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Some people say recessions are inevitable; others say they are healthy, necessary to clean out the system and clear the way for the next expansion. Finally, while many blame greedy capitalists for pushing things too far, there are some who believe that the current recession is something we deserved (or earned) because so many lived beyond their means.

No matter what you believe, recessions are never fun. Beneath all the statistics and data are real people facing real challenges. The unemployment rate, now 6.7%, is headed to about 8% by late 2009. In the fourth quarter, real gross domestic product will drop the most since the brutal recession of 1981-1982, when, over the course of only two years, Paul Volcker reversed 20 years of inflationary monetary policy.

But it is not just the speed of the collapse that is so scary; it is that our current generation has little experience with economic pain. Between 1965 and 1982, the U.S. economy was in recession one out of every three years, inflation hit double digits and the unemployment rate peaked at 10.8%.

Since 1982, the U.S. has been in recession just one out of 16 years, the unemployment rate bottomed at 3.8% in early 2000 and then at 4.4% in early 2007. In other words, a wobbly economy today feels much worse to the average American and politician than it did 30 years ago.

So we have a real schizophrenia today. People are going to the mall for holiday shopping, parking hundreds of yards away and waiting in long lines to check out. But then these same people go to parties and argue about whether the Obama economic stimulus plan should be $500 billion or $1 trillion. It feels so bad that President Bush is justifying his economic intervention by saying that "I've abandoned free-market principles to save the free-market system."

What's important to recognize is that even at the bottom of the current recession, sometime in mid-2009, the living standards of the typical American will still be amazingly high. In fact, even an aggressive contraction in real GDP will leave per-capita real GDP above 2005 levels.

Now, we did not have 8% unemployment back in 2005, but that kind of jobless rate is not unusual for recessions. The unemployment rate peaked at only 6.3% in the recession early this decade but peaked at 7.8%, 10.8%, 7.8%, and 9% in each of the previous four recessions, respectively, dating all the way back to the 1973-1975 recession.

Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.

The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.

Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.

Rep. Barney Frank, chairman of the House Financial Services committee and a long-standing critic of executive largesse, said the bonuses tallied by the AP review amount to a bribe "to get them to do the jobs for which they are well paid in the first place.

"Most of us sign on to do jobs and we do them best we can," said Frank, a Massachusetts Democrat. "We're told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!"

The AP compiled total compensation based on annual reports that the banks file with the Securities and Exchange Commission. The 116 banks have so far received $188 billion in taxpayer help. Among the findings:

The multibillion-dollar Madoff mess proves one thing: Even the most sophisticated of investors are susceptible to fraud. It also proves that relying on highly paid financial advisers or the Securities and Exchange Commission won't protect you from getting ripped off.

Madoff's alleged $50 billion Ponzi scheme had the appearance of being a legitimate operation. Until recently, Madoff was paying dividends, sending out monthly statements and fulfilling withdrawal requests. It wasn't until early December when he admitted to having requests from clients for approximately $7 billion in redemptions that the Ponzi scheme started to collapse. Madoff simply didn't have the funds to meet those obligations. The jig was up.

In the case of Madoff, investors turned a blind eye to due diligence that could have been done. "Sometimes the bigger someone is, the less vetting people do," says fraud expert S. Gregory Hays, managing principal, Hays Financial Consulting. "Investors sometimes assume that someone else did their homework." And in the case of Madoff's scheme, the multitude of seemingly sophisticated investors and accomplished business people--from Mortimer Zuckerman to HSBC (nyse: HBC - news - people ) and Groupo Santander--no doubt lent credibility as Madoff expanded his ponzi.

For most investors the best way to keep a Ponzi out of your portfolio is to follow the common sense rule of "if something sounds too good to be true, it probably is." It also is best to ask lots of questions and beware of any potential investment or adviser that is overly secretive in terms of explaining investment strategy.

In Pictures: 10 Fraud Red Flags

In the case of Madoff, it was difficult to rely on publicly available information to discover that a fraud might have been taking place, since little was available. "There were no lawsuits or claims that he was defrauding people," says Kenneth S. Springer, former special agent of the Federal Bureau of Investigation who is now a certified fraud examiner and president and founder of New York-based Corporate Resolutions.

