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2008 just sucked. Flat out sucked. Glad to see it go.

If this is the direction the folks at Microsoft are going to push force the computer industry, count me out.

From Ars Technica:

A recent Microsoft patent application dating back to July 2007 has shed light on what the company describes as a type of pay-to-play computing. Although the specifics of the approved application are somewhat different from the ad-supported “free” PC business models of the late 1990s and early 2000s, a consideration of the merits of the patent identifies many of the same potential problems.

The patent abstract describes a computer with scalable performance level components and selectable software and service options has a user interface that allows individual performance levels to be selected… Software and services may include word processing, email, browsing, database access, etc. To support a pay-per-use business model, each selectable item may have a cost associated with it, allowing a user to pay for the services actually selected and that presumably correspond to the task or tasks being performed. An administrator may use a similar user interface to set performance levels for each computer in a network, allowing performance and cost to be set according to a user’s requirements.

…

Microsoft presents the following example of how such a system might be priced. “The Office bundle may be $1.00 per hour, the Gaming bundle may be $1.25 per hour, and the Browsing bundle may be $0.80 per hour. Alternatively, a bundle may incur a one-time charge that is operable until changed or for a fixed usage period. Other pricing techniques are apparent.”

The rest of the patent is devoted to describing the various ways in which fees could be implemented, adjusted, and metered. Redmond admits that the final cost of PC ownership could end up being higher than that of a one-time purchase, but notes that “the payments can be deferred and the user can extend the useful life of the computer beyond that of the one-time purchase machine.”

NO MICROSOFT, NO!!

 Count me as part of the free net AND right-to-own movement. Hourly usage fees are nothing more than “Hyper-DRM” that puts illegal and illegitimate barriers up for a freely transacted product. No it’s not enough that they can tell us we only have one or two installs per game, now we also will have to pay an hourly fee for using a computer “blessed” with Windows Vista?

Well the good news, per Ars, is that the patent application at this point has been rejected. But that doesn’t mean we won’t see Microsoft trying to increase the “Microsoft Tax” via monthly subscription fees in the future. This is an important of an issue as Network Neutrality, something we must keep an eye on.

Infowars: Ron Paul- Fear based bailouts constitute economic terrorism

I will be AFK from Sunday Dec 21st through the 28th to spend some much needed time off with family. I shall return energized and refocused to continue our efforts to restore Liberty and Freedom to the Republic. The Obama Watch shall resume in short order.

In spite of everything I still believe this was a great year and I wish all of my readers a happy and prosperous New Year. Here’s to Life, Liberty and the Pursuit Of Happiness.

WaPo: Bush To Provide Emergency Loans To The Big Three

This, as Heritage notes, despite the fact that the law established the TARP funds does not authorize it:

More problematic, Treasury lacks the statutory authority to direct TARP dollars to the automakers. While the statute, passed by Congress in October, grants the secretary extremely broad discretion to decide how to employ the funds, it clearly limits the recipients to “financial institutions.” And the definition of that term is quite clear:

FINANCIAL INSTITUTION- The term ‘financial institution’ means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.

This doesn’t leave much room for interpretation.

But I guess we don’t need to follow written laws due to the “extreme economic emergency” now do we?

FINALLY!!!!

The credit card rule changes, from the article:

The rules aim to address several issues consumer groups and U.S. lawmakers have complained about for years. The rules prohibit raising the annual percentage rate (APR) on existing balances except under certain circumstances, such as a payment being more than 30 days late.
Credit card issuers will be required to give consumers 45 days notice before a rate is increased, and holders will be allowed a reasonable amount of time — 21 days — to make a payment, according to the rules.
The rules also ban a practice known as universal default, in which a credit card company changes the terms of the card based on how the holder performs on other bills such as utilities or gym memberships.
Issuers will also be prohibited from another highly criticized practice called double-cycle billing, which imposes charges based on the previous billing cycle.
Further, the rules require issuers to allocate payments in excess of the minimum payment to balances with a higher APR or to all balances equally.

My only question is… what took them so long?

Washington Times:

The government’s spending commitments exploded by 25 percent in 2008, putting taxpayers more than $1 trillion in the hole even before the astronomical costs of the economic bailout were taken into account, according to an annual report released Monday by the White House.
…
The report showed that U.S. debts and liabilities are close to passing the value of the U.S. population’s net worth, said Peter G. Peterson Foundation, a nonprofit organization devoted to promoting fiscal responsibility.

“The value of this report is that it shows the long-term cost of expensive commitments we are making today,” said Brian Riedl, a budget analyst for the Heritage Foundation.

“The government makes a lot of commitments that cost a little in the short run but a lot in the long run, and this document is one of the only government documents that show the long-term cost of the long-term commitments,” Mr. Riedl said. “What it shows is that future trends are completely unsustainable because the government has promised more benefits than the taxpayers can pay for.”

The height of the ARM mortgage boom has yet to write its final chapter in our economic history. The chart above shows that we are only two years into a six year spell- or more - depending on how many other non-traditional mortgage products will come back to haunt the investor.

Yes the pain is great, and the days of easy credit and no down-payments are probably over. I know countless families whose lives have been dramatically affected by our false assumption that our personal prosperity would always grow, that we could “leverage debt” (our home) for the future. But in the end, we all knew this was a bubble didn’t we?

If we didn’t, we sure should have seen the signs:

Here are some historic measures:

Rent. In the last half century, homes have on average sold for 20 times what it costs to rent them for a year. In 2006, at least in some places, they were selling for 32 times annual rent.

Income. From 1950 to 2000, home values sold for three times average household income. In 2006, average household income was $66,500, which should have put median home prices at $200,000. Instead the median was $301,000.

Appreciation. Existing home values rose 0.5 percent annually, adjusted for inflation, from 1950 to 2000. From 2000 to 2006, they rose at the annualized rate of 8.2 percent above inflation and peaked with a 12.3 percent rise in 2005.

Well, we all know that good things must come to an end.

Consider this, USA Today writes:

The boom in home prices — fueled by heavily leveraged loans built on low or even no down payments — made it easy to forget that housing values had been remarkably stable for a half-century after World War II, rising at roughly the same pace as income and inflation. Prices soared in most of the country — especially in Arizona, California, Florida and Nevada and metro areas of Washington, D.C., and New York — during a brief period of easy lending, especially from 2002 to 2006. That era’s over.

So far, home values nationally have tumbled an average of 19% from their peak. As bad as that is, prices would need to fall as least 17% more to reach their traditional relationship to household income, according to a USA TODAY analysis of home prices since 1950. In that scenario, a $300,000 house in 2006 could be worth about $200,000 when real estate prices hit bottom.

So what if this “economic crises” is really just the market responding to an economic imbalance? Not everyone is going to have the means to afford a $320,000, 3,800 sq ft home with a three car garage. And yet, that is what was being built- everywhere.

Can we please, just for one second, consider that perhaps *some* of the the people losing their homes shouldn’t have qualified for it to begin with? Can we consider for just one second that perhaps we should let the institutions fail that perpetrated these bad loans, easy credit and overabundance of generational space? Can we consider for just a second that maybe this crises is just part of the normal business cycle and we are really just getting set up for the next success?

Sigh.

But know this, the demand for these homes will still be there. Sure, the prices may be down, for awhile. But, as the Village Soup article notes, we grow by three million people a year. The only question is will the government let the market work to match these, and other new buyers, to the sellers? That is what we must concern ourselves with now.