I hadn’t heard about that — did GM bonds become worthless when GM was bailed out? I just figured it was the GM bankruptcy that made them worthless.
GM never went bankrupt.
The GM bonds were worth about 60 cents on the dollar before the Obama GM bailout. Afterwards, they were paid 10 cents on the dollar, as GM lost another 25 billion or so in the next 3 months, and the US claimed that it and the UAW had priority over GM bondholders.
Bankruptcy law would have put the UAW and the US behind the bondholders, as UAW was a general creditor (as well as the entity that bankrupted GM, along with gutless management) and the US could not legally get in front of senior creditors (except for taxes, which were not an issue, since GM had no taxable income).
Short version: GM bondholders were robbed. Under law, they should have received 100 percent of the company, UAW and Obama zero. Last I checked, theft under color of law is still legally theft.