It's off to bankruptcy court for Government Motors

Bondholders are still getting stiffed - a paltry 10 cents on the dollar - but it appears they were finally worn down - or threatened enough - to give in and allow GM to head off to bankruptcy court.

David Zanger, Bill Vlasic, and Jeff Zeleny of the New York Times have the details:

The bankruptcy, to be filed in New York, is a moment of reckoning for an industry that was once at the heart of the American economy. It culminates a remarkable four months of confrontation between Washington and Detroit that is expected to result in a drastic downsizing of the company.

It also places the government in uncharted territory as a business owner, as it takes a 60 percent ownership stake in the company during its restructuring.

Reflecting the government's extraordinary intervention in industry, aides say, Mr. Obama plans to tell the nation on Monday that he believes G.M. can be brought back from the brink of insolvency, even if the company looks almost nothing like the titan of old.

Meanwhile, a federal judge late Sunday night cleared a path for Chrysler to get out of bankruptcy by approving a sale of most of that carmaker's assets to a new entity to be run by Fiat of Italy.

Administration officials briefed reporters on the G.M. plans Sunday night, as President Obama began to inform members of Congress. But the White House insisted that the aides who talked to reporters could not be named.

Does anyone - even the president - believe that Government Motors will ever make any money again? Not only are the billions already spent to "bail out" GM irrecoverable, but the billions and billions more that it will take to keep GM afloat every year will simply follow that taxpayer money down the rabbit hole. GM will be forced to build cars incorporating emission standards, CAFE standards, safety standards, that will require a retooling, redesign, and rebranding of the entire company.

The company that once boasted the most stylish and powerful cars in the world is going to be reduced to making cars that only Obama would drive.

The Times calls the move "risky." That's an understatement. Obama can claim he doesn't want to be in the car business all he wants but the fact is, if he really believed that, he wouldn't have gotten tied up in this unholy mess in the first place. Experts have been telling him that even a reduced GM will bleed money until the liabilities inherent in a flawed union contract are seriously addressed. That won't happen any time soon. Obama needs the UAW in 2012 to win re-election.

A very sad day for America.