees you your money overnight, state guaranty associations have to see that they first have the money before they pay you back. If they're short, you've got to wait -- which could potentially take years.

Again, AIG policyholders aren't facing such a situation. Clark just wants to explain a worst-case scenario so you are informed.

It's startling to Clark that our free market is becoming state-run. And you know who is at fault? Capitalists like Clark who went from greed to hubris and made big bets with borrowed money that didn't pan out.

Meanwhile, for the first time in the 38-year history of money-market funds, Reserve Primary Fund "broke the buck" -- that is, they devalued shares by 3% below a dollar. That may not sound like a big deal, but it means that money markets are no longer the ultra-safe option they once were.

With all the Wall Street worries abounding, is it time to run for the hills? Consider this: Today, Clark bought additional shares of the mutual funds he automatically buys every month. He hasn't changed anything about his investing approach.

Is Clark like the captain of the Titanic about to smash into an iceberg full-speed ahead? Is he being foolish? That's an individual determination that you have to make. But Clark thinks he's crazy like a fox. Standard human behavior dictates that we buy at the peak and sell during lean times -- exactly the opposite of how we should behave.

The key, as always, is diversification. You've got to spread your money out to meet different purposes. If you're a 60something, putting all your money in CDs will make it evaporate under the pressures of inflation. So you've got to diversify across the spectrum with some stocks, bonds and CDs even at a late age.

Being an owner is how long-term wealth is created. Don't fall for the CNBC mindset, which is all about drama and ratings. If you like Maria Bartiromo, put a picture of her on your computer -- don't buy into the "sky is falling" mentality.

One theme that's emerged from all the calls and e-mails that Clark took this hour had to do with retirement. If you're retired; have parents who are; or are facing retirement soon, there's this feeling of, "What do I do now?"

If you drill down deep enough, people all have the same fears: Will we become those seniors who have to shop for deals on cat food? Or take handouts from our kids?

But if your money is adequately diversified, the fact that stocks are tanking is not that important. Other sectors of your portfolio -- be it bonds or cash investments -- can pick up the slack. And yes, even as a senior citizen, you want to have some money in stocks to counteract the effects of inflation down the road.

Notice the one thing Clark didn't mention: variable annuities. There will no doubt be a big sales push for variable annuities in the coming months. But you should resist the temptation of the supposed safety and security they offer.

The only kind of annuity that's appropriate is a lifetime annuity or an immediate payout annuity where you get a check for the remainder of your life -- much like a pension. You may not hear about these options from an insurance agent because the commissions on them are very small. But they're a good idea for 25% of your money.

If you are feeling nervous, remember the pie chart model and diversify!

The financial meltdown on Wall Street making big headlines today really began in earnest last summer. It was such a New York/Washington D.C. kind of story that you probably didn't pay attention to it unless you were involved in the financial sector.

About 10 days ago -- when mortgage underwriters Fannie Mae and Freddie Mac failed -- the general public started taking notice. There was some interest several months ago when Bear Stearns failed, but the Fannie/Freddie failure put the story over the top.

Now Lehman Brothers -- a legacy financial house -- has gone bust. If you had an account with them, there's no problem at all. Your holdings will simply be transferred to another company. As a result of the Lehman crash, the government decided to make $200 billion available to aid Wall Street as it unwinds from the damage.

In related news, Merrill Lynch -- with its $2.5 trillion in assets -- will be taken over by Bank of America. That makes BoA the largest investment house in the world; the largest consumer bank in America; and the largest retailer of mortgage loans (through Countrywide) in the country. They've become a behemoth, and perhaps the most powerful private financial institutions in the world.

AIG -- the 18th largest company in the world -- is on the ropes. The New York Times reports they've gone to the government and asked for a humongous bailout to stay solvent. Clark has no idea how that will play out. Meanwhile, Washington Mutual -- the 7th largest bank in the U.S. -- is also ailing and may fail soon.

