Monday, April 22, 2013

French Govt buys from and owns the French defense industry

Long article about this in Aviation Week.  The French government owns sizable chunks of stock in the big French defense firms like Dassault, Thales, and Sagam.  Which puts the French in a confusing spot when they are negotiating contracts with the industry.  There is pressure on the government to sign contracts generous to the contractors because the extra money will make the government's stock holdings worth more.  Which does French tax payers no good at all. 
  Apparently the French government fears  their companies will merge with companies in Germany and Britain, which will make it hard for the French to build up a French built armed force to fight a war with Germany or Britain.  So the French use their stock holdings to put a veto on international mergers.
   Aviation Week, an industry organ, is all in favor of defense industry mergers, it gives the merged company more pricing power.  As in when we merge with all the competitors, we can charge as much as we like, 'cause there is nowhere else to go.
   Fortunately the US government doesn't own stock in defense contractors. 

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