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The pace of US home sales surged 7.4 percent in November, helping to bring down the inventory of for-sale homes to pre-recession levels. November's robust performance was fueled, however, by an extraordinary factor – the anticipated expiration of a tax break for first-time home buyers. First-time buyers accounted for 51 percent of purchases tracked in the report on previously owned homes, released by the National Association of Realtors Tuesday.

A case for optimism rests on several factors: Mortgage interest rates are low, Congress has extended the home buyers' tax credit through the first half of next year (it was set to expire at the end of November), and an improving job market next year could offset a continued high rate of mortgage defaults by households in financial trouble. While not auguring for a new housing boom, those forces could help keep the market on a path toward recovery.But other factors suggest that the housing market still faces significant headwinds. The biggest question mark is interest rates. The Federal Reserve has become a big investor in the mortgage market this year, creating demand for mortgage-backed bonds and thus pulling down the cost of loans for people buying homes. A 30-year fixed-rate loan averaged just 4.88 percent interest in November. But this month the Fed reaffirmed that it expects to complete its mortgage buying by the end of the first quarter of 2010.

Also weighing down the housing market is a large "shadow inventory," including homes in various stages of foreclosure. The record volume of foreclosures, highlighted in another report this week, shows no sign of stopping soon. In fact, "shadow inventory" continues to rise, according to a recent analysis by First American CoreLogic, which tracks the housing market.

if large economies keep interest rates loose for too long, faster global growth could instead add fuel to the fire. Tighter monetary policy in the United States and the Euro area is still a way off, but may be edging closer.  The European Central Bank will conclude emergency lending in December. The rate on the final loans will be indexed to the ECB’s benchmark rate, rather than fixed at 1 percent, giving the Bank room to raise interest rates if needed. Unemployment, a key signal for central bankers considering raising rates, fell to 10 percent in the United States last week, but it is not yet clear if this improvement will persist.

These price surges could cause or temporarily conceal bad debts in a number of smaller economies, hurting investors who have turned to these markets. However, unless these surges continue, the risk to the global recovery will be contained. Dubai World’s recent near default illustrates the potential shocks that debt from bursting asset bubbles can cause. Similar problems could and probably will emerge in other economies which have been badly hit by the crisis, and where government finances are stretched, including Ireland, Greece, and the Baltics.

U.S. manufacturing firms spend almost three times as much per worker per hour for healthcare as our most important foreign competitors--$2.38 versus $0.96. Healthcare costs drive employers to move jobs overseas, grow jobs outside of the United States, and limit the ability of firms to invest to improve productivity [and] compete more effectively in the future.

Analysis also shows that the U.S. economy loses as much as $207 billion annually because of the lost productivity stemming from the poor health and shorter lifespan of the uninsured. Employers notice the workplace productivity loss, which for a full-time worker equals four days a month in lost work time.

On the budget front, the House bill would reduce deficits by $138 billion over the next decade and the Senate measure would reduce deficits by $130 billion over that period, says the Congressional Budget Office (CBO), which predicts the two measures would continue to reduce deficits for at least a decade thereafter. The bills would achieve this goal through a combination of spending cuts (largely in Medicare) and tax increases that, together, exceed the costs of bringing health insurance coverage to about 95 percent of all legal residents. The House and Senate bills deserve much more credit for cost control than they have received. They [address] almost all areas that experts have identified as promising areas for reducing the growth of healthcare spending. Most important, both would create a health insurance exchange to promote competition among private health insurance plans based on price and quality, reduce administrative costs, and provide a platform for systemic change across the healthcare system.