New York Times Leader

Today’s lead story in The New York Times is titled, “Supreme Court Moves to Delay Chrysler’s Sale.” It describes a stay issued by Judge Ruth Bader Ginsburg in response to a suit by Indiana State Funds and consumer groups.

According to the article, the impact of the stay is uncertain. On one end of the scale, it could be similar to the time when the court overthrew an attempt by President Truman to seize the steel mills during the Korean War. On the other hand, it could just be because the paperwork had to be reviewed, and there was insufficient time to do so.

While the administration and company executives are trying to minimize the impact of the stay, in my opinion, the effect could be much greater. It is uncertain whether President Obama may use stimulus money intended for financial institutions to prop up the automakers instead. Our system of checks and balances inevitably brings a branch that is accumulating too much power back into line, and that branch these days is the executive.

On the other hand, I find it disturbing that we can pour billions of dollars into the financial institutions and show such frugality regarding Detroit. One wonders whether the reasons concern the lobbying and campaign contributions of the former compared to the unionized nature of the latter.

President Obama’s new plan for the car industry, as detailed in today’s lead story in The New York Times, is a breath of fresh air after the obstruction by the Bush administration and its refusal to do anything substantive about global warming.

The new emissions standards and mileage improvements proposed by Mr. Obama represent an integration with the plan currently in effect in California, and they were actually welcomed by the automible industry.

That’s because the only thing worse than the current situation, according to their own admission, was the uncertainty previously in effect. There had been several lawsuits because, previously, the California standards were significantly different than the rest of the United States. Now, they are all harmonized.

Environmentalists were pleased, too, because the new standards represent substantive improvements. The current average MPG for the auto fleet is  25 miles per gallon, and the new standard will be 35.5. According to the article, Detroit will be able to make up the difference using current technology.

I must admit it’s good to wake up in the morning, for a change, because the headlines are now describing real improvements to our society and government after the long march backwards of the Bush years. I wait to see what the Obama administration will tackle next.

Friday’s lead article in The New York Times was titled, “Chrysler Files for Bankruptcy; U.A.W. and Fiat to Take Control.” It describes the shocking development of Chrysler filing for bankruptcy protection after a deal brokered by President Obama was rejected by the company’s debtholders.

This just goes to show the greed of the financial sector while the rest of the economy is hurting. They don’t care about the impact of Chrysler’s failure on the United States, just recouping what they think is theirs. The union and management of Chrysler have made sacrifices again and again, but the debtholders want every cent of their money.

As a result, they will get less than they could have unless they have the additional gall to file legal charges.

One can only hope that a stronger company will emerge after restructuring though there are several landmines along the way. Many plants will be closed, workers laid off and “collateral damage” will occur as well. Who can say how many parts suppliers and other dependent businesses will be affected by the process?

And noone knows how the American consumer will react. Will our citizens lean over backward to buy Chrysler automobiles after the restructuring or will they react with the same greed as the debtholders who torpedoed a deal?

Today’s lead article in The New York Times is titled, “Latest G.M. Plan Cuts More Jobs, Halves Dealers.” It describes a radical new restructuring program proposed by top executives of General Motors. The program is designed to convince the Obama administration to provide additional funds for the company.

The plan essentially makes over General Motors into an entirely different organization. Instead of the 395,000 employees at its peak, it will now have 38,000. Instead of 150 factories, it will have 34.

Even with all these sacrifices, the plan might still fail if it is not accepted by the bondholders. 90 percent of them must agree to the final terms by June 1, and they will be  paid off with 225 company shares, of rather dubious value, for every $1,000 in debt.

To make matters worse, the article notes that some of the bondholders may benefit from GM’s demise. These bondholders might have insured their investment against losses by arranging credit-default swaps with AIG.

I would hope that President Obama is looking for any excuse to help out the auto companies. After pumping so much money into the financial sector, the support sought by General Motors and Chrysler is pocket change in comparison.

And more importantly, their bankruptcy or even closing could have an irreparable psychological effect on the American consumer.

The lead story in today’s New York Times is titled, “U.S. Said to Seek a Chrysler Plan for Bankruptcy.” It describes efforts by the Treasury Department for Chrysler to prepare a Chapter 11 bankruptcy.

The story leaves open a major question: are the bankruptcy preparations actually genuine or do they represent an attempt to forge an agreement betweeen Chrysler and its lenders.

