Are we tough enough? I'm working on a piece about the root of our problems and our ability or inability to endure pain. The thing is becoming an opus. On that note, the essential question around the world is how tough people are and how much they are willing to sacrifice and invest in blood, sweat, and tears. I think we have to take it out of neutral and somehow find a way to push ourselves. In the meantime, the government has to find a way to make decisions that would hurt at first but be liberating down the road.

Education

We live in a world of fast pace, fancy gizmos and technology everywhere, and it makes us all feel smarter. The irony is that on occasion I've forgotten my home phone number, my wife's cell number and birthdays of many relatives. I don't need to know those numbers as they are embedded in any number of devices and software lists. So, why do I feel smarter? We look back at the poor slobs of yesteryear and assume they were not so smart because they didn't have smart phones. Yet the fact of the matter is we are getting dumber and dumber, and for those of us out of school I'm not sure how to turn it around except to stop listening to books on tape and buy the hardcover version.

Here is an eighth grade final exam from 1895 in Salina, Kansas. I sampled a few questions; let me know how you make out.

Grammar
1. Give nine rules for use of capital letters
2. Name the parts of speech and define those that have no modification
3. Define verse, stanza and paragraph

Arithmetic
1. Name and define the Fundamental Rules of Arithmetic
2. If a load of wheat weighs 3942 lbs., what is it worth at $0.50/bushel, deducting 1050 lbs. for tare?
3. Find interest of $512.60 for 8 months and 18 days at 7%.

U.S. History
1. Give the epochs into which U.S. History is divided.
2. Describe three of the most prominent battles of the Rebellion
3. Who were the following: Morse, Whitney, Fulton, Bell, Lincoln, Penn and Howe?

Orthography (time, one hour)
1. What is meant by the following: alphabet, phonetic, orthography, etymology and syllabication?
2. What are elementary sounds? How classified?
3. Use the following correctly in sentences; cite, site, sight, fane, fain, feign, vane, vain, vein, raze, raise, rays.

Geography
1. What is climate?
2. Of what use are rivers? Of what use is the ocean?
3. Describe the mountains of North America
4. Name all the republics of Europe and give the capital of each.

Okay, if you get a score above 75 let me know. I'm making the entire exam a project for me and my son. In the meantime since most eighth graders couldn't pass this exam does that suggest school is too easy these days? I hear about class size, lack of white boards, lack of computers and quality of school lunch as reasons for fading academic excellence. All those things help but our own expectations have drifted to the point where we aren't being honest. This is important because of our deteriorating educational standards and the fact a second term for President Obama will bring pressure for corporate America and taxpayers to pay for college educations.

Hitting the Books

In a 2010 study titled "Leisure College, USA: The Decline in Student Study time," Philip Babcock and Mindy Marks found that the average full-time student at four-year colleges in the United States studied about fourteen hours per weeks down from the 1961 average. Sure college students are working more but even with that taken into account, the fact is college students today enjoy so much more leisure time. It would seem to me more study would see higher grads and maybe even the ability to graduate sooner and thereby cut loan obligation.

The overall premise, however, is whether we are tough enough.

The reality is we are going to have to be sooner or later.

Olympic Effort

There was a piece in the NY Times about events that are no longer included in the Olympic Games. Some of the events seem antiquated but others make you wonder if we have the toughness to handle the rigors. The 12-hour bicycle race in 1896 saw the winner ride 195 miles. Only three people even finished the race.

Yesterday's Session

I hated the way the market closed although it seems it was off on concerns about Greece and not fundamental reasons. Of course that's the dilemma facing the market and one that saw the market fall completely apart last summer. Between the daily Greece deathwatch and worries about a double dip recession in America and that debt ceiling debate, fundamentals became irrelevant.

Of course, as investors these things are never irrelevant, but we have to recognize when prices are driven by emotions rather than by logic. Late in yesterday's session, there was news the former prime minister of Greece said preparations for a Greece exit of the Euro and Euro Zone were being considered.

This game of chicken is going to be played to the bitter end—and it will be bitter.

I continue to believe Greece does not have the guts to go at it alone. But they know how much power they have to manipulate the entire world for the moment and will take advantage. It's time to call the bluff and move on; it's time for the world to focus on solutions and to take care of our own house. In fact it's time to take a cue from the root of the word "economy" which happens to come from the Greek word "oikonomos."

"Oikos"= House
"Nemein"= To Manage

Bright Spot

I noticed a couple of months ago that companies acquiring other companies saw positive reaction in their share prices. Normally the acquiring company sees its shares get hit as deals are often not accretive right away and either increase shares outstanding or take cash from the company coffers. I think this is a great sign for the market as it suggests stocks are so cheap that even hefty premiums are justified. Moreover, consolidation is also a great sign at the end of a recession that companies are bulking up for an uptick in demand. There haven't been nearly enough deals, but when they happen Wall Street cheers, and I think it's a great sign.

