Courtesy of Mish.
The incredibly inept policies of French president Francois Hollande are back in the news.
Hollande is following up on his proposal to not let companies fire workers, starting right now with French car maker Peugeot’s Plan to Cut 8,000 Jobs, Close Plant
An article in El Pais has better details of Hollande’s denial of reality than I have found elsewhere.
My friend Bran who lives in Spain offers this translation key paragraphs of Hollande’s “Moralization” of Political Life.
Hollande says “Peugeot’s plan is unacceptable and will be renegotiated.”
Hollande accused Peugeot owners of having delayed the restructuring plan with the excuse of not interfering in the election campaign and denied that the biggest problem are labor costs, as claimed.
“There is also a strategy, a market and some shareholders who have distributed a dividends rather than reinvest them,” he said.
The solution? “Have an independent expert examine the company, find a way out of the plan to close the plants, and create a strategic plan for the automotive industry and encourage the purchase of French products in France.”
Peugeot Has 51% Chance of Debt Default
Just to highlight how out of touch with reality Hollande is, please consider Peugeot Has 51% Chance of Debt Default, Credit Swaps Show
PSA Peugeot Citroen (UG) bond-insurance costs surged to a record, trading as if the French automaker has a 51 percent chance of defaulting as it cuts thousands of jobs and closes a plant.
Credit-default swaps on the carmaker’s debt jumped 50 basis points to an all-time high of 800 basis points at 4:30 p.m. in London, Bloomberg swaps prices show. The contracts have doubled since March and now signal a 51 percent probability of default within five years. Caroline Brugier-Corbiere, a spokeswoman for Peugeot, declined to comment.
Peugeot’s cash reserves allow it to “survive for one to two years,” said Xavier Caroen, a Zurich-based Kepler Capital Markets analyst who has a “hold” rating on the company. “We hope the French government lets them cut production and shut some sites in France, or they won’t have any earnings in the future,” Caroen said.
Hollande Turns on the Heat
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