The one red flag that might have raised suspicions was the fact that Madoff used a tiny accounting firm in New City, N.Y., Friehling &

Of course the best way to discover a sophisticated scheme would be to hire someone to do on-site financial due diligence. Sometimes, large, institutional investors are even allowed to do surprise audits. "You would want to look at the trading and see what kind of transparency was there to see where the money was really being invested, too," says Springer. "Had people done that, many wouldn't have been satisfied with what they would have found out, and they would have walked away." Investors could have also hired an investigator to examine and interview the prime broker and administrators, he adds.

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President-elect Barack Obama called on Congress today to quickly approve short-term aid to the U.S. auto industry to prevent a "devastating" collapse, but a House-passed bill ran into strong Republican resistance in the Senate, and talks were underway this afternoon to salvage a compromise.

The 26-year-old, a former Microsoft employee who helped put together the Windows Home Server product, founded a company called Esgut within months of the debut of Facebook's developer platform in May 2007. Esgut is a portfolio of Facebook applications, and a few of them, like Superlatives and Entourage, became genuine viral hits.

In April, Ali sold the 12-employee Esgut to the Social Gaming Network, a Silicon Valley company backed by the likes of Bezos Expeditions, the Founders Fund, and Greylock Partners. He said the price was in the seven figures.

But Ali is the first to acknowledge that for upstart social-platform developers, hailed just months ago as the Valley's hottest breed of bright young things, the condition has taken a significant turn for the worse.

"Most people are not counting on anything," the lanky and bespectacled Ali said over lunch at an organic restaurant near New York's Union Square in early December. "They're just operating from day to day."

When Facebook's developer platform launched, the social network's traffic began to really skyrocket. What had started as a no-frills networking site for students at elite universities became a Silicon Valley buzz factory with legitimate geek credentials. And however gimmicky many of the most popular Facebook Platform apps were, millions of people decided they now had a reason to join the site. The floodgates had opened. Facebook was a phenomenon.

When other social networks such as MySpace, Friendster, and Hi5 also paraded out developer platforms, the tech world took it as evidence that there was a big future in building platform applications. More importantly for developers and ambitious tech entrepreneurs, it looked like there could be gobs of money in it; the open, anyone-can-play attitude created the notion that there was enough for everyone.

"The social platform (on Facebook) actually launched the last day that I was at Microsoft...I was quitting without any idea of what I was going to do," Ali recalled. His aims for leaving Redmond were starry-eyed. "I left because I wanted to do a start-up. I wanted to see what I could do out there on my own. And I wanted to care deeply about what I was working on."

But he had no concrete plans to go the Facebook route initially, he said. "I ended up in my parents' house in Florida and was kind of bored, and started building Facebook apps just out of restlessness and the desire to do something."

Then, Ali continued, he went to the Graphing Social Patterns West conference in San Diego in March and met Social Gaming Network founder Shervin Pishevar. At the time, he was looking to raise venture funding but hadn't thought about selling his apps. "We talked for 30 minutes and he was like, 'You sound like the exact type of people we want at SGN.'"

Ali sold Esgut to Pishevar's company the next month.

Widgets buzz turns into hush

Ali got lucky. Even before the reality of the recession set in, the social-platform craze was subsiding. The venture capital buzz about widgets began to quiet over the summer. Some of the sillier novelty apps wore off in popularity. Companies that were snapping up small apps and raising huge amounts of venture capital, like Slide and RockYou, grew intimidatingly bigger--but the glut of independent apps made it more difficult to grab the attention of potential buyers.

And after new restrictions, a redesign, and then the social network's focus on expanding through its Facebook Connect log-in service, it became evident that a social-network platform is still a new phenomenon that can change dramatically, and not always to the benefit of little start-ups.

"There's definitely a lot of tightening up," Ali said. "There's a few people that I know that have apps that are relatively small, and they're selling them for valuations lower than what they could've sold them for a month ago, and there are just no buyers in the marketplace. I think they're going to have a hard time selling, period--forget trying to sell at a lower valuation. They're just having a hard time getting rid of them."

So would he still be able to sell his company as easily now? "No, probably not," Ali admitted. "If we were the same company we were then, it would be much harder to sell today. I think we would've had to evolve as a company. I think we would need to be generating more revenue than we were."

But for all his concern about the fate of social-platform developers in a recession, Ali is still strikingly bullish on Facebook--enough so that his newest project is a fund for Facebook stock. He started purchasing it in November, he said, and is meeting with investors in the hopes of purchasing more. He added with surprising gusto that Facebook's decision to delay direct cash-outs hasn't derailed his plan.

