Capitalism, Socialism, Debt and Interest

I get it…people are disillusioned.  Disillusioned to the point they think a socialist may be the answer to an improved life.  The “Bern” is in…The “Donald” is on a roll…HRC, who knows?  Capitalism and free markets are what built our country into greatness.  It is now viewed as evil and associated with huge, global conglomerates that are greedy and bad for the individual. Today, I would like to propose Capitalism is the answer and not the problem.

First, I want to share my perspective on how we arrived to this point.  The two key measures that I focus on (there are many more like the status of the US dollar, but I believe these to be central) are:

  1. The Federal Reserve zero interest rate policy for the last eight years.
  2. The US debt load and the interest owed on it.

We all remember the “great recession” that occurred in 2008 and 2009.  In overly simple terms, it was the result of three Federal Reserve induced bubbles.  The first being Y2K and NASDAQ 5000.  Huge amounts of money was printed to prep for what was viewed as a potential disaster with computers worldwide.  The internet craze was on fire and lots of that money led to the NASDAQ bubble.  Y2K came and went and the NASDAQ collapsed over the next two years, down by over 80%.  That led to a recession.  What did the Federal Reserve do?  Would it surprise you that they printed a load of new money?  That money directly guided us into the next bubble:  Residential real estate.  Ahh, the days of zero percent down, “liar” loans;  home flippers; and of course low-interest rates. 

Guess what?  If a person has no equity in a house and that house’s value drops, what happens?  They leave the keys on the counter and leave.  Lots and lots of people left keys on counters.  And lots and lots of banks, big and small, were technically insolvent…not just here, but all over the world.  You see…even the banks overseas invested in those mortgages and in a hugely leveraged way.  Some mortgage packages were levered 10, 20, 30 times.

 The US entered a severe, fear filled recession.  Markets collapsed (not just the stock market, the bond market collapsed, the housing market imploded, the banking system was on life support).  Enter the Federal Reserve (again) with interest rates lowered many times until they hit zero:

Fed Rates

And zero they have been ever since until they were recently raised ¼ of a percent.  What’s wrong with zero rates?  Everything in which a free market/capitalistic system functions.  Savers are punished…the earn nothing on their savings, in fact saving is a bad thing.  What do large corporations do when rates are close to zero?  They borrow and borrow BIG.  The S&P 500 companies have borrowed BIG over the last five years and used that money to buy back shares and raise dividends.  However, research and development and capital spending have remained stagnant…that’s not a good thing, growth comes from the last two activities and not the first two. 

 Who else has borrowed BIG?  The US government…and they (we) are the biggest of all.  In the years since our current president took office, the Federal debt has increased from 9.0 trillion to 18.2 trillion at the end of 2015.  It’s now over 19T.  We spend more than we take in every year…the gap is debt.


The “official” statistics suggest our economy is growing.  It is, but barely and entirely on the back of new debt:



Seems to me that 9 trillion would have produced more growth?  The 2016 1st quarter GDP has come in at an ANNUAL growth rate of 0.25%.   The real median annual income in the United States has fallen from $57,795 in 2008 to $55,218 today. There are now twice as many Americans on food stamps than before the financial crisis.

 Why is no one talking about this?  Isn’t this a problem?  In short, yes…it’s a massive problem, but the symptoms have not been expressed yet.  It’s like the years of plaque build-up are not seen or noticed until the heart attack occurs.

 At current interest rates (1/4%) we pay $48 billion in interest.  What happens if/when rates go back to “normal”…say the 5% we had a few years back in 2007?  We would owe a WHOOPING 950 BILLION!  In 2015 Federal revenue was $3.1 trillion…by my calculation, that would consume 31% of all our revenues.

Houston, I believe we have a problem…a big one.

That’s if for today…next I will bring this full circle to capitalism and this election’s highly charged emotion.



