Friday, March 9, 2012

Attention U.S. taxpayers: $400 million tax dollars to bail out a French car company


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.


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