Great news: Le Bailoutte de Peugeot avec Le US Taxpayer Francs

posted at 9:15 am on March 9, 2012 by Ed Morrissey

Americans sunk tens of billions of dollars into General Motors in 2008 and 2009, money which they won’t see any time soon, if at all.  The Obama administration strongarmed senior creditors in an unprecedented politically-engineered bankruptcy to get taxpayers to eat the costs of old pension obligations and boost the UAW.  All of this was done in the name of making GM a stronger company so that they could eventually pay back the bailout and make better decisions in the future.

So how did that work out?  About as well as you’d imagine.  As soon as GM had some cash, it decided to invest it — in another car company whose bonds had achieved le junk status:

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. …

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.

Oh, goody!  Just what we US taxpayers need — another car company “drowning in red ink.”  But there is some sort of secret synergy that the taxpayers who currently float GM must be missing … right?  Right?

An analysis by auto industry consultants IHS said it is “somewhat baffling that GM is willing to get involved in an alliance that it frankly does not need for size or complexity, while still avoiding any public plan to rationalise its European production, cut costs, or deal with labour rates.”

So let’s get this straight.  As soon as GM got freed up a little from its own irrational production costs and could deal a little more effectively with its own labor rates, it took cash that it still owes taxpayers and sunk it into a car company whose problems in the exact same areas are as bad or worse as GM’s was before the bailout.  What a great investment!  Why, that sounds amazingly like the kind of investment expertise that cost taxpayers $535 million in Solyndra.

ABC’s Jonathan Karl notes that while GM bought a big stake in Peugeot, the Peugeot family had an opportunity to buy a stake in GM.  They passed on that “opportunity,” which just proves that the Peugeot family is smarter than GM.

This is what government bailouts buy.  Instead of clearing the decks at GM and freeing their assets through normal bankruptcy so that more competent hands could put them to better use, the government intervention maintained the same status quo and funded it with taxpayer assets.  It’s no great surprise, therefore, that the leadership at GM would toss away money owed to taxpayers to buy a stake in another failing enterprise.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Mais NON!!!

Logus on March 9, 2012 at 9:19 AM

Obama dumps $500 million on Solyndra and Obama Motors dumps more than $400 million of taxpayer assets on junk bonds.

The ACORN didn’t fall far from that tree.

dirtseller on March 9, 2012 at 9:20 AM

It’s all about bailing out the unions, whether they’re in the US or France.

BTW, The Wall Street Journal has a story on how Fiat wanted GM as well.

Steve Eggleston on March 9, 2012 at 9:22 AM

Un-friggin’-believable.

AZCoyote on March 9, 2012 at 9:23 AM

but barky said GM repaid their bailouts loans and Eastwood and M&M said Detroit was back!

I’m confused.

Lost in Jersey on March 9, 2012 at 9:23 AM

Once again proving that GM management hasn’t a clue about running an auto company! Stiff the taxpayer. Yeah, that’s the ticket. Meanwhile, crickets heard from the party of stupid!

Bob in VA on March 9, 2012 at 9:23 AM

As soon as GM got freed up a little from its own irrational production costs and could deal a little more effectively with its own labor rates, it took cash that it still owes taxpayers and sunk it into a car company whose problems in the exact same areas are as bad or worse as GM’s was before the bailout.

Wait, what? Next thing you’ll be telling me is that a million dollar lottery winner still demands food stamps.

rbj on March 9, 2012 at 9:24 AM

Here’s a novel idea: If a company screws up, let it go bankrupt. If you aren’t smart enough to run a business, you should work for someone who does.

Turtle317 on March 9, 2012 at 9:25 AM

There has to be more to it than that. Why would they do something dumb? They must have been encouraged to do it for some real reason. I don’t believe their just bad at investing.

magicbeans on March 9, 2012 at 9:25 AM

The UAW is just hedging the 2012 elections. If the Dems lose this fall, they’ll have a place to retreat to in France.

