I am not saying holders of common stockholders would have been have been better off with or without government intervention. I believe it would have made little difference. The purpose of the government intervention was not to save the stock or bond holders. It was to prevent the country from sinking into a deeper recession by save the jobs of hundreds of thousands of workers in GM plants, offices, dealerships, and suppliers. So far it has been quite successful.What makes you think things would have been better for stock and bond holders if the GM would have gone through bankruptcy? I have owned stock in several companies that went through bankruptcy. Stock holders usually get nothing are only a few pennies a share. Bonds of manufacturing companies are usually secured by fixed assets such as plants, equipment, supplies, and inventory which rarely bring a good price.
Looking back, critics make the assumption that there would have been a reorganization and the automaker would have been saved. At the time the government stepped in there were no buyers. GM was headed toward liquidation of assets. The vultures were gathering to scoop up the remnants of GM at bargain prices. There is of course no way of knowing what would have actually occurred if the government had not saved GM. But one thing is for sure. It would have been a hell of a gamble. A gamble the country could ill afford to take.
You are arguing that instead of getting nothing, which they did under Obama's version of bankruptcy, they would only have received a few pennies on the dollar under a court monitored bankruptcy, and then trying to tell me they would have been worse off? Do you live in the same universe rdean does? Even if they had only a penny on the dollar, that would have been better than nothing.
Regardless of the ultimate outcome of that bankruptcy, it would have actually followed legal precedent, and protected the people that should be protected first, the actual investors, instead of the source of the problem, the unions. If, as you think, this would have resulted in a massive disruption of the economy and the auto industry, the government could easily have legally injected capital into the process.
Instead, they elected to disrupt laws, and make all future investments uncertain, because the government now can step in and save any company they think is too big too fail, and ignore the law while doing so. As an investor yourself you know that this will result in investors demanding more compensation for the increased risk. this will have a negative overall affect on the economy, and that can be seen today as companies, and individuals, with capital, prefer to sit on it rather than risk loosing it without knowing exactly what the dangers are.
Perhaps you shouldn't blindly assume you are smarter than everyone else.