"I think that's actually good news for us," Ali said. "I think that means that the price that we pay will actually go down because there are all these employees who intended to sell stock back to Facebook, and now they're not going to be able to sell it to Facebook, (so) they'll have to sell it somewhere else."

He hopes to keep the stock until Facebook files for an initial public offering, and he still thinks that's on track, too. "I think it's going to be a function of the economy and when the markets open back up for an IPO," he said, and cited target dates that had been provided in interviews by Facebook investor and board member Jim Breyer. "From a Facebook perspective, I think it'll be ready to IPO in 2011."

Many critics would say that's wishful thinking, and that the company will sell--to existing investor Microsoft, maybe--for much lower than its $15 billion preferred-stock valuation.

But Ali got lucky on Facebook once already, and even in a recession he hasn't given up hope that it could happen again.

South Korea's central bank carried out its biggest interest rate cut ever Thursday, slashing borrowing costs by a full percentage point to a record low in a bid to stave off possible recession.

The Bank of Korea said it was slashing its benchmark seven-day repurchase rate to 3 percent from 4 percent during a regular policy meeting Thursday.

It was the fourth time for the bank to lower the rate in the past two months and exceeded the 0.75 percentage point emergency cut on Oct. 27, previously the largest one.

The rate has gone from 5.25 percent to 3 percent since the cycle of easing began on Oct. 9.

The previous record low for the bank's benchmark rate was 3.25 percent last seen in October 2005.

South Korea's economy slowed in the third quarter and economists are predicting it could falter further next year amid global economic weakness.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Social networking giant doles out more than $1 million to widget makers.

An analyst expects the downturn to lead consumers to drop the music player, even as sales of iPhones soar.

Note to Apple Chief Steve Jobs: Don't worry. Piper Jaffray analyst Gene Munster still loves you. As for your little friend the iPod, well, let's just say Munster doesn't think it's so cute any more.

A longtime Apple (nasdaq: AAPL - news - people ) fan, Munster slashed his estimate for the company's 2009 sales by 5% Thursday, citing weak consumer spending and economic uncertainty. Mac and iPhone fans have nothing to panic about, however: Munster thinks Apple's computers will continue to gobble up market share, and sales of the iPhone will boom. 

Then again, Munster might be Apple's biggest cheerleader. Hey, the man has a price target on Apple's stock of $235. This on a company whose shares were selling for $91.41 at the end of Thursday trading.

So pay attention when Munster says the iPod faces a bleak future. Rising unemployment and credit problems will just make it tougher for shoppers to justify spending money on little luxuries next year. Munster predicts Apple will sell 20% fewer iPods next year, after clocking unit sales growth of 6% this year. "We are modeling for the sky to fall on iPod demand," Munster wrote.

Those same factors caused Munster to cut his target for Mac sales, too. While PC sales will cool, however, Munster still predicts Apple will gobble up market share next year. As a result, Munster figures Mac sales will jump 10% over this year's levels in 2009.

The iPhone, however, could be the new iPod: a hit product that powers Apple through a downturn in stronger shape than ever. Munster stuck to his prediction that Apple will sell 45 million iPhones next year, despite bearish guidance in recent weeks from Research In Motion (nasdaq: RIMM - news - people ) and Palm (nasdaq: PALM - news - people ). Munster sees smart phone sales booming next year, and Apple romping through the fast-growing category.

So does Musnster have it, right? Maybe--although the iPod Touch may have a future, in part because it can tap into iPhone applications, including Truphone, which turns the second-generation iPod Touch into an Internet phone.

In January, President George W. Bush will join the growing ranks of the nation's unemployed. And though he's guaranteed a presidential pension that will approach $200,000 next year--and has his family's oil fortune to fall back on--being an ex-president can often be a boon.

In Pictures: Out Of Office, In The Money

Between speeches, book deals, consulting arrangements and sitting on myriad corporate boards, ex-presidents stand to make far more than the $400,000 annual salary they earned while in office.

How much will Bush make in the coming years? It's difficult to say. He'll surely be able to earn a few million dollars giving speeches at an estimated $100,000 a pop to right-leaning think tanks and advocacy groups.

But Bush likely won't come close to the megabucks President Clinton has banked since leaving office. The reason: With his approval ratings below 25%, Bush is being advised to hold off on signing a multimillion-dollar book deal--the linchpin of any former president's money machine.

