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King Me! By Charles Payne


When a king sets himself to bandy against the highest court and residence of all regal powers, he then, in the single person of a man, fights against his own majesty and kingship - John Milton

While the holiday excesses wear off for most Americans, President Obama was still in a jovial mood, perhaps buoyed by his win in the court of public opinion. In fact, I haven't seen the president this pumped and excited since the passage of the historic health care law that we were told would soon make us all as giddy. That hasn't happened, and in fact, it's been more like sour grapes than sour mash as Americans are suffering from a hangover as a result of that health care law, even before most of it has gone into effect.

Yesterday's recess appointment of Richard Cordray as head of the Consumer Financial Protection Bureau seems to violate the rules of engagement and power sharing in Washington D.C. The White House says the Senate's pro forma session is a "gimmick" and an "overt attempt" to block the president from using his authority. Yet, it would seem to me that such authority comes from the Constitution, which also gave Congress a certain amount of power as well. Then there is basic common sense with regard to vetting officials in powerful positions.

This is yet another move, in a long string of power grabs, that continues to push and even confront the Constitution, and that challenges the sensibilities of civilized society.

The King's Speech

Of course Republicans were outraged, with Senator McConnell stating: "Breaking from this precedent lands this appointee in uncertain legal territory, threatens the confirmation process and fundamentally endangers the Congress's role in providing a check on excesses of the executive branch." House Speaker Boehner weighed in by calling the move an "extraordinary and entirely unprecedented power grab," in the understatement of the day. In announcing the new head of the Consumer Financial Protection Bureau, President Obama tossed out all those familiar phrases:

"A no-brainer"
"Everybody plays by the same rules"
"Important financial decisions"

There are so many no-brainers that seem to be brain-teasers with this administration, which makes the notion of playing by the same rules laughable. The administration wants to move college age kids with lower scores to college spaces that other kids rightfully earned.
The administration browbeats hardworking Americans that climb the ladder of success through long days and nights at school and then at jobs. While claiming more of their earnings for his own pleasure, President Obama berates these successful people for their greed and not doing their part, yet portrays college and high school dropouts as victims deserving of the share of others.

It's a no brainer that consumers should have protection, but there are so many agencies out there already, and during the financial crisis a lot people were victimized by their own greed, which is a right in a free country. This new agency is yet another power grab that will be used to intimidate businesses. Ironically, the real genesis of the housing bubble was the intimidation of banks into making risky loans. It's a proposition they resisted until the government stopped their natural growth and acquisitions. Of course, it became a lot easier when Washington turned Fannie Mae and Freddie Mac into dumping grounds for risky loans.

The idea that important financial decisions have to be perfect or become the responsibility of a government agency ultimately hurts consumers into some kind of false hope. In the end it could also take away the victim card, so when they overcharge those credit cards or buy a house that's too big they'll have to take the hit, and not taxpayers or others that actually live within their means. But, this move is also about playing the public and the notion Republicans want to harm the general public, so in such a scenario it's only right to extend additional powers to the White House.

Just think about the idea of a 1-800 number to find out if a particular mortgage is a good deal or not. That's crazy! If it turns out said mortgage wasn't a good deal, would the taxpayer be on the hook, or if a person lost their job months after getting a new house, would the folks at the 800 number face criminal or civil charges for a lack of foresight? This is almost as batty as the 800 number for illegal immigrants to report arrest or detention by local authorities to the federal government. It's an upside-down world.

I'm talking about the great fight to take away states' rights in the January Newsletter out on Friday after the jobs numbers; if you'd like a free copy send me an email at Charles.payne@wstreet.com.

The gambit worked with respect to the payroll tax extension debate thus far, and against all common sense. Some might consider it great political chess, but as far as being an economic policy, it's terrible. Touting the pluses of massive welfare, unlimited unemployment benefits and 47 million Americans on food stamps as good fiscal policy is economic checkers. I find it difficult that people are going to buy into this scheme for another four years. The relentless power grabs from the administration are forcing a moat around the Constitution and a moat around the greatness of America. Both are already constrained and bracing.

If President Obama gets to say "King Me" after November those moats will flood those bedrocks of America's greatness.

Another Case for Keystone

The year began with Chinese and French companies making giant investments to get a piece of the American shale oil action. Of course, the Chinese have been investing billions for years in dozens of nations to secure oil as they power to the number one economy in the world. The news was a reminder of the fact that we need to not only pass Keystone but to stop playing games with new drilling techniques and holding up permits. We are shooting ourselves at a time we need to gear up to be able to power our economy.

Yesterday we got a reminder that when we vilify an industry the rest of the world watches and jumps on for the ride. After watching the oil industry demonized, foreign nations see a gold mine in confiscating oil company assets and draining them in court. On this point, it wasn't a great day for Chevron yesterday.

In Ecuador a court upheld an $18.0 billion judgment against the company that goes back to the 1970s and 1980s. The lawsuit was filed against Texaco (acquired by CVX in 2001) with just 47 plaintiffs, but is now said to represent 30,000 victims of environmental pollution. The case also has undertones of racism and American imperialism as well. On that note, the current judgment is the result of an original judgment doubling because the company has failed to apologize. But the company did apologize for a spill in Brazil, but that hasn't stopped a litany of fines and the order to halt operations. The company now faces a $10.6 billion lawsuit in that nation.

These are our friends and the nations the administration wants to take your tax dollars to for investment in oil and gas. Go figure ... but while you're at it lets start building Keystone.

Today's Session

A huge number from ADP puts more pressure on Friday's jobs report but also signals the gradual improvement in labor might be accelerating. The street is in disbelief that the number was too good. A mixed picture on same store sales isn't helping as Target was a major loser. But, clothing continues to do well including those surfer/skateboard stores. Yesterday I noted SODA acting great in the afternoon comments and today the company inked a big deal with KFT.

I understand the ADP report is always too optimistic for December but this initial reaction underscores my contention investors might be too pessimistic.