Posted in Investing/The Economy | 5 Comments

Odds and Ends

I didn’t have time to get to my odds and ends before our flight left for Honolulu, so here goes:

  • Plane Economics:  Our flight from Melbourne to Sydney was packed full and seats were very tight.  A fellow named Clint was seated next to me and immediately started to critique what I was reading, which was an article against Keynesian economic policies (he thought it was for).  So for once, someone was next to me who actually even knew what Keynes was all about and I may have stimulating conversation.  The problem:  He was intoxicated beyond comprehension.  Oh well…close, but no cigar.
  • See the movie “Trumbo”…it is not only very, very well done but the story (which is true) is about turbulent times in the 1950’s and 60’s and the campaign to fight/eliminate communism in the US.  It illustrates that a concern/fight can go way to far and actually violate the rights and lives of people who have done nothing wrong or illegal.  Fear can be a powerful poison…we need to reasoned and balanced when confronted with it.
  • If I own a house worth $400K with a loan of $200K and I “improve” it with 200K of further debt, the house is now valued at 600K with 400K of debt.  Am I any better off?  Some would point to the higher valuation.  The factual answer is it’s neutral…my net worth in the house is still 200K.  I would say I am worse off because I have doubled my debt, am leveraged higher and thus have more risk in a down market.  In the last seven years under Obama, the US has printed and borrowed 7.5 trillion dollars.  Are we better off?
  • According to Ted Cruz, I am a “low information” voter since I do not support him.  Is that the height of arrogance?  What do you expect from a politician…he may be a outsider, but he is a politician through and through.
  • Earnings for companies in the S&P 500 fell 3.4% from last year, according to research firm FactSet. It was the third straight quarter of declining earnings for the S&P 500. The last time earnings fell three straight quarters was during the financial crisis.

    It was also the fourth consecutive quarter of declining sales. That also hasn’t happened since the financial crisis.

  • Idea:  Given that central banks around the world have borrowed, printed and even gone to negative interest rates (if you have not heard, that means YOU pay the bank for the privilege of holding YOUR money and seven countries currently have them) and none of it has worked…why not let deflation run it’s course and go from there?    
  • Linda and I are looking forward to visiting the UK and the Netherlands at the end of this week.  We will spend some time Friday with Louella-Belle, our UK partners…great people who do a great job.  Monday we meet with our new Italian distributor (in London) to plan our launch.  Then onto the Netherlands for a whirlwind tour with Tracy and Piet of Gorge Nails doing IBX Certification classes, meeting Nail Professionals and Salon Owners.  Going to be great…then home and no travel for a couple of months.

Until next time-

Posted in Professional Nail Business | 4 Comments

OZ Land, The Election, Random Thoughts

Linda and I are on our way back home from two phenominal famous Names weeks in Australia. I have travelled to this great place several times, but it has been quite some time.  First off, mega thanks to Pete and Lucy Lykissas who are our distributor partner and long time friends for organizing nothing short of a remarkable trip. During our tour we conducted three IBX certification classes for over 100 techs, visited six distributors, toured the Melbourne show and visited several fantastic salons. As with all of our travels, we made some wonderful new friends and rekindled others. Really impressed with the Aussie techs and had some really good laughs along the way (the snake charmer being the best!). I must also mention Beth from Salon First Supply who has been a long time devoted Creative Nail Design distributor and must have the best vintage Creative poster collection in the world. She was kind enough to dig out one of our most iconic, early era posters (see image below) for our meeting.  So, on behalf of Linda, we both would like to thank everyone who took their time to join us…we really appreciate it and enjoyed every minute.

This trip introduced us to Kingscliff (the most beautiful beaches I have ever seen in my life), Brisbane and Melbourne. I have heard many compliments on Melbourne and must agree…a wonderful vibe and special place.  We also spent time in the wonderful city of Sydney.  Despite some horrible currency headwinds, the economy and lifestyle I observed seems to be doing fine.

No trip is ever perfect.  Watching Sky News Australia was disturbing. I cannot call them Journalist…I am trying to be kind by calling them “commentators”.  They are literally on a witch hunt aimed at none other than Donald Trump. I simply could not believe what I was seeing and hearing.  I am not sure they understand they do not get to vote, but listening to them,  you would think they get the only vote!  The artistry of sound bites aided by the most off base and biased commentary truly puts them in an “idiot class” all their own.