Make no bones about it -- more failures will come. But the darkest hour in a financial market is usually before the dawn.

This is not the end of the world; it's not even close. We messed up as a country. Both Obama and McCain released statements talking about the failure of regulators to police the markets. As far back as 1998, Clark has been saying we need a cop on the beat in capitalism. Think about that -- as far back as 1998. So this is not just a Bush problem; it goes back to the Clinton days.

Our "Big Easy" financial mentality -- where we "let the good times roll" -- is only good until the levees break. And that's what is going on right now.

Let's get a short history lesson on how we got where we are right now -- so that we can see where we're headed in the future.

Around 2002, it seemed that lending standards began loosening. The same thing happened again in 2005. By 2006, all you needed was a pulse to borrow money. Think about how many pre-approved credit card offers you got back in 2005. That's because there was so much money to be made on Wall Street doing "securitization" -- which is a fancy term for passing the buck to somebody else.

Companies would lend to whomever for whatever. Then it was hot potato time. Loans were bundled and sold off to investors in collateralized debt obligations (CDO), structured investment vehicles (SIV) and other arcane mechanizations Wall Street developed to shift the risk.

In the midst of the excitement, companies decided to keep some of the loans for themselves in the hopes of making real money. They started actually borrowing money to buy more of these debts.

With so much easy money flying around, investors turned to the ultimate "can't lose" investment -- real estate. That's how the real estate bubble began. But when the music stopped and property values started declining, all these bets started falling apart. And that's what we're dealing with now.

Clark does see a silver lining here: The intelligent financial people who will be out of work will have to filter out to other industries -- be it the medical field, the entrepreneurial sector, etc. Then they'll put their minds to use doing something more important than shuffling paper!

Clark's been getting a lot of questions about some of the biggest financial institutions in our country like Fidelity, Vanguard and Charles Schwab. All 3 of these institutions are absolutely fine and weren't involved with the shenanigans that got others in trouble.

Fidelity was the only one of the 3 that was briefly caught with its pants down when it came to auction rate securities. As much as Clark loves the company, Fidelity fought hard when contacted by regulators about their wrongdoing. But they soon realized the error of their ways and will fully compensate individuals who were ripped off.

Do you have money to invest, but you're not sure where to put it? Most people who are unsure about investments hire someone to help. One of the greatest danger points is in mid-career, when you find yourself with a great deal of money in a 401K. At that time you're at the greatest risk, because that's when you're most likely to end up hiring a commissioned salesperson. Is that a problem in itself? No. There are plenty of situations when paying a commission is just fine. But in the investment world, there can be inherent conflict of interest with commissions. There are plenty of investment products that may not be the best choice for you, but you may be sold on them because the commissions are humongous. Variable and Index Annuities are referred to as 'sold', not 'bought', since people don't buy these on their own -- they are convinced to do so. Salespeople use code words such as Retirement Secured Account and other phony phrases to keep from tipping you off that you're being sold an annuity. Sometimes a Life, or Immediate Annuity makes sense, but the commissions are so low you won't hear much about them.

Clark wants to warn you away from another term: "fee-based planners." These salespeople start with a fixed fee, but the commissions on products they may sell you defray those initial costs, which again, may not be in your best interest. Honest commissioned salespeople will rise above their personal interests and sell what's right for you.

The stakes are so high in investing that Clark urges you to consider fee-only planners. They'll give you a fixed price up front for their services, regardless of the product they recommend. You won't have to worry about conflict of interest. Their success will depend on your good word of mouth and how well they did by you. To find a good one, go to the National Association of Personal Financial Advisers website, NAPFA.org. Another good resource is Garrett Planning Network: garrettplanningnetwork.com

The high-end business media has undergone a shift because of the economic downturn. You used to see stories on "How To Make More Money" or what kind of status symbol vehicle or watch you should have. But we're shifting to a new era of thrift.

