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If the Big Three automakers were to fail, unemployment would spike to 8 percent or above, from a current berate of 6.5 percent, says Deutsche Bank economist Joseph A. LaVorgna.

The output of all the nation’s goods and services, or GDP, could sink 4 percent based just on reduced auto work, but that estimate could be conservative, he adds.

“Suffice it to say, as bad at the same time that the economy is right now, it could get significantly worse,” writes LaVorgna in a list of items.

Chief executives of General Motors (GM), Ford (F) and Chrysler ultimate week appealed to Congress directly to ask for loans, declaration their industry is on the verge of collapse.

On a Web place created for public lobbying, gmfactsandfiction.com, GM says: “What happens to the U.S. auto industry matters on Main Street.”

Oracle while burdened with pressure

Given Warren Buffett’sitting penchant for long-term-value investing, he may not be too bothered round Berkshire Hathaway stock being down about 40 percent this year. But Jeff Matthews, founder of hedge fund Ram Partners and author of “Pilgrimage to Warren Buffett’s Omaha,” notes adhering his blog that other parties are very worried about Berkshire debt.

He points out that the cost of insuring to counter-poise a default on Berkshire bonds jumped not long ago. As of Thursday, the cost of credit default swaps to insure $10 million of Berkshire bonds rose to $475,000 a year, according to Bespoke Investment Group, compared with about $100,000 at the start of September. Similar insurance on Morgan Stanley’s due costs $456,000, “the highest of the swollen banks and brokers,” according to Bespoke.

Matthews writes that Berkshire’s long-term derived bets on global stock markets are under pressure, partly explaining the increase in costs of insuring contrary to default.

Berkshire did not respond to a request for remark.

The Associated Press

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