Courtesy of Mish.
French president François Hollande took two more swan dives into the pool of ludicrous actions in the past few days, first with car-maker Peugeot, quickly followed up with a guaranteed-to-fail proposal regarding search engine giant Google.
Government Motors French Style
Bloomberg reports France Guarantees Peugeot Debt in Exchange for Influence
The French government stepped in to rescue PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, by guaranteeing as much as 7 billion euros ($9 billion) in new bonds in exchange for greater influence over company strategy.
The state and workers will each receive a seat on the board of directors, and an outside committee will be set up with veto power over any “significant” changes in Peugeot’s operations, the French Finance Ministry said today.
“The state will want to see this business run more in the interest of government, rather than in the interest of the shareholders,” said Erich Hauser, a Credit Suisse analyst with a neutral rating on the shares. “The rising debt of Peugeot clearly shows that the core things are getting worse.”
I would like to point out how ridiculous this action is, but Pater Tenebrarum at the Acting Man blog beat me to it. He did a first-class job of making Hollande look foolish in his post Peugeot Bailed Out, More Trouble for the Banks.
The government and workers will receive board seats? Are they sure this is going to work out? We believe that this latest socialistic experiment is highly likely to turn into a bottomless pit for France’s tax payers.
Not surprisingly, competing car makers in other European countries are rather unhappy that an inefficient competitor is kept on artificial life support. They are perfectly right to complain. To keep companies that are not competitive artificially afloat harms the economy at large, but it is especially detrimental to more able companies in the same branch of industry.
However, the French government insists that it is actually not providing aid to Peugeot, and will therefore not run afoul of EU regulations that forbid such state aid. It is not giving aid, it is merely providing ‘support’.
Hang on, it gets even better. Guess who Peugeot is now in an alliance with to produce new cars consumers will – hopefully – want? You guessed it…. GM, the original ‘government motors’: Peugeot said today it’s making progress with GM on the alliance and the two have selected four vehicle projects to work on together.
“Google Law” Another Sign of Hollande’s Warped Mind
That piece by Tenebrarum is a tough act to follow. Nonetheless, please consider the Wall Street Journal article France Calls On Google to Settle Rift With Publishers
France will consider adopting legislation that would force Google Inc. GOOG to pay for the right to cite news articles online if the U.S. search giant fails to settle a long-running dispute with French news publishers over how to share advertising revenue, the office of France’s President François Hollande said on Monday.