OneArmPaperHanger on March 9, 2012 at 9:25 AM

If this is how their management runs things, how can they expect to succeed? Oh right, they’ll just come running to the government. Easy enough.

dernst2 on March 9, 2012 at 9:26 AM

Mon Dieu. Cherchez l’argent.

banzaibob on March 9, 2012 at 9:26 AM

One of the answers has to be that taxes must be dropped dramatically so that so much power doesn’t lie in DC to waste our money.

BuckeyeSam on March 9, 2012 at 9:27 AM

The UAW is just hedging the 2012 elections. If the Dems lose this fall, they’ll have a place to retreat to in France.

OneArmPaperHanger on March 9, 2012 at 9:25 AM

Historically speaking, a retreat to France doesn’t work out well. Just sayin’.

Ed Morrissey on March 9, 2012 at 9:28 AM

This stinks like the unshaved, unbathed French woman that sat next to me on the plane.

search4truth on March 9, 2012 at 9:29 AM

In other great news concerning Obama’s involvement in the auto business, Consumer Reports tested the Fisker Karma, the $110K plug-in hybrid that was built overseas with our taxpayer dollars. How did that go? Per Consumer Reports:

We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

TXUS on March 9, 2012 at 9:30 AM

will we keep track of this stuff when its time to run against “the one”. we could counter his tom hanks documented video sooooo easily yet I know we will do nothing of the sort

badswing on March 9, 2012 at 9:32 AM

Je ne sais pas

Deafdog on March 9, 2012 at 9:32 AM

Ed Morrissey on March 9, 2012 at 9:28 AM

But Ed, surely we have a Maginot Line to defend us!

Logus on March 9, 2012 at 9:34 AM

Merde.

Lightswitch on March 9, 2012 at 9:34 AM

Historically speaking, a retreat to France doesn’t work out well. Just sayin’.

Ed Morrissey on March 9, 2012 at 9:28 AM

(((rimshot)))

hawkdriver on March 9, 2012 at 9:35 AM

Tres mal.

Logus on March 9, 2012 at 9:35 AM

It’s no great surprise, therefore, that the leadership at GM would toss away money owed to taxpayers to buy a stake in another failing enterprise.

More likely GM is being used as a front by the US government in order to bail out Peugeot. Most likely Obama is getting something in return such as campaign donations or some other kind of favor.

Doomberg on March 9, 2012 at 9:37 AM

Wait, so now we’re surrendering to France?

Mon dieu!

ExUrbanKevin on March 9, 2012 at 9:41 AM

Historically speaking, a retreat to France doesn’t work out well. Just sayin’.

Ed Morrissey on March 9, 2012 at 9:28 AM

But it works fine if instead of physical retreat it is a financial retreat.

Follow the money. I smell barely legal laundering, and possibly that these funds come back to the U.S. before November in the form of kickbacks and under the table funding of a certain candidate.

The cheese eating surrender monkeys are just the crew to do it.

Difficultas_Est_Imperium on March 9, 2012 at 9:42 AM

Gift from Obama to Sarkozy…

albill on March 9, 2012 at 9:44 AM

So now we are bailing out the Frogs’ corrupt auto unions as well as our own ?

viking01 on March 9, 2012 at 9:44 AM

Ed, your French made my head hurt. A lot. Of course, I mean that in the nicest possible way.

Prufrock on March 9, 2012 at 9:47 AM

Incroyable. Incroyable. So you’re saying that Mitt was right–we should have just let ‘em go bankrupt. We’ll he speaks French–maybe he’ll sort it out next year. But until then we can all still rest soundly knowing that we helped build that “gorgeous” 3008 HYbrid 4 Diesel car everyone’s been raving about. Yep, raving about it. Uh, yeah. Oh, the excitement. Sacre bleu.

pacard33 on March 9, 2012 at 9:48 AM

The first GOP candidate to openly promise an appointment of special prosecutor to investigate Obama corruption will my attention, vote, and support. The crimes reaches such a heinous level, they make Santorum’s cross-waving zeal, Gingrich’s rampant adultery, Romney’s flip-flopping insincerity, and Ron Paul’s foreign-policy idiocy immaterial. All I want it at this point is to see Soetoro Jr. in handcuffs.