The Blot

My goodness this Facebook fiasco just gets worse. The latest about an analyst lowering his opinion/outlook on the company after crunching numbers and looking at trends is disturbing. The fact he did this before the stock began trading to the public could be criminal. In the eyes of the public this company has already been damned and found guilty. Yesterday the New York Post featured a story of a fifth grader that poured his money into the deal and still isn't sure where he stands. The article called Sam Lesser one of a long line of "average-Joe" investors which is a stretch. The kid pumped in $10,000 into the deal.

He's not average but he may be a victim. On a side note, they say he earned the money selling bracelets and skateboards to schoolmates. That's a lot of skateboards but the better story is the kid goes to a private school. In fifth grade my son began selling Japanese candy to his schoolmates and was doing pretty well. On a class trip a teacher witnessed him making a transaction and forced him to return the money. He refused to give money back to kids that already ate the candy. But the damage was done. That day his entrepreneur career ended, but a new conservative was born.

Today's Session

The same song from Europe is hitting our market today but sets us up for the perfect test because now the market is going to have to start a session lower and climb into the close in order to wrest control from the bears. Facebook seems to have support north of $30.00; look for it to become a day trading stock; I think it has room to $34-$36. Although I think there is a good chance we rally intra-day on a better than expected new home sales number. I'm not going to force it. Plenty of ideas in the Special Portfolio Review - if you haven't received it send me an email or contact your representative.

Comments

I have said this before. The essential quality of a functioning person hence democracy is GRIT. Grit is defines character. It is essential to personal happiness and success. We lack it in abundance right now. Obama is anti grit. kevin kehoe on 5/23/2012 9:57:14 AM

I don't think America is tough enough, it seems as if everyone has their hand out for the free stuff. I was raised near the Blackfeet Indian Reservation in northern Montana, If one thinks what is happening in Europe won't happen here they need only look to nearly all the reservations to see what a nanny state can lead to. Brian Dobson on 5/23/2012 10:17:55 AM

We have what it takes to make the sacrifices, but not without leadership at the top. This leadership needs to lead by example, (by cutting their pay, their retirement and doing without the double and triple dipping of retirements) and I fear this will not happen in our present political situation. Our civil "servants" basically have only served them self. Their retirements are extremely high. The fact that politicians pay so much money to get elected to me has always raised the question of "Is it worth this expense? What is the return?" So obviously they find a monetary return, they are not servants but the served. The new royalty, the same thing exists in China and I venture to say in most countries. This leadership will not give up their advantages. So the short answer is no, sacrifice will not happen as we have no will at the top levels. What would their motivation be? What could it be? Money motivates and they have no motivation to lead. Work 6 years in the House of Representatives, $13,000+ in retirement, then get elected to the Senate and again you get the same retirement after 6 years, who will give this up? Who will say in our top levels of government that they are overpaid, their retirements are too generous? None. Royalty will not give up their estate, or even part of their estate as an example. We need leadership and we do not have it. We need integrity in leadership and we do not have it. They know what is coming down the pike, they have passed bipartisan bills taking away our constitutional rights, making way for marshal law, they know what is coming and they are insulated from it and will not lead us in the right direction. They lead by public opinion polls, and public opinion is swayed by biased media and small sound bites, not thoughtful commentary. David Huber on 5/23/2012 10:23:48 AM

Once again its not the question that bothers me. its the fact that you have to ask it! We are creatures of comfort and gadgets. My girls are doing an outdoor survival class this summer. I have them doing mixed martial arts. I put them in private school and force them to to put the hours in to study. They get all "A's"! They each practice a classical instrument. So go ahead America keep wiping your kids back sides well into their 30's. They can always go work for my kids...maybe! We give our kids everything and ask for nothing in return. They feel they are entitled and it is the baby boom generation who taught them this! David Henson on 5/23/2012 10:31:20 AM

NO WAY The Greedy caught the real working class again !!! MS & Facebook a great sample. Josef on 5/23/2012 10:32:43 AM

DISCIPLINE!!! Discipline within the school as well as Self-Discipline is absent from our educational system. Feel-Good-ism has pervaded everywhere. As a Jesuit product, if nothing else, discipline was the cardinal virtue imparted by their system. z on 5/23/2012 10:50:27 AM

As long as 50.1% of the voters pay no taxes,you can forget about any substantive changes. Unfortunately, we are now seeing what democracy means. Is there another way? Perhaps we are in this warp because of the polution of the constitution over the years by the Supreme Court. Bob on 5/23/2012 10:52:55 AM

Individually, yes. You see it with entrepreneurs, the self employed, and particularly farmers. There will always be those willing to work hard and succeed in spite of the environment around them. However, as a society, we're losing it. Policies are incenting the wrong behaviors. Scott Heck on 5/23/2012 11:02:39 AM

