Thread: Obama is kicking ass!

And then there's this nugget that just hit the news

http://abcnews.go.com/blogs/politics...ut-for-france/

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.

Originally Posted by Alundil

And then there's this nugget that just hit the news

http://abcnews.go.com/blogs/politics...ut-for-france/

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.

This is the downside of wild speculation posing as journalism.

I'm not going to argue that this is a good deal for GM, but a good deal can look exactly like this - an old, respected company; solid brand recognition and loyalty; deep and broad distribution... but having a few rough years due to a global recession/depression.

The genius investments/acquisitions always look like basket cases at that moment.

This may be a really stupid deal, but I don't know how anyone outside the business would be able to know that.

Cheers,


AetheLove

You're possibly correct Ae, however, it still looks the way it looks. Is their (Peugot) market share on the way up or the way down? I don't know. Is this GMs attempt to overcome, longterm, the Volt issue and it's lack of impact? Perhaps. But if that were the case, the losses of the the Volt program would have to be docked against any gains that this deal might bring about. Might wind up being a wash.

GM Announces Alliance with PSA Peugeot-Citroën

Analyst reaction to the announcement has been decidedly mixed, and rightfully so—it is somewhat perplexing why GM would want to enter into this kind of a deal with PSA, which it quite frankly does not need. GM's bigger problem, and the one most analysts had hoped to hear information about in the company's quest to right its European ship, is how its Opel unit plans to cut structural costs, deal with overcapacity, and resolve sky-high German labour costs. The GM-PSA alliance may provide some interesting benefits for scale of commodities purchasing, but GM is the biggest automaker in the world—scale is not nearly as much of a problem for it as it is for the much smaller PSA, which is the world's eighth largest automaker by volume. The alliance will not address either company's overcapacity, or the need to shutter plants and rationalise production capacity to meet flagging European demand.
...
Certainly, the deal seems to be more advantageous for PSA than it is for GM. However, one possible suggestion as to why GM would enter into this contract concerns Fiat-Chrysler. Fiat-Chrysler CEO Sergio Marchionne stated just yesterday, as news was breaking about the GM-PSA alliance, that he would also like to pursue a partnership with Peugeot. The two companies already collaborate on light commercial vehicles (LCVs). Fiat-Chrysler would also very much like help in accessing the Chinese market, in which Peugeot has been present for over 20 years. There are possible synergies between Fiat-Chrysler and Peugeot in South America as well, making the Italian-US conglomerate seem like a better fit for Peugeot than GM. This could explain GM's move—it may simply be a move to deprive Fiat of a potential alliance that it would really like to have. In the short term, however, this alliance does little to address the most pressing problems facing either GM or PSA, and the reaction to the announcement accurately reflects that.

That was more along the lines of what I was getting at and less reliance on "wild speculation posing as journalism."

Originally Posted by Alundil

That was more along the lines of what I was getting at and less reliance on "wild speculation posing as journalism."

Well that at least sounds less like BS. The original started with:

Attention U.S. taxpayers

... and ended with:

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

True or not, that's the language of someone with an axe to grind not of someone who is an industry analyst. Either way, I won't deny that deals like this are excellent fodder for any discussion about direct gov't involvement in business.

Cheers,


AetheLove

Yeah - I don't write the articles. I just get to analyze many of them.

what are you? an article doctor?