Archivarix on March 9, 2012 at 9:51 AM

Barack Obama est un SCOAMF

aquaviva on March 9, 2012 at 9:52 AM

The new Chevy Fromage will give “new car smell” an entirely different meaning.

viking01 on March 9, 2012 at 9:53 AM

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.

How do you say “lemon” in French? Citro(e)n!

It’s all about bailing out the unions, whether they’re in the US or France.

Tout a fait d’accord. French car companies are dominated by the CGT union, one of the last overtly Communist unions in Europe, who never got the message from Lech Walesa. The CGT can cripple France and bring the government to its knees, and doesn’t hesitate to flex its muscles. Government by the goons, for the goons!

Steve Z on March 9, 2012 at 9:55 AM

Delphi retiree’s and bondholders hardest hit!
Does that mean JugEars will be getting campaign money from France?

KOOLAID2 on March 9, 2012 at 9:56 AM

“This is what government bailouts buy. Instead of clearing the decks at GM and freeing their assets through normal bankruptcy so that more competent hands could put them to better use, the government intervention maintained the same status quo and funded it with taxpayer assets.” Ed

Ya nailed it.
The Peugot, especially the Citroen, has always been a POS.
Europeans, who really love their motor vehicles, have stayed away in droves. I wonder why? /sarc
Meanwhile, back at the AMERICAN Ranch, the investors and franchise owners who were literally robbed, still have no say – on par with we the freakin’ taxpayers! The UAW however, has been laughing all the way to the bank – where they get ATM cash for their drug and alcohol-fueled lunches.
~(Ä)~

Karl Magnus on March 9, 2012 at 9:57 AM

Le Bailoutte de Peugeot avec Le US Taxpayer Francs
posted at 9:15 am on March 9, 2012 by Ed Morrissey

Fantastically fractured Franglais.

Steve Z on March 9, 2012 at 9:59 AM

Tres Moutarde…..(old Dixieland tune)

elintex on March 9, 2012 at 9:59 AM

More likely GM is being used as a front by the US government in order to bail out Peugeot. Most likely Obama is getting something in return such as campaign donations or some other kind of favor.

Doomberg on March 9, 2012 at 9:37 AM

Yup, are they buying the IMF seat back from france or something like that?
Follow the money.

the_nile on March 9, 2012 at 10:00 AM

I went to prison for robbery…

Karmi on March 9, 2012 at 10:05 AM

Oh I’m happy for this bailout bcuz I’m so surrounded by Peugeots on the streets and in the parking lots as I drive around the suburbs of Chicago and I wouldn’t want the roads to be empty.

Je ne sais pas pourquoi.

stukinIL4now on March 9, 2012 at 10:06 AM

Get real! It costs billions to have a Marxist president PLUS his actions and plans need to be covered by a complicit media.
.
This is what we have until, January, 2013. Vote Republican and never be called a racist again.

ExpressoBold on March 9, 2012 at 10:06 AM

Seems the Treasury just sold a bunch of AIG stock @ $29. Needed $43 to break even.

marinetbryant on March 9, 2012 at 10:07 AM

http://www.peugeot.com/en/products/cars/ion.aspx

Peugeot is building a 100% electric ION and one look at this rolling coffin on American highways is scary. Maybe GM needs help with refining the DOLT?

angrycodgr on March 9, 2012 at 10:07 AM

Hmmmmmmmmmm……….think I’ll call GM this morning and ask for $500 million……..I’m developing an engine that runs on pond scum. I just need a little more money for research and development. And I’d really like to vacation in Hawaii this summer.

GarandFan on March 9, 2012 at 10:15 AM

Wow, the ION. It doesn’t even look like the headlights point in the right direction. I’ve seen Matchbox cars bigger than this thing…but for something really scary: THEIR CONCEPT ELECTRIC– http://www.peugeot.com/en/design/concepts-cars/concept-bb1.aspx

pacard33 on March 9, 2012 at 10:19 AM

I’m confused…doesn’t Critical Race Theory suggest that we must make European car companies die because they are institutional tools of white oppression?

