It's not capitalism that failed - it's the government's regulatory interference!
The Federal Reserve, by setting a single interest rate for the entire economy, destroys local market signals. (What you want is a locally adjusted rates to reflect natural cycles in decoupled local economies - this is what happens if you don't regulate centrally.)
The government's monopoly on the issuance of currency is important, too. And what about the SEC that went after innocent people like Martha Stewart and ImClone founder Sam Waksal, while blind to actual crooks such as Bernard Madoff? What about the federally-owned Fannie Mae and Freddie Mac? They were to a large extent responsible for the housing crisis. They have so much of the market, and it's government regulation and backing that gave it to them.
On a national scale, private business, if devoid of these corrupting government influences, would not fail all at once, nor would it fail with such lasting severity as we've seen in the last century. It's notable that all of the regulatory bodies (and a great many more that I did not mention) were created in the last 100 years to "stabilize" the market - but it doesn't take great genius to see that all they have accomplished is to take little local pockets of boom/bust (which add up to overall growth and stability on a national scale), and pack them into huge booms and busts that cause much longer and deeper cycles that you can't escape from as easily by moving to a new city.
And don't forget that this sort of centralization is important for marshaling resources necessary to run an expansionist empire (think about the economic policies in America during the two world wars, and the American empire that resulted).
To help differentiate between the "capitalism" the article smears (what should be called a mixed economy - some capitalism, some regulation), and actual capitalism, see http://www.capitalism.org/.
You mean to say there would be unintended consequences to the Fed dropping interest rates after 9/11 to below market rates and cranking up the printing press? No...
It was not Capitalism or Government Regulations that caused the current unpleasantness.
Capitalism didn't fail. Anymore than Socialism, or any other economic -ism. When nations allocate resources in a foolish manner, they fritter away their resources. End of story.
No need to 'restructure' capitalism so that it doesn't happen again. Capitalism is fine. Just don't fritter away your resources.
A good example of frittering away resources is diverting roughly 30% of your nation's personal income EVERY YEAR to one sector, Financial Services, in the form of 'guaranteed bonuses'. BTW, these people are managing roughly 20% of our nation's annual personal income. About 20% goes in through mutual funds and 401ks and the like, and for managing it, we pay them 30%. Anyone other than me see a problem here?
Another example, starting wars in intractable parts of the world to go after a man whose stated aim is to get us to start a war in an intractable part of the world. And thereby bankrupt us.
I heard the other day that the United States and Israel are thinking about placing 'a security umbrella over the Middle East'. I am not a general, but 'security umbrella over the Middle East' sounds pricey to me.
Or how about allocating more resources to Real Estate than to new technology development. That's a good example of foolishness.
BTW - Fannie and Freddie were not government owned, or even government backed. The entity I believe you are talking about is Ginnie Mae, which takes care of HUD housing, housing for Native Americans and handles housing for our nation's Military Veterans. Basically, Ginnie handles all of the sub prime people. Further . . . and are you ready for this? Ginnie is solvent! The only problems it has, it acquired in clumsy government attempts to save Fannie and Freddie. 'Give us all of your money, we need to save Fannie and Freddie who went private, acted foolishly and fell flat on their faces.' That's basically what they told poor little Ginnie. Foolishness.
Additionally, Ginnie was EXPLICITLY backed, whereas Fannie and Freddie were IMPLICITLY backed. Which brings me to another foolish practice, letting private corporations encourage the belief on the part of the general populace that they are backed by the US government. There should be no such thing as implicit backing, that is fraud, plain and simple.
In summary, they say no matter how far a jackass travels he will not come back a horse. Foolishness is the cause of our problems, and no matter what structure you place a fool in, he will still be a fool.
Capitalism may have problems, or even create them. Government Regulations may have problems, or even create them. But those are not the problems that got us to where we are today. Foolishness did. The abiding belief that money can create money. The belief that ANY economic system can give you something for nothing, is foolish.
We can stay with Capitalism. We can even submit to government regulation. But by all means we must invest our money wisely.
Realize that in the future you may have to do real work. You may need to produce real things. You may need to sell them to real people, for real money. The whole stock market and real estate thing may not work for you anymore the way it used to. That is the economy, or the market, or whatever you want to call it, doing what it is supposed to do!
We are in a different stage of Capitalism. Stock markets may work beautifully for today's Chinese citizens, for today's American's . . . not so much. Don't whine about it, or try to set things up so that they work a while longer. This is Capitalism, the market is showing us the way, we just don't like the road ahead.
"The Federal Reserve System [...] was created in 1913 by the enactment of the Federal Reserve Act, largely as a response to a series of financial panics or bank runs, particularly a severe panic in 1907."
http://en.wikipedia.org/wiki/Federal_Reserve_System
So telling us that the Fed is the reason for the recent panic is ridiculous. Capitalism by itself is highly destructive. Without state interference you would have a famine in the US by now.
You know what is the problem "efficient market" capitalism?
It is logical enough to make people with IQ 100-110 attracted and interested and even fascinated by it, but it is completely devoid of theoretic basis - the only basic premise is Adam Smith's invisible hand; and that is disturbing for smarter people. Like Stiglits often says - hand is invisible because it is not.
The Federal Reserve, by setting a single interest rate for the entire economy, destroys local market signals. (What you want is a locally adjusted rates to reflect natural cycles in decoupled local economies - this is what happens if you don't regulate centrally.)
The government's monopoly on the issuance of currency is important, too. And what about the SEC that went after innocent people like Martha Stewart and ImClone founder Sam Waksal, while blind to actual crooks such as Bernard Madoff? What about the federally-owned Fannie Mae and Freddie Mac? They were to a large extent responsible for the housing crisis. They have so much of the market, and it's government regulation and backing that gave it to them.
On a national scale, private business, if devoid of these corrupting government influences, would not fail all at once, nor would it fail with such lasting severity as we've seen in the last century. It's notable that all of the regulatory bodies (and a great many more that I did not mention) were created in the last 100 years to "stabilize" the market - but it doesn't take great genius to see that all they have accomplished is to take little local pockets of boom/bust (which add up to overall growth and stability on a national scale), and pack them into huge booms and busts that cause much longer and deeper cycles that you can't escape from as easily by moving to a new city.
And don't forget that this sort of centralization is important for marshaling resources necessary to run an expansionist empire (think about the economic policies in America during the two world wars, and the American empire that resulted).
To help differentiate between the "capitalism" the article smears (what should be called a mixed economy - some capitalism, some regulation), and actual capitalism, see http://www.capitalism.org/.