Speaking of the election, it looks like it will be Donald vs Hillary. Should be interesting for sure…one for the ages. I have always wondered who the “party machinery” is…it is being revealed this election cycle. This group of elite, rich influnencers rarely need to reveal themselves, but they are out in full force now. Two dishonarable mentions:

The National Review released a full, stand alone Anti-Trump issue. 30 political elistist put their name on the cover. Glen Beck was notable…I have always viewed him as an out of touch kook, he really has delivered.  How sad, how out of touch…good ridence to them. I predict they will not stay solvent through the next election.

Mitt Rommney…where do I start?  This man lost the 2012 election with his condescending and dividing comment about “the 51%”.  He is the ultimate in the rich and out of touch segment. Mitt, do yourselve a favor…leave us “common folk” alone. You were and continue to be a embarrasment.

Hillary:  I decided a full 12 months ago that the last thing our country needs is another political dynasty. That excludes the Clintons and Bushes from this race for me. Hillary is an intresting one.  Yelling and shouting is her version of a good speech and “connecting” with the elecorate.  She is all about anger and division.

America is fed up with career politicians who put the people last…last in a long list of “power brokers”, special interest groups and the political party “big machinery” donors. These normally confident insiders are all afraid of the “outside” canidate. They cant own him…this is unfamilar territory for them. We are SUPPOSED to do what they want us to. Not this time, last time I checked, its one vote per citizen. Lets not let the elistest and the political dynasties control us.

One last disturbing note:  A recent study by an independant university found that Google search has the ability to identify undecided voters and modifies serch results to sway users into supporting Hillary Clinton. Eric Schmidt, CEO of Google is a big HRC supporter. I respect anyone who is reading this political position, no matter what is, this is horribly wrong.  If this bothers you as much as me, change your default browser to duckduckgo. They do not collect any personal data and pride themselves on quality search results and not the political agenda of their (elite) senior management.

We are about to board our flight to Honolulu.

until next time……




Posted in Famous Names, Investing/The Economy, Professional Nail Business | Tagged , , | 1 Comment

Brand-Bullies in the Biz

Source: Brand-Bullies in the Biz

Posted in Professional Nail Business | 3 Comments

World Scene; Election 2016

Linda and I are on a two-week, high energy trip that started in London at the Olympia Show. We then overnighted in Helsinki on the way to St Petersburg, Russia and as I write we are in Moscow.
This has been a remarkable journey. Linda worked with our wonderful famous Names UK distributor Louella-Belle and I had the privilege of being reunited with the talented Sweet Squared team. It was a successful show for both and I liked the energy on display.
Linda held two IBX certification classes with forty attendees in each. These classes generally go about 2 ½ hours, these went for 3 ½. The thirst for knowledge was amazing and the gratitude of the students to Linda was special.
What was very, very fun was the spontaneous convergence of some notable industry leaders and the genuine good time we had together every night (in the bar, of course). Alex Fox of Scratch, Athena Elliott of Nail Talk Radio, Elaine Watson of Nailebrity, The Boys of Nail Alliance (Danny, David, George), Jewell Cunningham of Creative Age, the fun and talented Louella-Belle team and more. It shows the great unity that is possible amongst competitors… We are all so blessed to be in an industry that continues to thrive because of leaders who care and interact with the customer base. In the same spirit I had a complete blast with my Sweet Squared Family, many of whom I had not seen in two years. To spend this kind of quality time is so motivating to keep growing and deliver the very best to our customers.

I have never been to Russia. In the plane, on final approach into St Petersburg, it appears to be just like any-other large and pretty city. It struck me how our impressions are greatly shaped by the media we are exposed to. We had so many friends telling us to “be careful and travel safe”. To be honest, we had excitement mixed with apprehension. In reality, we have felt completely comfortable and really like St Pete and Moscow. Our distributor hosts have been so gracious and have created a cultural trip that is amongst our best ever! The techs here are as professional as any in the world. They are smart, passionate and we are really excited about this market.

