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Chrysler announced plans to lay off 13,000 workers on Valentine's Day

Some Valentine

News of the Year | February 2007

Issue: "News of the Year," Dec. 29, 2007

Chrysler announced on Feb. 14 that it planned to lay off 13,000 workers at plants in Michigan, Delaware, Missouri, and Canada-cutting back 16 percent of its North American operations in what auto workers called the Valentine's Day Massacre. Experts have long forecast a major realignment for U.S. automakers, saddled with pension-heavy labor contracts and for too long reliant on gas-guzzling trucks and SUVs to fuel profits. But fewer analysts foresaw how deeply a downturn in the U.S. auto industry would contribute to, and in turn be affected by, a slump in home values and the crisis in debt markets. In auto-industry-dependent Michigan, home foreclosures have run more than two times higher than the national average-even before the home mortgage crisis spiked on the nation's radar screen.

In May German owner DaimlerChrysler, which took over Chrysler in a much-heralded $36 billion deal in 1998, sold the U.S. automaker for a fraction of that, $7.4 billion, to private equity firm Cerberus Capital Management. In October workers at Chrysler went on strike as part of an overall effort by the United Auto Workers (UAW) to gain retiree health care and pension guarantees for its aging work force. Chrysler, along with the other Big Three, reached agreement with the union but not without further cost: By November Chrysler under new management announced further layoffs in the coming year, likely to total 12,000 in 2008.

These job losses came during an already growing housing crisis, as subprime adjustable-rate mortgages in 2007 went from weapon of choice in the race to buy a home to a blunt instrument pounding at a once-robust market. At least one report said housing prices will fall 13 percent through 2007 and beyond-with 80 metropolitan areas seeing double-digit price drops. "This is the most severe housing recession since the post--World War II period," analyst Mark Zandi told Reuters news service.

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The foreclosure problem is most acute in politically noteworthy California, Florida, Ohio, and Michigan. Those troubled economic areas represent 119 electoral votes, over one-fifth of the total, heading into an election year. California and Florida together possess 28 percent of the country's subprime adjustable-rate mortgages, and they account for one-third of the foreclosure proceedings on subprime loans.

Also in February ...

A law establishing same-sex civil unions took effect Feb. 19, making New Jersey the third state to offer the option. The state legislature hastily authorized civil unions in December 2006 after the state supreme court issued an ultimatum: Either legalize gay marriage or create another institution bearing the same rights and benefits.

Still, gay-rights groups complained that the arrangement evoked a "separate but equal" doctrine akin to public-school segregation. Now, a New Jersey bill is pending that would legalize gay marriage per se. Senate President Richard Codey, a Democrat, said no vote will take place on the measure during the lame-duck session that ends early in 2008. But the bill's Democratic sponsor Sen. Loretta Weinberg said, "I will be advocating as hard as I can in the new session."

The U.S. Court of Appeals for the District of Columbia Circuit on Feb. 20 upheld the Military Commissions Act (MCA) of 2006, which prohibits terror-war detainees from challenging their detention in U.S. courts. Detainees Fawzi Al-Odah and Lakhdar Boumediene are claiming the MCA violates habeas corpus, or the right to claim unlawful detention, and have appealed to the Supreme Court, where oral arguments took place Dec. 5.

"The lawyers were arguing toward [Justice Anthony] Kennedy," said Heritage Foundation legal scholar and former Deputy Assistant Defense Secretary for Detainee Affairs Charles Stimson, who attended the arguments. Kennedy, now widely considered the swing vote on an ideologically divided court, "seemed to be looking for a way to send the case back to the D.C. circuit."

On Feb. 22, the International Atomic Energy Agency (IAEA) reported that Iran had defied a United Nations Security Council order to halt its nuclear program. The report prompted President Bush to press for tougher sanctions and triggered a U.S. naval buildup off Iran. But in December, a new U.S. National Intelligence Estimate (NIE) said Iran had suspended nuclear-weapons development in 2003. While some U.S. officials and media embraced that conclusion, others, such as former UN ambassador John Bolton, did not. "There is little substantive difference between the conclusions of the 2005 NIE on Iran's nuclear capabilities and the 2007 NIE," Bolton wrote in a Dec. 6 Washington Post op-ed. Bolton pointed out that Iran's uranium-enrichment program has continued, and that any distinction between military and civilian applications of that program is "highly artificial."

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