The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. The nation's jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It's only going to get worse.
With the three U.S. auto companies seeking financial assistance to avoid bankruptcy (at least GM & Chrysler) my thoughts of 9% + unemployment are becoming more probable. My thoughts were that this recession would be notably worse than the prior one and, if one auto company fails, it would get us to 9% unemployment very quickly as the ripple effects would go through the economy over a few months.
Banks have exposure, which they would then have to book losses
Auto suppliers would go belly up as many aren't just SOLELY GM, Chrysler or Ford dependent. They lose 35% of their production and potential receivables (uncollected bills) then they' ll have to cut their production, let people go, etc.
Oh yeah, and the communities are dependent on them. So that would ripple through the local economies where the manufacturer is located.....
It could get UGLY quickly is my point here.
FYI, I think the guy with Task is DEAD WRONG for one reason. This economic cycle and downturn is being caused by something NOT SEEN IN 80 years! This is a CREDIT CRUNCH / devaluation cycle and it will take quite a bit of time to work through the system. It can happen quickly or slowly. That is the choice of politicians and policy makers. Either way, I think it will be painful.