Buried in the continuation is a comment by Jeremy Anwyl, the chief executive of Edmunds.com, an auto-related web site. He said, “You have to proceed as if it’s happening, and in doing so, you may avoid it.”

I tend to discount his theory. There are several ominous signs of an impending bankruptcy. An agreement has been reached with the U.A.W. And the four major banks, JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs, who hold 70 percent of the debt, are interested in making a deal with the government.

The implications of a bankruptcy, should it occur, are enormous. It will cross a red line making this recession different from any of the preceding ones, and it augurs a deeper and more pronounced downturn than the one currently envisaged by more optimistic members of the Obama administration.

The bankruptcy would also mark the end of an era in American manufacturing and a final transition to an information-based economy. That, however, has been in the cards for many years now.

(To read an analysis of the New York Times lead story each morning, visit <a href=”http://www.cioediting.com/wordpress”>The New York Times Leader</a>.)

Today’s lead article in The New York Times is titled, “China Vies to be World’s Leader in Electric Cars.” It describes China’s plan to become the world’s leader in all-electric vehicles, and some of its accomplishments and barriers in doing so.

This was a very interesting article. China’s goal to reduce pollution and global warming will be hindered because it gets three-quarters of its electricity from coal, the worst possible source. Also, replacing a gasoline car with an electric one only reduces greenhouse emissions by 19 percent.

There are economic barriers as well. The cost of an electric vehicle will be almost twice a gasoline vehicle, $30,000 versus $14,600, despite the Chinese government’s subsidy of $8,800 per vehicle.

There are some benefits. Most Chinese have a short commute so the 120-mile range of electric vehicles between charges is okay. And many are purchasing vehicles for the first time, so they won’t notice the comparative differences.

The most hopeful part of the article, in my opinion, involves raising the consciousness of U.S. citizens about the strides other countries are making regarding alternative transportation. Maybe, just as Sputnik helped us win the race to the moon, China’s program will spur research by U.S. carmakers, and American ingenuity will win in the end.

Today’s lead article in The New York Times is titled, “President Gigves U.S. Automakers a Short Lifeline.” The large headlines and two-column article continue to describe President Obama’s decisions on General Motors and Chrysler.

In addition to the ultimatums to receive additional federal aid — GM has 60 days for restructuring and Chrysler has 30 days to merge with Fiat — the article also describes the nature of the changes demanded, changes “experts say will severely shrink them.”

So, reading between the lines, it seems the auto “giants” will no longer dominate the American manufacturing sector as they once did, even after being nursed back to financial health, and even when the recession is over. People look at this as a decline for American industry, but I prefer to see it as a transformation.

We are no longer in a manufacturing age but an information age. People who get hung up about “making things” as a way to prosperity miss this essential fact. Our economy is largely service related, and the productivity engendered by computers, and our ability to create new “killer” apps, will continue to keep this country in the forefront of change and progress.

It’s unfortunate about the car companies, and unfair about the sacrifices demanded from them compared to financial institutions (a topic for a whole new entry), but this may represent the beginning of the end of an age. As such, it will create enormous dislocation and suffering, and we can only hope the transition is as smooth as possible under the circumstances.

Today’s lead article in The New York Times is titled, “U.S. Moving to Overhaul Ailing Auto Industry.” The banner headlines across the front page describe President Obama’s decision to require the resignation of the head of General Motors, Rick Wagoner, and a deadline for Chrysler to merge with the Italian company, Fiat, if it wishes to receive additional assisance.

Finally, someone’s getting tough with corporate bosses who have led us into the abyss we currently face. Kudos to President Obama for his decisive action. It’s something we’ve all been waiting for.

Obama’s plan also shows thoughtful analysis of the situation. Instead of applying a one-size-fits-all strategy, so typical in the mindless, ideological days of the Bush administration, this approach indicates the government’s opinion that General Motors, who has worked hard to develop energy-efficient vehicles and cut costs since receiving taxpayer money, has a chance to survive intact, while Chrysler, who obviously has noted applied the same kind of effort, should not.

Let this decision show corporate bosses, so used to relying on a sweetheart deal during the Bush administration, understand that when the Obama administration, or President Obama, says something, he means it.

Politically, the article gives one other reason for the tough stance. After the bonuses paid to AIG, the public is in an unforgiving move regarding corporate bailouts. In my opinion, further taxpayer support for bailouts will still be needed for banks and the financial sector, but today’s actions should serve as a caveat to these institutions: don’t expect something for nothing.