The famous school of economics at the University of Chicago led by the late Milton Friedman spread its market fundamentalism worldwide. Greed, selfishness, individualism and short-termism were conflated with freedom and democracy and elevated to the status of moral philosophy. The fatal flaws of this ideology fueled the reckless risk-taking, greed and arrogance that led to Wall Street's downfall. Henry Paulson's $700 billion bailout plan is probably unconstitutional. The Congress needs to stay in session and continue its hearings to make sure that this amount will not be swallowed into the same black hole as the earlier bailouts. Understandably, the furious reaction from taxpayers is suspicion, and more fear and loathing of Wall Street, whose disgraced portfolio managers will be the ones to manage this $700 billion!

The Chicago Boys and their clones stormed through Latin America in the 1950s, led the triumphant forces of capitalism to victory in the Cold War and sparked the Reagan and Thatcher era and the Washington Consensus of deregulation, privatization driving today's form of economic globalization. The roots of market fundamentalism, which stem from Adam Smith's Wealth of Nations (1776) while ignoring his Theory of Moral Sentiments (1759, 1790) and from the Austrian School of Ludwig Von Mises, Friedrich Hayek and others, became the ideological basis of U.S. libertarianism and the neoconservatives' revival in the George W. Bush administration.

Elevating individual freedom and free markets to a higher moral status than community responsibility and the role of government helped destroy the excesses of communism and Stalinism. Yet, this lure of "rugged individualism," making money in markets free of regulation, also drove the narrow calculus of Milton Friedman's famous single bottom line: the only purpose of private enterprise and corporations is to make as much money as possible for shareholders. Academics created "free market" curricula, and business schools reaped grants from corporations and from conservative and gullible liberal foundations. Media joined in promoting the "animal spirits" of individual entrepreneurs, the glorification of business leaders and the "wealth" of Wall Street raiders, hedge fund titans and private equity kings. Money was seen as the only form of wealth.

The computer revolution which automated trading on Wall Street and linked financial markets worldwide played a key role in the excesses of short-termism, now measured not only quarterly but in nano-seconds. In September, split-second trading and short-selling of United Airlines stock on a false rumor lost the company $1 billion in its price in 12 seconds. Now the short-sellers are turning on each other, shorting the financial firms at Wall Street's core. The "free market" ideology prevented regulation of today's global casino -- even as finance ministers fretted about the need for a global financial architecture after each crisis. The Asian meltdown of 1997-8 was followed by the Russian default and the blow-up of the Long Term Capital Management hedge fund in1998, the Argentine default of 2002 to the 2008 bailouts of Bear Stearns, Fannie Mae and Freddie Mac, the demise of Lehman Brothers and the rescues of Merrill Lynch and AIG -- costing the Fed $900 billion so far.

Calls grow louder for re-regulation, cracking down on outsize executive pay, golden parachutes, lobbying and campaign contributions. The laissez-faire free markets turned into today's free for all. Stock market specialists, whose role is to assure orderly markets, began manipulating asset prices by shorting stocks, as reported by Richard Wendling at Seemingly the clean-up task in the U.S.A will be left to the next president. Both Obama and McCain expressed outrage at Fannie and Freddie's reckless risk-taking and influence peddling -- even though both took contributions and were deeply-involved with favoring these two housing giants which hold over $5 trillion of U.S. mortgages. Both candidates blame Wall Street's recklessness and greed while faulting regulators asleep at the switch.

Automated program trading is now 50 percent of all market activity. "Value-at-risk" and other mathematical models created by all those academic "quants" are still proving inaccurate while all the financial "innovations" from sub-prime mortgages hailed by Federal Reserve Chairman Alan Greenspan, to the securitization of debt in CDOs, SIVs, CDSs are revealed as little more than Ponzi schemes. Shockingly, pension funds, charitable foundations and university endowments played the same games, competing for higher returns. They piled into hedge funds, oil and commodity speculating, risking their beneficiaries' retirement incomes in real estate and private equity deals in spite of their special status as universal owners (i.e., such large funds own shares in most corporations, so it is foolish to try pitting them against each other for short-term gains).

We now know that capital markets built on individual and corporate self-aggrandizement, unrealistic profit targets, competition in seeking these "alpha" returns, lack of transparency, dishonesty and greed are bound to fail. We know that narrowly-calculated single bottom line, "externalizing" social and environmental risks and costs to others, cannot address these impacts it creates: from pollution and hazardous waste to global climate change. The illusory "wealth" booked in this faulty economics is being exposed, and no amount of bailing from sovereign wealth funds or central banks' money creation can keep this global fiat money bubble inflated.

Chicago School economists have been de-frocked in prime time as market players, including AIG with its $85 billon in Fed loans, and now General Motors and Ford line up to be bailed out by taxpayers. True believers in "free markets" and tax cuts to "starve government" are red-faced as those despised governments now come to the rescue. The new mantra is that the titans of the free market are "too big to fail" and so their losses and risks must be socialized. Yet in spite of multi-hundred-billion dollar liabilities to taxpayers, the bad news keeps on coming. Official statistics are fudged to conceal the bad news: for example, the U.S. Commerce Department's estimate of 3.3 percent growth of GDP in the second quarter of 2008, if corrected for the real 5.6 percent inflation rate, would have been negative, while the average 6.1 percent unemployment rate still concealed millions of workers dropped from the rolls as "discouraged" (