Back to the media shaping our opinions. I like to watch local news stations when traveling abroad, so have been watching RT (Russia Television) quite a bit. In listening to their coverage of the issues, they present very straight forward, fact based view points from a Russian perspective. In listening, you think…that sounds reasonable or that makes sense. Yet they are almost the mirror image opposite of what we hear in the US. Who do you believe? Who is correct? I think its important to go beyond the main stream media and read alternative/additional views, as its obvious the media is manipulated in all the major countries of the world by our elected officials. At the end of the day, its amazing and refreshing how the common, average person is very similar, no matter where you are in the world. We have certainly found that here. They have the same types of hope, outlook etc that we have in our country. They also don’t put a lot of credence that the politicians have their best interests in focus.

Now for some fun, quick takes on what I learned and observed while in Russia:
Vodka: We are led to believe all Russians sit around and drink Vodka…so NOT true. In fact, the folks we hung with don’t really drink that much at all and beer seems to be more popular.
Iphones are mega popular…seems like everyone had one.
The word “Kremlin” means “strong”…thus a very imposing wall surrounds the Kremlin. It is the “nerve center” of the Russian government and where Vladimir hangs out (but does not live…he has 14 homes around Russia). It was built in 1480 by Italian architects.
Double Eagle is the new symbol of Russia post-Soviet Union (Hammer and Sickle). It represents the view to the west (Europe) and to the East (China/Asia).
GUM Department Store on Red Square looks like a mid-evil palace on the outside and a train station on the inside. We loved it!
Red means beautiful, not communism. Thus Red Square means beautiful square and it surely is.
The Metro stations are gorgeous…like art museums. Lenin built them that way so make the people feel like they lived in privilege. Each station is different. We visited the Victoria Station which had golden statues of German Shepherds…you rubbed the nose for good luck…everyone did it (me too!).
Moscow means “cold or dark water”.
When the first Mc Donald’s opened in the 1990, it was mobbed by 5000 people. Why? It represented freedom and new thinking to the Russian people…we drove by it every day while in Moscow.
Ruble means Rabbit

The 2016 Election is shaping up to be a good one…I don’t recall ever seeing this much interest, especially on the Republican side of things. I don’t really have any idea of who I will vote for, there is a tremendous amount of water yet to pass under the bridge. A few early observations:

• Donald Trump has been a phenomenon. Doesn’t matter if you like/don’t like; Agree/Disagree…he has shaken up the entire process and brought tremendous interest from the public. The last time I remember someone drawing this amount of attention was Ronald Regan.
• Dynasty Politics: I am done with both the Clintons and the Bushes. They have too much power, too much influence and neither of them is in touch with our real world. Jeb has just stumbled. More on Hillary below.
• It is possible a Socialist is running for President and receiving meaningful support??? The foundational philosophy that built our country is under attack…Capitalism is now “bad”. To see how Socialism works, read up on Russia under Stalin. If that doesn’t cure you, nothing well. But really, a Socialist???
• BUT, I get it…people are totally frustrated with the entire political scene in Washington. Why do you think non-politicians are making such a splash? No one trusts the career, pansy politicians running our government. They are corrupt and self-serving with a crony based power structure that places you and me last on the priority list. Both parties. It’s so bad, a socialist is garnering support.
• The Democratic Debate: I was unimpressed. Linda and I arrived home from Russia just in time to view it. It was watched by 15 million viewers and ranked second to NCIS. By comparison, the Republican debate on Fox drew 25 million (see comment on Trump above). It seemed some parts were pre-scripted…like the Bernie Sanders comment on email. It looked like Hillary started nodding her head before Sanders even started talking. So, the socialist to her right declaring the emails not important was deemed to settle the matter. Oh, that’s right…there is that matter of a FBI investigation that won’t go away.
o I read a list of about 25 goodies that were promised during the two hours. Not one mention of the sorry state of our finances as a nation. No one mentioned the total debt we have run up. I don’t think anyone cares, or at least 99% of Americans don’t. My prediction: they will in the next 12-24 months.
o Not one mention of the zero percent interest rate policy supported by the Obama administration that punishes savers, and had little impact on the real economy.
o There was lots of talk about income in-equality. I agree, it exists…but the cause is the approximate THREE Trillion in new money printed under the Obama administration that has pumped up asset prices. If you have assets, they have gone up. But printing money does not create quality jobs. Capitalism does…but that is not popular now, even though there is overwhelming evidence that private sector investment is what built America into a great nation.
o No mention of the vacuum that has been created in the Middle East. Amazing.
• Hillary: I found her boring, scripted and extremely partisan. She said “I will help those who need it the most”. So she will decide who needs help and who does not, right? That is the power of politics for you. Does the email server situation matter? It does to me…it goes to integrity and honesty. The story keeps changing. Who wants four years of that? Not me. She also said she is a “capitalist”, but want’s to rein it in. That is one of biggest oxy-morons I have ever heard. The last thing this country needs is more regulation, laws and rules that further tie the hands of the free market. That is what Hillary will bring. I also think it’s a lock she will be the Democratic candidate…no one else will touch her, too much power in that dynasty.
• All the others: Time will tell…the shake out will occur and it will be fascinating to see who is left standing.

