The 533,000 plunge in jobs during November guarantees that the government will bailout the big three auto makers, says Mark Zandi, chief economist for Moody’s Economy.com
“These numbers insure that automakers will get their money,” he told Bloomberg.
“If they don’t in the next few weeks, they will be in bankruptcy. And that would mean liquidation, which would mean the loss of up to 1 million jobs.”
But the money won’t come easy, Zandi says.
“The auto companies will get a lot of oversight, unlike financial institutions in their bailout.”
General Motors, Chrysler and Ford will need $75 billion-$125 billion “under reasonable assumptions” to make it through the next two years, Zandi says.
He maintains that the economy will continue to suffer massive job losses for at least the next few months.
“Almost all businesses are in survival mode, slashing payrolls and investment,” he says.
“I don’t see that changing soon. Confidence has been shattered. There is no credit flowing, and until it does, businesses won’t stop cutting.”
The government has to go all out to prevent a severe recession, Zandi says. “The Fed will have to even more aggressive than it already is,” he argues.
Zandi may well be correct about aid to the big three. An agreement over the weekend between Congressional leaders and the White House makes it appear that auto makers “will get something,” Clint Currie, a transportation analyst for Stanford Group, told Bloomberg.
© 2017 Newsmax. All rights reserved.