The problem as I see it is a lightly regulated economy has natural checks and balances in place that deal with "undesireable" behavior. Government intervention, like massive bailouts of financial institutions and auto manufacturers, eliminates these checks and balances and produces different disincentives which cause institutions to perform other "undesireable" behaviors.
When you consider the home buyers who purchased homes at (well) above average prices, home speculaters and realtors who drove those prices well above average levels, mortgage brokers and banks who approved loans which were doomed to fail, investors who bought these doomed mortgages, home builders who continued to build houses even though unsold inventory was near record highs, and people who used their imaginary home-equity as a piggy bank to buy things they don't need, it becomes obvious that most people need to be punished for their (amazingly) risky behavior in order to provice the moral hazard for future investors.
The government's actions are to simply return everyone to the status quo and continue with this (amazingly) risky behavior
