The week opened with another financial stunner: The US Government seems to now be in the US Auto business. According to President Obama’s statements Monday, GM’s CEO, Rick Wagoner, joins America’s ranks of the unemployed, and Chrysler seems headed for a Shotgun Marriage with Fiat – just business as usual in another week here in Great Depression II.

Not that they didn’t have it coming. Since all the BailOut frenzy of last Fall and their private jetting into Washington to beg, hat in hand, for money to Congress, only to be unceremoniously kicked out to return via Amtrack, US automakers have been treading on the thinnest of thin ice. We all debated whether or not they should be left to the forces of nature and then something of a compromise was reached whereby US automakers were given some BailOut dollars, much less than they said they needed, and told to come back with a real plan for how they would get themselves out of the financial black hole that is swallowing them up. Well, those plans underwhelmed the Obama Administration, to say the least.

GM has lately been called a health care company who happens to make some cars and Chrysler has been in and out of its merger with Daimler, also underwhelming, and is now in the hands of some very unlucky investment types who probably wish they never took it off Daimler’s hands, even for the peanuts price they paid to bring it back out of that star-crossed merger. Most notably, none of the other automakers has yet come forward to cherry-pick the few models which make economic sense from these troubled US automakers and they continue to hemorrhage taxpayer dollars.

Now, talk is of a ‘pre-packaged’ Bankruptcy proceeding where, basically, all the deals that Bankruptcy lawyers representing both Debtor and a whole host of Creditors would normally agonize about and litigate endlessly over in a real Chapter 11 Re-Organizing Bankruptcy Case, are made before the actual Bankruptcy petition filing, and then the Bankruptcy Case is strictly pro forma, awaiting the signature of the Bankruptcy Judge on the Re-Organization Plan. But, there is more. “Goodies” in the Obama Administration plan also include a tax break if you buy a car between Feb. 16 and Dec. 31, 2009; incentives to turn in clunker cars which are less than fuel-efficient; incentives to make people buy more energy-efficient cars, and; a US Government-backed warranty for those vehicles which many worry would be left without warranties if these US Automakers fail. And, that’s not all; if you act now . . .

Ford, interestingly, is not mentioned in these plans for ailing Chrysler and nearly comatose GM; apparently they are indeed selling enough Fords and have managed the company well enough not to need Federal aid for now. Bravo.

As for GM, my guess is that one way or another, it will have to be broken up into a number of pieces, some of which (maybe, Chevy and Cadillac) may actually be able stand alone. The big problem for GM is all those retirees that they have been supporting and finding some humane way to lessen the financial burden without throwing thousands more into abject poverty with loss of their valuable medical benefits and pensions – there is still no easy answer for that one.

Of course, there is also a Czar – what effort these days is complete without one – appointed to oversee the remaking of the US Auto Industry and he is Edward Montgomery, a former deputy labor secretary, who will supervise and direct these efforts.

The effect that all this will have on areas in the Midwest, where US automakers still run factories and employ many of their workers, is unclear right now. One often wonders how many more ‘hits’ the good people of the Midwest can take from this economy, but one thing is clear, many who were formerly employed in the US auto industry will likely never earn what they were making as union auto workers ever again in their lives. Programs will have to include massive re-training and teaching many new job skills. Then there are all the businesses, large and small, which make their living from supplying, catering to and servicing the US automotive industry – what the ripple effect on them might be from this planning, surely a dramatic uptick in the unemployment numbers for one thing.

It could not continue like this and, therefore, this had to happen. GM’s CEO, Mr. Wagoner, was a popular fellow who operated GM at a loss since about 2004 and who has been in office since about 2000. The billions that GM was losing, month after month and year after year, were intolerable, and all the arrogance and stubborn conduct of automakers like GM in seemingly always being ‘behind the curve’ in meeting trends, resisting energy-efficient vehicles and so many other sensible ideas, all eventually had to come to a crashing halt. It will be very interesting to see what emerges from the wreckage of US automakers. Once, long ago in the early 20th Century there were hundreds of little auto manufacturers – it was almost a home garage business reminiscent of our computer industry in the late 70’s and early 80’s. Now there are so few you can count them on the fingers of one hand. And the Fed inches ever closer to adding the US auto industry to its growing investment portfolio, which now includes banking, insurance and yes, the US auto industry.