Even a high-end publication like BusinessWeek recently ran a story called "25 Ways To Save More Each Month." Below are a few excerpts:

• No. 1 -- Track your expenses.

• No. 3 -- Cut out investment charges and fees.

• No. 4 -- Cut back on eating out.

How many of these tips are you doing??

CLARKONOMICS: The FDIC recently reported that there are now 117 un-named banks on its watch list of potential failures. There are likely to be even more than that. Meanwhile, the head of the FDIC reveals that they'll need to come to taxpayers to deal with the cost of future bank failures.

The cost to be shared by taxpayers is a collective one. There is, however, a more immediate and personal cost. Think about those who get burned when they have deposits in excess of the FDIC limit ($100,000 for individuals, $250,000 for retirement accounts) in a failing institution.

The most recent bank failure was the Kansas-based Columbian Bank and Trust Company. The uninsured money on deposit there totaled $50 million. That's $50 million that just vanished into thin air!

It's usually non-profit organizations, local governments and wealthy private individuals that tend to have deposits over FDIC limits. But there is a better solution. Visit CDARS.com to find out how to get FDIC insurance on deposits up to $50 million. The process actually involves splitting your money among a number of participating banks.

Regional bank Synovus has a similar program using its own branches.

Sometimes Clark's advice is probably better to ignore. Here's an example: Clark was bringing his son to a bagel shop in the midst of the rain. His $1 umbrella inverted in the wind and broke, leaving Clark as wet as if he'd jumped in a pool.

The penny pincher has long said that he's always willing to accept lower quality for a lower price. That's because he's so obsessed with spending less than he makes and being a maximum saver.

Clark recently saw a drawing by cartoonist Joel Pett (see below) that appeared in The Lexington Herald-Leader. The cartoon depicted a man asking his wife, "When can we go back to wasteful consumerism fueled by reckless borrowing against our childrens' uncertain future?" The woman is reading a newspaper with a headline that says "Economic 'Slowdown,'" and the man is wearing an American flag T-shirt.

Isn't that modern America in a nutshell? For the first time in history, the average American is carrying debt way beyond annual income. The immediate gratification mindset is killing us. It's good for a moment, but then the financial hangover comes when you use money that you don't have.

Mind you, it's not necessary to be as extreme as Clark with the umbrella.

Here's another admitted example where Clark's cheapness may be getting the best of him: His 17-cent razor is starting to wear out after little more than 5 months. But Clark insists that he's going to push it to 6 months. But at the price of getting cut? That's just silly over a 17-cent razor.

Yet Clark would rather be foolish that way than spend money willy-nilly in his life. Nobody ever got rich paying Visa and MasterCard interest for things they can't afford.


Copyright Joel Pett, USAToday, Cartoonists and Writers Syndicate.
All rights reserved.
MORE Joel Pett cartoons are available at http://kentucky.com/594 and at nytimages.com

Clark often praises the spirit of bipartisanship in politics. He believes it's great when people can reach across the aisle and do what's right for the country.

But right now, both Obama and McCain are in agreement and it's not a good thing. Both are hinting that they'd support a potential taxpayer-funded bailout of General Motors, Ford Motor and Chrysler.

You'll recall the government agreed to have we the taxpayers bailout Bear Stearns to the tune of $29 billion. Fannie Mae and Freddie Mac, meanwhile, also look set to get a bailout.

McCain and Obama are really hoping to buy electoral votes on our dime in Michigan and the Midwest with this automaker bailout. But where does it stop? The Big 3 banked huge bucks with their monstrous SUVs. Now that the marketplace has moved away from that kind of vehicle, should we be on the hook for their overproduction?

That's not how capitalism works. "Creative destruction" in capitalism dictates that when businesses fail they must go away or re-organize in bankruptcy. You can't just take away the risk side of the equation.

And this is not to say that Clark isn't empathetic to autoworkers facing unemployment because management made bad decisions -- because he is.