JohnTant on March 9, 2012 at 10:20 AM

Le Bailoutte de Peugeot avec Le US Taxpayer Francs
posted at 9:15 am on March 9, 2012 by Ed Morrissey

Fantastically fractured Franglais.

Au contraire: It’s grammatically perfect Pepe Le Pew French.

And speaking of stinkers…

ExUrbanKevin on March 9, 2012 at 10:31 AM

What Government Motors did to Saturn is unforgivable. The original ION design likely was a dog forced onto Spring Hill, TN by a resentful Detroit. Resentful of the high quality of the 1990s Saturns and the excellent customer / dealer relationship of that company.

We had a Saturn SL2 for run city about and shopping use when the land yacht was impractical yet the Saturn more often than not became the go-to car. Practically no repairs, great mileage and sporty handling, plastic doors which were virtually un-dentable, a good value and no rush of panhandlers as when filling up the land yacht at gas stations.

viking01 on March 9, 2012 at 10:33 AM

The bondholders of GM should sue the govt. big time. How come Obama isn’t in jail for this little charade?

Christian Conservative on March 9, 2012 at 10:33 AM

What Government Motors did to Saturn is unforgivable. The original ION design likely was a dog forced onto Spring Hill, TN by a resentful Detroit. Resentful of the high quality of the 1990s Saturns and the excellent customer / dealer relationship of that company.

We had a Saturn SL2 for run city about and shopping use when the land yacht was impractical yet the Saturn more often than not became the go-to car. Practically no repairs, great mileage and sporty handling, plastic doors which were virtually un-dentable, a good value and no rush of panhandlers as when filling up the land yacht at gas stations.

viking01 on March 9, 2012 at 10:33 AM

Glad you liked yours. I bought a used SL2 and hated it with every fiber of my being. I celebrated the night we got rid of it.

Bitter Clinger on March 9, 2012 at 10:47 AM

Bitter Clinger on March 9, 2012 at 10:47 AM

All bets are off with anything bought used.

viking01 on March 9, 2012 at 10:51 AM

What Government Motors did to Saturn is unforgivable.

(snip)

viking01 on March 9, 2012 at 10:33 AM

You betcha! And now the gurus of Gunk are going overseas seeking quality and fuel mileage?
It boggles the mind.
And Gubmint Motors dumped Pontiac for BUICK? They’re only good for:
“Buying a Buick”
(just because their POS new GTO was under-powered?)
The Mind Doth Boggle

~(Ä)~

Karl Magnus on March 9, 2012 at 10:57 AM

Ron Paul wouldn’t stand for this!

kirkill on March 9, 2012 at 11:05 AM

Every week when I see my husbands pay stub and the amount of taxes they take out–and then read stories like this, I want to scream.

JennM111 on March 9, 2012 at 11:07 AM

Citroen = lemon. Figures that, everything that Oboobi invested in turned out to be lemons.

AH_C on March 9, 2012 at 11:12 AM

I agree with Doomberg: it’s money laundering for Barry and Co.

PattyJ on March 9, 2012 at 11:13 AM

This was all based on a promise of the French Socialist leader François Holland to allow himself to be photographed in a Chevy Volt during the upcoming campaign.

Annar on March 9, 2012 at 11:16 AM

Check the stock holdings of the proggie’s favorite Nazi stooge George Soros. I’ll bet he’s holding big Peugeot.

slickwillie2001 on March 9, 2012 at 11:34 AM

Follow the money! Who benefitted from this criminal act? How long are we the people gong to stand still while Odumba and his minions continue to screw us and rob the country of any available money?
Wake up and take back our country from The Kenyan half-breed bastard.

harvey1 on March 9, 2012 at 11:43 AM

Va te faire foutre, bâtards!

Resist We Much on March 9, 2012 at 11:49 AM

I went to prison for robbery…

Karmi on March 9, 2012 at 10:05 AM

Obviously, you weren’t working for the Obama administration.

