As always, TB, you have missed the whole point. This has nothing to do with the failure of capitalism. The laws of economics are self evident and immutable. What this has to do with is the greed of capitalists. You can't see the difference because to you the free market is a vehicle for personal freedom and fulfillment and not just a mechanism for allocating resources. You've got too much emotional involvement in that vision to look at it clearly and dispassionately. You see any criticism of it as a personal attack.

The capital markets collapsed because they produce nothing, they shuffle paper, print IOUs. Their only legitimate function is to act as a buffer, a flywheel, and keep the flow of capital smooth and dependable, not intermittent. This is a good thing, but it is only a minor regulatory function, one which can easily become perverted when commandeered by skilled and unprincipled men. Capitalists saw capital markets as an end in themselves, as if they were generators of wealth. They generate nothing, they are just offices and computers and elitist overpaid New York preppies playing their corporate career games. They are not Randian Atlases, they are glorified riverboat gamblers.

There may a bit of truth in what you say about overregulation being a part of the problem, but if that was the entire case, why did we have a crash in 1929 when the lions of Wall Street had their own way about everything? Why have there been booms and busts in market economies since the Renaissance? When left to itself, finance capital is inherently unstable. It is not the same as the lonely entrepreneur making something out of nothing with nothing but the force of his will.

Finance capital has nothing to do the economics of extraction, manufacture, wholesaling and retailing. It is another level of abstraction altogether.