The market failure was the bailout, not the drop in equities, loss of confidence in the banks, etc.
The market was doing what it does. The government intervened to circumvent the market responding to new information.
What the market learned is that the government was willing to bail them out when they don't practice sound business.
Originally Posted By: mbacfp
SonoofJoe. 2008 was hardly a "free market" failure. Federal reserve allowed/approved unsound bank lending practices and banks innovated investments that ultimately caused major issues when they failed. Government causes these problems then creates new laws to fix, etc., etc. Then taxpayers bailout companies and no one learns their lession...hardly free markets. At least in free market situations poor companies don't survive to live another day to make more poor decisions. We have a crony capitalist system. I unfortunately lived through this on the front lines...you learn quickly don't fight the Fed or the system investment wise but get out before it comes crashing down.