Wall Street buoyed by indications govt will foot bill for lenders' mortgage crisise

ww
December 1, 2007

News Analysis
Despite Market Upturn, an Uncertain Economy 
By PETER S. GOODMAN
As Wall Street rallied this week, it seemed that investors were taking
comfort in the notion that the economy has become so imperiled by the
crumbling housing market that it is forcing the government to finally mount
an aggressive rescue effort.

Investors found reassurance yesterday in talk that the White House is
brokering a deal with banks that could diminish a looming tidal wave of home
foreclosures. Soothing words from the Federal Reserve earlier this week
revived the hope that more interest rate cuts are on the way, drowning
nervousness in a din of buying.

"The market now feels comfortable that the Fed has come to appreciate the
severity of the situation," said Robert Barbera, chief economist at the
brokerage and advisory firm ITG. "The bad news gives you the blessing of
lower interest rates."

But even as investors took heart in palpable signs that the government is
preparing to dole out more medicine for the ailing economy, a number of
economists cautioned that the pain itself is still unfolding, with its
ultimate magnitude far from known. 

Signs point to a slowdown in the creation of jobs and investments by
companies. Consumers are clutching their wallets more tightly. Banks are