By now you've probably heard the headlines about inflation being at the highest level in 17 years. While there's no doubt that inflation is the enemy of saving for the future, Clark wants you to look beyond the alarmist nature of the headlines. The inflation report is retrospective; it's not indicative of where Clark thinks we're headed.

Consider this: The price of commodities -- which were a big part of the run-up -- has moderated and many have dropped at wholesale. We've only been focused on the price of oil and gas, but they represent just one sliver of the cost crunch.

It will, however, be a while before that wholesale drop is reflected in the prices we pay for other commodities.

Meanwhile, housing and cars are steadily getting more affordable.

So Clark is not saying that everything's rosy, but he does believe we have bigger problems than inflation. In the penny-pincher's estimation, the real problem we have is remaining competitive in the world -- but that's another show note!

But just to touch on that topic, we need better education, training and an emphasis on career skills so we can compete with foreign capitalist economies. Plus, the federal government should not spend money it doesn't have. On the state level, we need to rein things in with a program similar to Colorado's TABOR (Taxpayers' Bill of Rights).

How would you like to make 5% on your money in less than a month? Sound impossible? It is. But that's precisely the lure a businessman named Anthony Christou used when he stole $14 million from 20 wealthy investors, according to BizJournals.com.

Christou claimed he was making "bridge" loans to developers and others who needed short-term money and charging them higher interest. He even used his mortgage firm as a front. In reality, he was running a classic Ponzi scheme -- paying early investors with money from latter ones. He also blew through $7 million on a gambling habit.

The reality is that nobody can earn you 5% a month on your money. That promise of higher-than-market rates of return is the telltale mark of a scam. Successful entrepreneurs are specifically susceptible to such pitches because they're flush with cash and have a "go-get-'em" kind of enthusiasm for new ideas.

Meanwhile, scams revolving around 1031 exchanges are also popping up. A 1031 exchange involves selling an investment property tax-free and having an intermediary hold the proceeds until you buy another property. The problem is that intermediaries have been running off with the money. The Wall Street Journal reports one intermediary disappeared and now millions are missing.

Here's the bottom-line: The tax rate on real estate is favorable right now and it's almost certain to go up in the next year or two. So you're better off paying the tax when it's favorable. So often when we get in trouble, it's when we're trying something cute. But cute doesn't work.

CLARKONOMICS: Wachovia, Washington Mutual and National City -- 3 of the nation's top banks -- have all had to go looking for more cash, but hundreds of smaller banks around the country won't be able to find an angel to avoid failing. If you have less than $100K in a failing bank, none of what Clark is about to say matters to you; you'll be protected up to the full FDIC limit of $100K. But many business owners, people with inheritances and local governments have deposits that exceed that limit.

What can they do to avoid getting burned in the event of a bank collapse? CDARS.com extends FDIC protection up to $50 million by spreading your money among a number of participating banks. That way you never have more than $100K at any one financial institution.

On a related note, many people are upset that savings rates are in the toilet. But there are deals to be found if you search around. Many of the deals come from unusual sources. For example, CapitalOne.com is looking for a quick cash infusion on the cheap. So they're offering a simple savings account that pays 3.50% APY (accurate as of 07/31/08) if you have a minimum of $10K. Clark likes to check BankRate.com for CD rates. Do you have reservations about the financial health of any of these banks? You'll be fine as long as you stay below the FDIC limit.

The Mortgage Lender Implode-O-Meter is a popular website developed by former Emory University research Aaron Krowne. This unique portal monitors the overall health of lenders so that you know if they're safe to do business with.

Clark particularly loves the site's slogan -- "Tracking the housing finance breakdown: a saga of corruption, hypocrisy, and government complicity" -- because he believes those words ring very true.

We're still in the early innings of the corruption shakedown. More banks will likely fail; there will be continued credit problems for several years; and more bailouts of institutions deemed "Too Big To Fail" will come courtesy of taxpayers.

This last point really rankles Clark. When we bailed out Bear Stearns with $30 billion in guarantees, we taxpayers should have become owners of the company -- but that's not what happened.