So, its going to be an interesting election. If you want to respectfully share your views, I will include them in my next blog, which will be after the next debate. I respect all views that are well thought out and hope you do too!

That’s it for now…

Posted in Investing/The Economy, Professional Nail Business | 3 Comments

IBX Wins Schoon Scientific Innovation of the Year 2014 Award

I am excited and humbled to announce that Schoon Scientific has awarded Famous Name’s IBX system it’s 2014 Innovation of the Year award.  Doug Schoon who IS Schoon Scientific is, in my opinion, the most talented chemist for the professional nail industry in the world…there is no one close.  So knowing this award is coming from him, makes it extra special.

Famous Names launched IBX just a bit over a year ago and it has already won some notable awards, including Nails Magazine’s Best New Product of the Year.  We are thrilled to receive this recognition, but also take it seriously…our mission is to deliver the very best to our nail professional customers.  We accomplish that by listening to them;  throughly testing all products before release and then gathering all the input we can to continue the process.  We want to be the best (being big is not what drives us) and want to thank all of the nail professionals who have tried IBX, we know without you there would be no awards.  If you have not tried IBX, you may find more information at

For more information on our award and Schoon Scientific:              


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Wrapping Up 2014….

2014 really flew by…some thoughts on the year on a variety of subjects:

2014 has been a gratifying year for famous Names…we started shipping IBX, our new “baby” exactly a year ago.  We knew from the field testing we did that we had a winner, but the market has to validate that.  We are blessed to have a customer base that is open-minded, wants the best for their clients and are anxious to try new concepts.  IBX has been a winner for us…we are so excited at the difference it has made for nail professionals around the world and look forward to more of the same in 2015.  Thanks to our customers and distributors who have supported famous Names in 2014, we truly appreciate it and are working hard to be your partner in success! 2015 will bring some new excitement from famous Names and we look forward to further partnering with nail professionals around the world.

I have just learned this morning Vicky Peters has left us. It’s very sad and a loss for the professional nail industry. The “Vickers” was one of a kind and was forever dedicated to our industry. I have so many memories of good laughs, in-depth discussions on how to improve our industry and about life in general. I am so glad that I took the time to visit her in her salon earlier this year. RIP Vicki Peters, we will miss you and your smile.

Every year has its high points and challenge points. Through it all, it’s important to “smell the roses” along the way. Linda and I are blessed to have two fantastic daughters. I am so proud of them both. We are thrilled Niki comes home to visit us every chance she gets…she is going to be a real asset to the professional beauty industry and I look forward to her contributions. Carli was able to spend time with our UK family over the summer and continues dedicate herself to her studies as a home schooler this year. She has a business mind and that is what she wants to persue…maybe famous Names one day? Linda is amazing…how do you get younger each year in attitude and appearance? I am a lucky guy. I am also thankful for my “UK family”. The Sams and the entire Sweet Squared team are terrific. They are a pleasure to work with and it’s an honor to be their partner. 2015 will bring more thrills and challenges, but when you are surrounded by so many talented and great people, I know the ride will be filled with satisfaction and a lot of fun.

