Hello, I'm Mark Pearson. Stocks rallied late this week as investors welcomed Bush administration plans for the subprime mortgage meltdown, and prospects that the Federal Reserve will cut interest rates again next week.
The Mortgage Bankers Association reports that a record number of mortgage-holders entered foreclosure in the 1st quarter of 2007, marking the third consecutive quarter the tally set an all-time high.
On Thursday, President Bush announced plans to freeze interest rates for five years for hundreds of thousands of homeowners whose interest rates are scheduled to rise in the coming months.
Despite concerns that turbulence in the housing and credit markets is rippling into the broader economy, the Labor Department reported Friday that employers added a solid 94,000 jobs to their payrolls in November, while the unemployment rate held steady at 4.7 percent.
That should support consumer spending this holiday season, yet many economists predict the Federal Reserve will cut interest rates for the third time this year when policymakers meet next Tuesday. And that sentiment helped the Dow rise nearly 250 points this week.
Meanwhile, the largest policy reform affecting rural America -- -- commonly known as the Farm Bill -- -- now appears to be on the congressional back burner until early 2008. But that didn't stop lawmakers from passing an energy bill this week containing significant reforms in renewable fuel standards.
Sweeping energy legislation passed the U.S. House this week, promising the first increase in federal automobile fuel efficiency requirements in three decades. The bill requires an industry-wide fuel average of 35 miles per gallon – a 40 percent increase over current standards.
Renewable energy held a prominent position in the measure's language, including a series of proposals linked to rural America:
- A sevenfold increase in the federal ethanol mandate to 36 billion gallons by 2022.
- Rolling back $13.5 billion in tax breaks to the five largest U.S. oil companies and redistributing those funds to renewable energy development.
- Incentives for biodiesel and cellulosic ethanol production.
Passing the House by a 235-181 vote, the energy bill was largely divided along party lines. Democrats claimed victory and characterized the measure as a "new direction" in U.S. energy policy. Republicans warned the move could raise energy prices and lacks any support to domestic natural gas and oil companies.
Earlier this week, Ford Motor Company announced it could meet future fuel economy standards without abandoning sport-utility vehicles and heavy trucks. Auto manufacturers argue the increased requirements could limit vehicle choices, drive up costs, and threaten jobs.
Lawmakers now must hammer out key distinctions between the Senate bill and the House measure passed this week. Regardless of congressional action, President Bush threatens to veto the measure amid concerns over added costs to American businesses and consumers.
Answering criticism from Republicans and automakers, House Democrats pledge that the bill is focused on America's energy future and not on temporary energy price reductions.