CHARLES: there are thousands of financial commentators available to day, thanks to high tech media ! I simply wish to say, you are No. ! , with your unbiasias comments! I recently added FOX TV to my SAT/tv, because of your regular appearances on Varney & co. May the Force be with you ! Don Mc Nair/ retired Insurance exec/ Senior don mc nair on 5/23/2012 11:04:35 AM

NO! We, as a society, are not tough enough. The last 60 years have turned our society from tough to lust. The mass of voters want what they can get for themselves, and demand "rights" as a basis for doing what they know is wrong. We started down this path when the US Supreme Court of Unaccountable False Gods passed rulings that nullified the 10th amendment regarding prayer, abortion, religious monuments, and similar issues. In Texas, there was debate the last couple years which shows just how sick our society is. The technology became available to enforce traffic using cameras to record violations. Immediately, crooked lawyers questioned whether this rock solid evidence should be allowed to convict those who endanger lives by running red lights. No one questioned whether the evidence was true, only that it might catch them doing something assinine and cause them to either stop or pay for it. And nobody would discuss whether security camera evidence could be used to convict a rapist, murderer, mugger, or thief. That might have stopped the ludicrous protests. It was the regular Joe on the street who did not want to be accountable for his behavior. Truth was secondary to using any means possible to hold on to money that would be taken in justified fines. When I was growing up, a "speed trap" was when a crooked sheriff enforced a low speed limit in an unobvious place and where the speed limit sign was behind a bush. Kids now call it a trap when they get caught going 80 in a 60 zone that was clearly posted for several miles. They lack both accountability and integrity. How can anyone believe that a society that rejects truth in criminal prosecution would ever be willing to hold themselves accountable for something so less obvious as stealing the wages of future generations? Bob G on 5/23/2012 11:22:53 AM

About Charles' son's entrepreneurial career - Encourage him that his e-career isn't over, that was just the start! Every time you try something you learn, and you can apply that knowledge to your next venture. I'm not done being entrepreneurial yet, no matter what obstacles our elected politicians put up. Tell him to keep looking and he'll find a way! Mike on 5/23/2012 11:45:41 AM

No, that will come later, after it is too late. Much in the same way as undisciplined traders let a position go against them because of hope, then sell at a brutal loss when hope finally gives out, just before things get better. The correct action requires wisdom, a commodity that is sadly lacking in our political leadership. Will on 5/23/2012 1:55:45 PM

Most of us old people have spent our lives helping parents and kids. We don't want anything special. We like our independence and try to take care of ourselves. Sacrifice is a way of life for those of my age group. We just want to get the mess cleaned up and those of college age should grow up and learn that the world does not revolve around them. J. Young on 5/23/2012 2:11:37 PM

I'm not sure it matters if we are tough enough to do this or not because one way or the other, sooner or later, it is going to happen. The thing is if we did it now, it would be a mush less bitter pill to swallow. Today, Soladad on CNN bemoaned the high price of her lipitor and what would people who made less than her do? Well, they take another statin and pay $4.00 at Walmart. Or, if they can't substitute, the phamaceutical company sends you a lipitor card. On top of that you should take pomegranate extract instead because it deprives your body of the good cholesterol it needs. Anyway, there aare so many ways to save. We just live it this stupid world where one sentence from Soladad can send hundred of people to support more government aid because Lipitor is so expensive what will people do. It's ignorance and it is fed to us constantly. I think if we really had to get along without a lot less from the government the riots would make the Greek riots look like child's play. Fran Touchette on 5/23/2012 8:30:55 PM

Are we tough enough? I think the history of this country answers that question without reservation. The corollary is do we have the leadership and attendant vision to address these problems? I think the answer is an unqualified no. We live in this altered state where extend and pretend exist as normal business; where the rule of law is ignored in both civil and criminal areas; where certain groups enjoy special privileges (think credited interest). I think the American public would welcome a direct and truthful discussion. But the problem is that this will not happen until a crisis mandates it. I call this the Great Collapse. Only then can we sit down without the undue influence of lobbyist and special interests. We need to reform the entire system including a limit on campaign financing and defining persons as natural people. We need to eliminate the influence of money in the governing process. Then we can sit down and tell the people there is no “easy” button and this will hurt. But it will be a SHARED hurt; all segments of society will have to share the burden. Then I think that if this happens, then we can solve the long-term problems. David on 5/24/2012 12:12:07 PM

OK ....what are the answers to the 8th grade 1895 questions ? Peter Mayer on 5/25/2012 4:46:09 AM

only a fool would sink a ship on troubled waters without a lifeboat (arab spring could not freeze mubarak's assets) meyerhoff on 5/25/2012 9:20:41 PM

I think we must be tough to ameliorate the excesses of the last cycle and rebalance to avoid severe destruction. Jeannette Richards on 5/26/2012 1:25:10 AM

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