Social privacy

Caution: mild tirade ahead...

I recently read quite a few articles about people being required to divulge their passwords to their Facebook, Twitter, email and other online accounts to employers, potential employers or schools.  Mind you, this is much more than simply asking to be friended...this is saying, "Give me unrestricted access from your point of view."  It's like saying, "Give me the keys to your house, car, office and bank vault."  This is absolutely ridiculous.
First off, the legal implications of this is quite fuzzy.  In the case of the school, the girl was pressured by her counselor and a freaking police officer to give her privacy up because she had posted complaints about her teacher.  (And by complaints, I mean incredibly crude language, but still...Oh, and take note that this is the only time you'll ever hear me standing up for crude language)  Those comments were made in a private setting!
As for employers...this is beyond disturbing.  I do very well at keeping my work at work and my personal life on my own personal time.  There is a necessary separation there!  The legal complexity is that if managerial decisions are based on information gathered in such a manner, where is the guard against discrimination, since everything about you can be available on your profile?
This says nothing about 'terms of service' agreements.  Did you know that it's a violation of Facebook's Terms of Service to give someone else your username and password?  And further, did you know that it is a federal crime to violate a website's terms of service agreement?  So will someone please tell me why some employers want to break federal law to get an extra peek at the people they manage?
This is sickening, and it needs to stop.
I've found myself wondering what I would do if I was placed in such a situation.
-My gut tells me that I would just say "Screw you" and walk away, or at very least chew out whomever asked me for my personal information.
-If I was in a more diplomatic mood, I could see myself saying something like, "What an unexpected request...You'll need to help me have a vision as to why sharing this information is important before I comply with that request."
-Or, if I was in a vindictive mood, I could see myself saying, "Sure, as long as you give me the username and password to your online banking system and let me poke around a little bit, too."
But, after all, I suppose a simple, firm "No." would likely suffice.
Having said this, I realize that some people have to support a family, etc. and can't afford the same flexibility that I currently can.  Let me conclude this mini rant by saying that I'm really grateful that I've never had a job that has required me to compromise anything that I believe in.