No doubt we will continue to hear that "market failure" is to blame for the current crisis. Market failure is a ridiculous concept in economics used to justify government intervention in the economy. It is generally applied whenever somewhat doesn't like some aspect of reality and wishes that it were different.
If a football team beats your favorite team, would you describe this as a "sports failure" in the sense that somehow "sports" has an inherent flaw which resulted in your teams bad performance? Or, would you take the score as a signal that something is wrong with your team and it needs to improve?
The meltdown in the economy and particularly the automakers is, in fact, a glaring example of market success. When a company fails to make a profit and its stock plummets and no one will lend it money, it is the markets way of saying "stop what you are doing." If companies continue to produce products that no one wishes to buy would this be an example of market success or market failure? If the economy falters due to the implosion of a phony government credit expansion coupled with government policies that encouraged stupid investments is this an example of market success or market failure?
If an x-ray machine detects a tumor, would this be an example of x-ray success or x-ray failure? Modern intellectuals and politicians would consider this to be x-ray failure and tell the patient to continue doing what he is doing and further recommend expropriating money from healthy patients to fund the poor cancerous patient's lifestyle. This, they declare, would be a justifiable intervention to remedy the x-ray's failure.