The Last Response To Those Who Blame Free Markets

Will Wilkinson puts it rather succinctly in the comments section of his blog:

The worst we have learned in the present case is that sometimes the hesitancy to further regulate markets that have grown out of a set of dangerously ill-conceived policies can make things worse.

The key there would be "markets that have grown out of dangerously ill-conceived policies." Or in other words, the market as it exists today and as it existed 10, 20, 30 years ago and more, bears the mark of all the past policies and regulations that influenced the market, whether by design or not. While financial markets tend to be over most people's heads (mine included), an apt comparison would be health care, where our system of large HMO's and employer provided insurance is quite obviously the result of years of government policy.

Additionally, I'd note that it's intellectually dishonest to look at a complicated market and regulatory structure and say all the blame lies with X regulations that were repealed and no blame lies with Y regulations that were passed in the meantime.