Resist We Much on March 9, 2012 at 11:51 AM

Mais, bien sur.

juanito on March 9, 2012 at 12:04 PM

There has to be more to it than that. Why would they do something dumb? They must have been encouraged to do it for some real reason. I don’t believe their just bad at investing.

magicbeans on March 9, 2012 at 9:25 AM

Probably a private ‘understanding’ with the French government that a bailout will be forthcoming.

The French government has always subsidized PSA in one form or another.

CorporatePiggy on March 9, 2012 at 12:29 PM

Great! What next? We’re going to have to drive those ugly ass Citroens? Rather walk. But then, with the price of gas going higher, I just may have no choice.

rjulio on March 9, 2012 at 12:50 PM

It’s all about the three letter word J-O-B-S

eagleriverboy on March 9, 2012 at 12:53 PM

So let’s get this straight. As soon as GM got freed up a little from its own irrational production costs and could deal a little more effectively with its own labor rates, it took cash that it still owes taxpayers and sunk it into a car company whose problems in the exact same areas are as bad or worse as GM’s was before the bailout. What a great investment! Why, that sounds amazingly like the kind of investment expertise that cost taxpayers $535 million in Solyndra.

You’re too harsh. This only looks like a bad investment if the government fails to turn around and bail out GM again.

tom on March 9, 2012 at 1:02 PM

Gaackkk!

natasha333 on March 9, 2012 at 1:05 PM

Do you think Ed Whitacre knew where he was or what year it was when he made that ridiculous GM commercial saying they had ‘paid it back’?

bbhack on March 9, 2012 at 1:18 PM

Funny headline, Ed.

kunegetikos on March 9, 2012 at 1:25 PM

Do you think Ed Whitacre knew where he was or what year it was when he made that ridiculous GM commercial saying they had ‘paid it back’?

bbhack on March 9, 2012 at 1:18 PM

The first sign he’d lost it is that he took little Bammie’s job offer to run his car company.

slickwillie2001 on March 9, 2012 at 1:59 PM

Well, if it were any company but Peugeot, I might have a problem with this.

J.E. Dyer on March 9, 2012 at 3:02 PM

I am sure this buyout came with a guarantee that all former “Management and Executives” get ginormous bonuses they should have received had their company not gone bankrupt.

Ok…. I always thought it was just a cartoon land thing, but seriously I think steam just came out my ears!

Un-freaking believable. Have we seriously lost our right for protection against our own corrupt government?

I will say this once again… GM was bailed out with literally “ZERO” conditions. We as taxpayers are collectively cringing every time we look at our paycheck stubs (and see the deductions for taxes), our utilities (and see the taxes), our property (bonds and taxes), food purchases (taxes….. taxes…)

Crickets…… from the left.

ActinUpinTexas on March 9, 2012 at 3:26 PM

Fiat wanted GM as well.

Steve Eggleston on March 9, 2012 at 9:22 AM

and they ended up with Chrysler instead…

jimver on March 9, 2012 at 3:59 PM

Merde sainte!!

itsspideyman on March 9, 2012 at 4:22 PM

Citroens are good, but Peugeot makes awful cars. Maybe the plan is to get some of that “special sauce” that goes into a Peugeot to boost the attractiveness of the Chevy Volt? They could call the new model the Chevrolet Escargot.

virgo on March 10, 2012 at 1:33 PM

Those of you who are knocking the Citroen have obviously never owned one! I had a 1959 and a 1964 Citroen ID-19 and can state that they were the best cars I ever owned in my life and I am 82 years old! They were the most smoothest riding, most comfortable cars I ever drove. The only reason I got rid of them was because of the lack of service and lack of Dealers and I had no choice. Then Citroen pulled their cars out of the USA because of ridiculous rule of having a 5 MPH bumper that would give in a slow collision. Citroen wasn’t about to re-tool their front ends for the one percent of cars sold here! Too bad Americans couldn’t copy them!

Jersey Dan on March 10, 2012 at 1:59 PM