Financial Market "Failure"

I saw a lovely quote today, typical of many similar comments in the media recently, with respect to the housing collapse in the US:

Government intervention may be needed, too, if the free market system doesn't work quick enough

There seems to be this feeling out there that when the market is increasing peoples wealth it is "working", but when wealth is collapsing the market is NOT working. With my very limited understanding of free markets as being the sum total of the collective actions of individuals acting in their own interests, isn't this all perfectly normal ? This market, i.e., the people collectively acting out of self-interest, created this situation - blaming the problem on corporations that were spawned from your own desire for wealth is childish to say the least. This is the downside of the risk you took - if you believed them when they told you that there was no risk, it's your own silly fault.

Surely to try to rescue this situation with government intervention is to say that free markets are a bad thing. If left to it's own devices, there will be pain, yes, but the market will eventually stabilise and life will go on. Regardless, it doesn't look like any rescue plan is going to fix this one, so there may be no alternative other than waiting it out.