The stock market is part of capitalism in the USA and it certainly should not be eliminated. It should however be regulated and not be given free reign with the assumption it will regulate itself being a free market. Failures like Alan Greenspan tried this approach with capitalism and it backfired spectacularly.
Alan Greenspan did not by any stretch, have a free-market ideology. While he spoke about free-markets often, he did not as Fed Chair, enact free-markets. He was extremely interventionist in his approach.
Further, the 'failure' was in fact caused by regulation. The government forced, and incentivised banks to make bad loans, which created the bubble. There was nothing capitalist or free-market about it.
Uh huh:
http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=0
Greenspan Admits Free Market Ideology Flawed
Is Greenspan himself admitting his free market ideology was flawed enough for you to admit you are full of shit?
No. Of course not. If you tell me that you believe in vegetarianism, and then I see you eating steak every day, then you have an ulcer, and get on TV and proclaim that your faith in vegetarianism was flawed...... that just makes you a hypocrite.
Greenspan did not practice what he preached. That's all there is to it. Doesn't matter what he said, when he didn't practice what he said.
Greenspan's actions didn't match his words. He was extreme interventionist. He interfered with the markets constantly. Even Joseph Stiglitz who was economic advisor to Bill Clinton in the 1990s, said this.
Analysis - The Alan Greenspan Era | The Warning | FRONTLINE | PBS
Greenspan, remember, always said that he was a believer in Ayn Rand, a believer in free market. Little bit curious for a central banker, because what is central banking? It's a massive intervention in the market, setting interest rates. So to me, that kind of perspective, to say, "I believe in free markets, but I'm going to accept the job at central banking," is a contradiction. You almost have to be schizophrenic.
And he was schizophrenic. I believe in free-markets, so I'm going to take a massive government interventionist position, and screw with markets throughout the entire country. Which is exactly what he did.
So when the system blew up and Greenspan, who hasn't practiced a free-market in the last 20 years, says "his free market ideology was flawed".... that has zero credibility. You have to practice a free-market first, before you can claim it is flawed or doesn't work.