Meanwhile, we indirectly feel the effects of the mortgage crisis whenever we fuel up at the pump. Over the last several months, Clark has explained how the Federal Reserve devalued the dollar to help out Wall Street bigs and their idiotic lending practices in the housing sector. Because of that devaluation, the price of a barrel of oil is nearly double and the price of gas is some 60% higher.

More lenders and banks likely will fail. So now is the time to heed FDIC limits (or NCUA limits, if you're with a credit union) and not exceed $100,000 in the bank. Clark would prefer that you stick closer to $90,000. That way you won't lose one penny of interest in the event of a collapse.

If you are over the $100,000 limit, reduce your exposure by having multiple accounts at different banks. You can also use the CDARS.com program to do it for you.

New polling data shows that 7 out of 10 people are worried they can't maintain their standard of living -- a much higher figure than just a few months ago.

The results of other ABC News/Washington Post polls found that 8 out of 10 people think the country is off-track. That's the highest level since 1981, when we had our most serious recession since the Great Depression.

Meanwhile, 6 in 10 of those who earn more than $100K/year are worried about falling behind.

The reality is that the average American will see a short-term decline in their standard of living during a recession. A drop in the standard of living can be defined as only going out to dinner once a month instead of 3 times a week, or going from eating steak every week to who can remember the last time we ate that?!

In the long run, our adaptability will help us survive. If the name brand paper towels are too much at the supermarket, buy the store brand. That's called brand substitution. Of course, some people get hit with financial Armageddon and that goes way beyond your personal taste in paper towels.

The bottom-line is this: It will take a while to work through the excess in the housing market, our gas-guzzling vehicles, etc. But we can deal with more than we give ourselves credit for.

There have been a lot of media reports about curbside recycling being stolen by thieves. Clark read about criminal rings in the San Francisco Bay area that snatch aluminum cans and then sell them to recyclers!

We're in a time of commodity boom following a long period of commodity bust. The price of most commodities is on the upswing. Think about gasoline. There's an economic principle called "inertia bias," which refers to our perception that the price will just keeping going up.

But the boom and bust of commodity prices is cyclical and well-documented throughout history. There's nothing new about this. It's the drop in the value of the dollar, however, that is piling on the extra hurt right now.

Over the last several months, Clark has explained how the Federal Reserve devalued the dollar to help out Wall Street. But did you know that if the dollar weren't mismanaged, the price of a barrel of oil would be around $80 -- instead of $140?

Food (and fuel) for thought, indeed.

CLARKONOMICS: It's not often that we have back-to-back Clarkonomics segments on the show. But there's been so much in the media about the bear stock market that Clark felt compelled to do it.

A bear market is when things are down 20% from their peak. That understandably has people frightened. So many folks stop Clark on the street to tell him they're dumping their mutual fund stock-type holdings and going into safe stable-value kind of things.

It got Clark thinking about how far down he is this year. After crunching the numbers, it turns out he's down 4.8% over the last 12 months. Sure, that hurts, but it's not a decline of 20%.

So how is he "beating" the market? The secret is not that he knows about special stocks or has an exotic investment strategy; it's that he's taken a meat-and-potatoes approach to investing.

His largest allocation is putting just under 40% of his money into tax-free municipal bonds. The rest is divided evenly among large companies, small companies and the international markets. Clark also has a small amount of money in commodities and REITs.

In a word, he's diversified.

The penny-pincher also benefits through dollar-cost averaging. This means he keeps buying more shares every month instead of playing red light/green light based on market conditions. So as the market declines, his dollar buys more shares. T. Rowe Price's Automatic Asset Builder allows you to take advantage of dollar-cost averaging by investing as little as $50/month automatically out of your paycheck.

The purpose of investing is to create financial security. If you have a need to treat investing as a sport, Charles Schwab advises the "core and explore" approach. Put the money you really need to have into your core investments, si