www

"Look for Obama to forge a grand bargain with the automakers: we'll supply additional loans and investment capital if the industry can develop a next-generation, alternate fuel or alternate propulsion car, something that specifically reduces U.S. dependence on oil," Wang said. "But it has to be a widely marketable, practical vehicle, something that is a serious alternative to gasoline and diesel."

What energy form that next-gen vehicle will feature -- battery, fuel cell, etc. -- Wang doesn't know, but he does see the Obama Administration committing an additional $25-50 billion for a viable next-gen car plan, and other corporate operational reforms.

Obama Administration officials are also likely to push for clauses that require the U.S. automakers to use U.S.-based parts and materials suppliers as much as possible, in order to further stimulate economic activity in the nation, he said.

Auto Sector / Economic Analysis: Economist Wang also argued that most of each company's senior management and board of directors should be replaced, and the government's equity stake in each company should be substantial, but not so punitive that it hinders the attraction of additional private investors. Further, given the wide employment and economic implications of a non-rescue, the option of not intervening is a non-starter, he said, and that's the view from here, as well.

Few in economics or government circles a decade ago could have predicted the auto sector's current predicament, but if the 1979 Chrysler rescue is any indicator, the U.S. Government and taxpayers could end up making money on the deal.