By Logan Scisco
In August the economic crisis fuelled by the growing worldwide credit bubble was finally set in motion. Extempers have been focusing on this growing credit bubble for years and some of the readers of this brief might have already given a speech about credit conditions in the United States economy. These speeches most likely focused on America’s housing market, which has boomed over the last several years. However, this housing boom was built on a risky foundation of adjustable rate mortgages and subprime loans. Public forum debaters who also do extemp may also be familiar with the credit conditions in the United States due to a March resolution concerning the limitation of credit last season.
The recent credit meltdown in the United States economy has been felt across the world. It has been fuelled by a rise in home foreclosures and a hesitation by lenders to keep funneling money into economic institutions. Tightened credit standards have started to restrict the flow of money into the economy and financial markets, which have been boosted for the last several years on the free flow of money for investment and business acquisitions, have been jolted.
The credit crisis that is unfolding is something that extempers should start reading about soon. Understanding the complexity of hedge funds, pension funds, private equity firms, and the lending practices done by banks can be difficult, especially for beginning extempers. However, the more reading extempers do on these topics the more familiar with them they will be. Knowing about the workings of these different economic areas can help extempers feel confident about economic rounds and will also help them understand the current credit crunch.
Due to the fact that a presidential election is on the horizon, the U.S. economy is bound to play a role. How big a role it will play, though, will depend on how the economy is performing as we near November 2008. The economy under George W. Bush has grown at a continual rate of three percent but it has been criticized for leaving working class Americans behind. Furthermore, the credit crunch at the moment is prompting calls for the federal government to intervene in the economy and help those homeowners who are facing foreclosure. Therefore, knowing more about the current credit crunch can aid in your knowledge of how the 2008 presidential election will play out.
This credit crunch topic is also important for extempers because it is the first economic crisis that Federal Reserve Chairman Ben Bernanke has had to confront. How he handles this first crisis will determine how markets will perceive his leadership and will also go a long way towards defining his legacy at the Federal Reserve.
Due to the reasons mentioned above I felt that it was important to dedicate one of the extemp briefs for September to this credit crisis. Within this brief extempers will learn how the current crisis developed, Bernanke’s leadership of the crisis, and the economic fallout of the current crisis on the United States and the global economy.