Hosting Varney & Co on Fox Business 9:20am



"One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship." -George Orwell



Action speaks louder than words but more and more we are getting a dose of both. Both sides are resting up for what will be a serious donnybrook... or at least I hope so.



It may seem innocuous to some, but recent news that the White House will skip over Congress to tax everyone's cell phone in order to raise money for Wi-Fi for schools underscores three critical points in what I'm calling Obama 2.0 and its promises to challenge boundaries of law and established checks and balances in government.

•  I Am King


•  Redistribution


•  Public Wealth as Public Domain

Down with the King



Each time President Obama speaks he adds additional threats of going it alone and usurping the power of Congress. A big example in this direction was deciding to push back the so-called employer mandate of the healthcare law, in essence giving businesses a break for not offering healthcare insurance to employees. Many argue it's unconstitutional for any president to pick apart a law. The action will leave the budget for the new law $13.0 billion short, but there will be additional carve-outs. So, now the White House is saying the FCC has the power to tax all cell phone users without congressional approval.



This is serious stuff and will soon be applied to larger issues.



That means whatever executive authority I have to help the middle class, I'll use it. Where I can't act on my own and Congress isn't cooperating, I'll pick up the phone, I'll call CEOs, I'll call philanthropists, I'll call college presidents, I'll call labor leaders, I'll call anybody who can help and enlist them in our efforts —— because the choices that we, the people, make right now will determine whether or not every American has a fighting chance in the 21st century.



So, yes, Congress is tough right now. But that's not going to stop me. We're going to do everything we can wherever we can, with or without Congress, to make things happen.

 We're going to — we're going to take — go on the road and talk to you. And you'll have ideas, and we want to see which ones we can — we can implement. But we're going to focus on this thing that matters.



President Obama



Knox College



What's mine is yours



Redistribution of wealth is central to the middle class utopia with massive government oversight desired by the new enlightened class. It's what's behind those nutty comments about "we" built the roads that rich people used to get rich, hence, they owe "us." It's all about sharing the wealth no matter who earned that cash; it's all part of the big public pot. In his speech at Knox College, President Obama talked about what success really is, hinting it has nothing to do with money which suggests why hold on to more than you need. Human nature and man's history should nullify that argument.



Nevertheless, if you have a cell phone, you owe it to America's schoolchildren to share the wealth. Where all the current tax money, bake sales and lottery ticket money is going is anyone's guess, but it's more than enough to pay for high speed internet. Of course, that would leave less dough for pet projects and typical waste, plus there is no guilt factor associated with proper use of current tax receipts. So money and responsibility is redistributed after being confiscated and squeezed by the government.



In the end, I hope Congress puts up a better fight as their lily-livered defense of their own power has only emboldened the White House, which is getting more desperate each day.



Paper Tiger?

Much has been made over China's Potemkin villages, entire metropolitan areas with skyscrapers, highways, and glistening shopping malls that are completely empty. Many say these cities are an example of why China is a house of cards. I don't know how it works, and the optics are awful, but told most residences are paid for.



But, I must admit, a Chinese zoo claiming a Tibetan Mastiff is really an African Lion does raise red flags.

 

The Fed



I don't see why there is so much chatter about the Fed tapering, as I didn't see anything yesterday or this week that would suggest the economic coast is clear. On the contrary, economic data and corporate earnings hint at the Fed trying to find even more to accommodate banks and the federal government. No news outlet reported on the supplemental survey from the Empire State report on manufacturing, but it was perhaps the most important news of the day. It pointed to the next six months where the three year trend of expecting more hires and less fires has completely reversed.

 I may be alone, but I think the market is disappointed the Fed cannot taper soon enough and raising rates could be a 2016 phenomenon if the tea leaves are correct. In the meantime, the greatest risk to the rally isn't the Fed coming to its senses but the US economy lurching along and slipping.



July housing starts data out this morning had more decent news to follow yesterday's big Housing Market Index result:



Housing Starts 896,000 +6%



o Apartments +29%



o Single Family -2.2%



Housing Permits 943,000 +3%



o Apartments +13.5%



o Single Family -2.0%



And so the feared demand pullback from rising mortgage rates still seems nowhere near as bad as advertised; in fact housing is still apparently climbing higher.



We also got the BLS' reading on nonfarm productivity which was up 0.9%, above expectations for 0.6%. Sometimes this simply means workers are being paid less for more, but in this case it looks pretty positive, with both hours and wages rising.