In the right hands, big turnarounds do happen.

Once upon a time, there was a car company that was one of the world's sickest. Its managers spent their time fighting one another. The one thing its workers did most reliably was go on strike. Its bankers debated how big a bailout would keep it out of bankruptcy.

The company was Fiat. Yes, the same Fiat that is now taking over Chrysler. What kind of shape was Fiat in? Well, back in 2000, General Motors (GM) had signed a deal to buy Fiat. Then when the deal was supposed to close, in 2005, GM decided it was hopeless. "Being forced to buy Fiat," Business Week reported, was "GM's nightmare scenario." To avoid having to go through with the purchase, GM paid Fiat $2 billion just to get out of the deal. Most folks thought it was money well spent.

The man who let GM out of the deal for a mere $2 billion was Sergio Marchionne. He was a financial expert who had taken the helm of Fiat in 2004. Fiat then was on the verge of bankruptcy. Marchionne had never even worked at an auto company, let alone run one.

By 2007, just two years after GM walked away, Fiat was profitable. Now Marchionne is not only taking over Chrysler, but looking at buying GM's European division, Opel, as well. So recently deemed completely worthless, Fiat now has a market value of about $12 billion. A combination of Chrysler, Opel, and Fiat would leave Marchionne running the second biggest auto company in the world, after Toyota (TM).

Amid the wreckage of today's economy, it seems hard to believe that any of the sickest companies in the United States will rise again to their former prominence anytime soon. Whether the talk is about Citi or Chrysler, the discussion in the air is about culling and salvaging. If the auto industry survives, it will be in a greatly diminished form. Citi (C) and Bank of America (BAC) seem to get only further away from paying back the government's billions. Whatever happens, it'll be a long and painful story: Every reasonable person can see that decades of mistakes don't get fixed overnight.

Except, as Fiat proves, sometimes they do. Turnarounds do happen. And when they do, they can be surprisingly fast.