Erieversible

I’ve probably mentioned it before, but as it is such a pain I’ll mention it again.  Tax forms!!!!

For the last few years the tax form I’ve had to complete has been two sides of a single sheet of paper.  That was it.  The whole tax return for the family, all income, was done in 10 minutes.  No ambiguity.  No conditional elements that made hieroglyphics look simple.  Just some basic facts and figures.

How many people are employed by the IRS?  How many taxmen per head of population are there?  I think it would be very interesting to see comparative per capita figures for nations.  I think I know where the ratio would be the worst!

Those people who mock Zimbabwe for releasing a Z$100 trillion note should check their 401(k) status.  As of today it is a close run thing as to which is worth less, the Zimbabwe note or a banking stock.  With today’s events for global banks such as Royal Bank of Scotland (RBS) and the newly formed Lloyds Banking Group (LBG) there’s absolutely no value left.  Apparently shares in both banks traded at very high volumes.  You can understand people selling them, but who in their right mind would be buying them as they plummeted?

Wait a moment.  Didn’t the UK recently remove the ban on trading in shorts of financial institutions?  So if, for instance, you had gambled that either of those stocks was going to fall you’d need to be buying masses of shares even though they were sinking fast.  If that is the case the UK Government has a lot to answer for - I can’t believe that no-one made money out of the chaos in the banking sector in the last couple of days.  This really is turning into a mess.

There was an article on the BBC website the other day (and unfortunately I can’t find the link now) that explained how what was financially good for a country at the macro economic level was bad for the individuals who made up the country.  Similarly, what was good for individuals was bad for the country.  So how on earth is any Government supposed to respond when both country and personal finances are going down the tubes?  Seems to be a lose-lose situation.

And on a day when the US swore in a new President, let’s hope he has some of the answers, because there’s so much hope and expectation around.  

A couple of days ago I outlined my approach to 401(k) planning - I’ll look after my money, you look after yours.  So today I figured I’d better start applying that decision, acting on my own reasoning.

After arriving in the US I bought a few equities (shares) and for the most part the chosen companies are hanging in there.  No great gains and no great losses.  In the current economic climate I think that’s doing fairly well. Except for one.  I bought some banking shares, for old times sake really.  Also because they had lost over 90% of their recent value, and just had to be worth a gamble. 

Looking at them I’m not so sure any more, even for the long term.  Is the world ever going to trust the banking industry again?  And if in, say, 2010 the banks started making healthy profits again, will the world sit back and smile with relief or will it wonder where those profits are coming from and how sustainable they are?  My money (that’s what this is all about!) is on the latter scenario - banks are never going to be fully trusted again, and especially if they start generating large profits. 

So did I sell those banking shares?  Of course not.  They are so low in value they are effectively worthless.  I’ll keep my eye on them, and won’t make the same mistake again.  No more sentiment.  No more ‘playing around’.  Hard times are here and an appropriately hard line approach is required.