The midterm elections were held about seven weeks ago (seems like seven months ago!).
The final results were:   Senate:  Rep 54   Dem  44   Ind 2;   House:  Rep 247   Dem 188;  Governors  Rep 35   Dem 15.  Some are calling this election a “sea-change”.  I really don’t agree…midterm elections in second terms typically produce a change in the balance of power. I believe the magnitude of the change is above average. If you are a “Republican”, there was joy and jubilation. If not, indignation and resignation. It seems there is always a dose of fear and warning on how the world is about to change drastically for the worse after an election like this. One great example I saw is “the end of school lunches for the children was near”. I am quite sure there will be more school lunches served next year than this year. I wish school lunches are the worst of our problems. This next Congress has some major challenges facing it and I hope there is some intelligent governing that takes place…I know many of you are laughing out there at that thought. But we can hope, right?

Here are my thoughts on what needs to happen:

  • The Keystone XL Pipeline is approved and work started as soon as possible.  I cannot imagine a more obvious “no brainer”.  Currently the heavy crude that the Keystone XL would transport is being moved via rail.  Most of it comes from Canada.  President Obama spoke this week coming out against the project stating that “Canada would be the main beneficiary of the project”.   Here is what he left out:  Over the last twenty years, the US oil industry has spent tens of billions converting refineries to processing heavy crude.  There are two primary sources of heavy crude:  Canada and Venezuela.  Who would you rather see benefit?  Our strong ally to the north or  the socialist and unfriendly regime to the south?  One other note:  the majority of the rail system that is currently moving the Canadian heavy crude is owned by major democratic and Obama supporter Warren Buffett.  Lets put the interests of our Country first over politics.  Lets create tens of thousands of high paying jobs for Americans.  Lets advance our energy infrastructure.  This is a no brainer.
  • Reform the Federal Corporate Tax Rate:  The US has the highest corporate tax rate in the developed world at 35%.  The President and the Congress are demonizing companies for holding profits overseas and for doing corporate inversions (where tax domicile is changed from the US to other jurisdictions via acquisition). In a free market, money flows to where it is treated best. The US is not currently that place.  Here is a solution:  Put in place a competitive rate and the money will flow back to the US.  I think a 20% rate sounds about right.  In making this change, many (all?) of the special interest tax breaks would have to go away.  Simplicity and Competiveness…all good for the US.
  •  Constitutional Respect:  The balance of power envisioned by our founding fathers is being changed by the use of Presidential Executive Orders.  PEO’s  bypass the Congress and implement the agenda of the President.  President Obama’s PEO size and scope are unprecedented and may produce very dangerous and unintended consequences.  I have seen articles stating that the NUMBER of PEO’s is less than that of the last Administration and that would be correct.  However, when looked at in the scope and impact on our economy, impact on business and the judicial system…this president has gone far beyond any other.  A grid locked Congress is the excuse used…but that is how our system is set up.  It is what the Constitution was built on:  Separation of Power.  I don’t want any President doing this, no matter the political party or how justified the agenda.  I want to see some integrity in Washington and less “boundary pushing”.  Our Constitution enabled the most successful country in the world…why are we risking our future because of one man’s (political) agenda?

I have seen many in the Republican arena trying to make a case for repeal of the medical device tax.  I honestly don’t see it…the publicly held medical device companies have been amongst the biggest risers in a market that has gone up a lot.  The tax appears to have been taken in stride.  Innovation continues to flow.

Back to the topic of energy.  I was reading an article this week that quoted the EIA that a grand total of 0.6% of total power generated in the US comes from solar power.  Not much when you consider the tens of billions the current administration has “invested” in solar.  The fact is that solar is the most expensive type of power generation.  Wind makes up 4.7% of the total and is more economic than solar.  Nuclear is the most cost efficient.  America has a legitimate shot at being nearly energy independent…we need to wisely invest in making this happen (think Keystone XL along with wind, hydro and nuclear).  We need to keep innovation moving forward…quality of life depends on it.

It’s snowing here in Vegas today, what a perfect way to say goodbye to 2014 and welcome in 2015. Our daughter Carli and her bestie Celine are cooking Linda, Linda’s Mom and I dinner tonight. Cant wait, what a nice way to spend the evening! 2015 will bring a lot of travel (so what’s new???) and to some new places…I cant wait! In signing off, I wish you and your’s a fun and safe New Year’s Eve and above all else, a healthy 2015.

Until Next Time-

Posted in Investing/The Economy, Professional Nail Business | 4 Comments