"There's just a little bit too much animosity [toward Bush] right now," says literary agent Harvey Klinger, adding that, with time, more people will be interested in the president's introspection.

Klinger says it's likely that first lady Laura Bush will write her memoirs first. She reportedly has been entertaining publishers at the White House to discuss a possible book deal, which will likely fetch at least $5 million. Hillary Rodham Clinton received an $8 million advance for her 2003 memoir, Living History, which focused largely on her years in the White House.

Kim Witherspoon, founder of literary agency InkWell Management, who has represented Anthony Bourdain, Cindy Crawford and Lionel Shriver, says there is no doubt that Bush will get a book deal if he wants one.

What do you do when you're a company that believes it's always been environmentally responsible and yet environmentalists are calling for you to step up your actions and play a greater role in sustainability? And what do you do when you reach the limit with your most visible effort? Those are the challenges facing Nestlé Waters North America, best known for its Poland Spring brand of bottled water.

"Being environmentally responsible is part of our DNA and has been in the 30 years that I've been with the company," contends CEO Kim Jeffery. "Obviously, protecting the source of our product is important to us. We wouldn't have a long-term business otherwise."

He concedes, though, that for many years the company never felt a need to tout its environmental bona fides, and that the company found itself having to rethink that strategy. The light bulb moment came on what Jeffery describes as a sleepless night a couple of years ago when Wal-Mart (WMT) announced its plans to "go green." "They were talking about what they were going to do, and when I thought about it, I could name 10 things that we had done [along the lines of going green] but no one knew about them." Among those efforts: continually working with vendors to reduce the plastic content of its Poland Spring, Deer Park, and other spring water brand bottles, building LEED-certified (Leadership in Energy and Environmental Design) factories, and working collaboratively to seek comprehensive recycling solutions

Part of the reason Nestlé Waters wasn't touting its environmental efforts, according to Jeffery, was that he and the rest of management considered such actions business as usual. "For us at Nestlé Waters, sustainability is a continuous process and has led me, like many others, to view it not as a destination, but rather as a journey," he says.

Getting Proactive

Yet as Corporate America, the media, shareholders, and consumers have all begun to place a higher premium on sustainability, and individual companies' transparent efforts in that direction, it was critical the Nestlé Waters become more proactive in relating its message and pushing the envelope with its bottles and packaging. "For years, I thought it was enough to take good care of our lands, protect our spring water resources and comply with regulations," says Jeffery. When he realized that is wasn't enough, he engaged his entire team to think "as creatively and as boldly as possible" about all the parts of the business where they could be greener.

To that end, the company first mapped its carbon footprint and found that the biggest impact was coming from the plastic resin Nestlé Waters North America purchased from vendors to bottle its water. Jeffery and his team were thrilled to realize this. "It meant that our decade-long drive to reduce the weight of our packaging had material, dollar, and now carbon emissions savings." In 2007 alone, the company took another 15% out of the weight of its bottle, saving some 65 million pounds of resin, and has reduced its energy production costs by 10%.

By 2010 the company plans to reduce plastic in its half-liter bottles—already the lightest on the market—by yet another 15%, while continuing to reduce its environmental footprint in the areas of transportation, production, and water use. Stepping up these efforts are critical as the company thinks the further 15% weight reduction for that bottle will be as far as it can go. Also, Jeffery is acutely aware that the bottled water industry is criticized because some 75% of water bottles aren't recycled. "That's bad for business, bad for the environment, and wasteful."

Taking on Recycling

He points out that PET (polyethylene terephthalate) beverage bottles account for less than 1% of all municipal waste in the U.S. and water bottles comprise just one-third of 1% of the waste stream. And while the company can control the packaging of its water and the weight of the bottles, it can't control what happens to the product once it's in consumers' hands. Nevertheless, he believes that it's his responsibility to help tackle the recycling issue.

"I've become an outspoken advocate of comprehensive recycling initiatives to recover all—and I mean all—recyclable containers in our society. I won't be satisfied until we reach our goal, no matter how long it takes." With the American Beverage Assn., the company is working on a model recycling program in Hartford, Conn., to improve recycling rates among citizens. Once the results of that program are measured, it's hoped that the program can be replicated in other cities.

Jeffery says the vigilance is worthwhile. "These efforts have saved us money, created better work environments, and have helped to create a culture of sustainability within our company. Eventually, we trust the marketplace will recognize and reward our efforts."