Hoe Brothers Investment Management:

Hoe Brothers Investment Management recently published an in-depth report on the state of the world today. Among 9 overall issues on their radar, they take an especially deep look into the state of the global government debt markets and predict how sovereign debt crises may play out:

How Global Debt Affects You!
So what options are available to governments that want to solve its debt burden? They can do several things, all of which will directly affect you (pay attention!):

a) Raise taxes. This one is self-explanatory. I don’t think anyone enjoys having Uncle Sam reaching into your pockets to get more of your hard-earned dough. We can expect newly implemented and higher taxes in the future. The Bush tax cuts are set to reset in 2011 to their prior higher levels.

b) Lower spending. Social Security, Medicare and Medicaid are not the only targets, but most likely will be affected in the future. Lower defense spending will need to occur.
Also education will likely be targeted first as politicians move up the food chain targeting programs whose supporters’ ire will not be able to threaten their re-election.

c) Print money. While you will no longer hear it referred to as printing money these days, this approach goes by the euphemisms “quantitative easing” or “monetization of debt.” This is essentially a country imposing a hidden tax on the citizens of a country. Here’s a very simplified example that hopefully explains what the Federal Reserve Bank wants to do to investors who are ill-prepared.

This report is especially refreshing by stepping out of the box that most stuffed shirts sit in. Recommended read.

Get the PDF: Hoe Brothers Investment Management