Are You Ready For An American Auto Bailout - For The French?

Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink.

That's right. In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen - a 7 percent stake in the company.

Because U.S. taxpayers still own roughly one-quarter of GM, they now own a piece of Peugeot.

Peugeot can undoubtedly use the cash. Last year, Peugeot's auto making division lost $123 million. And on March 1 - just a day after the deal with GM was announced - Moody's downgraded Peugeot's credit rating to junk status with a negative outlook, citing "severe deterioration" of its finances.

In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.

 

topneuro - 3/9/2012 5:32:54 PM

+1 Boost

Q: Why does every army has to have a French flag?
A: In case they want to surrender!

globaltrader - 3/9/2012 6:03:30 PM

0 Boost

Let's start with the 400 million, assuming the one quarter of GM is correct, then the peugeot purchase would only involve taxpayer assets of 100 million. Those pesky facts.
All of the European carmakers are in trouble, I am assuming this is part of GM's plan to share production and streamline their operations.
Time will tell the story.

nguyenvuminh - 3/9/2012 7:02:21 PM

+2 Boost

That's right. George W Bush's bail-out is now "bailing out" the French automaker. I guess the business concept of doling out some cash for access to technology/production scaling/component design cost sharing when the recipient is in a weak negotiating position is a bad thing.

drell1emc - 3/9/2012 9:15:51 PM

+1 Boost

Maybe instead of spending 1 billion dollars to develope a small displacement diesel engine, peugeot has more than one small displacement diesel engine size.

reaumur - 3/10/2012 6:46:51 PM

+1 Boost

Enough of this kind of north american stupid comments about the French already... Are we talking about the same French army that provided essential support during the American war of independence? The French army that conquered most of Europe under Napoleon and actually did take Moscow? The army that stopped the German army in 1914-1918 and bled it white, at the cost of 1.5 million soldiers dead and 5 millions wounded, before the American army could help in any significant numbers? Enough already!

HoustonMidtown - 3/11/2012 10:46:28 AM

+2 Boost

Typical conservative BS....