Government "correcting" the "failures" of Capitalism

The supply and demand of goods and services are coordinated by the price system, which is the linchpin of a Capitalist economy.  Prices will rise or fall in order to balance supply and demand, this mechanism is mutually beneficial to both the producer and the consumer.  However, when government gets involved in the market "all bets are off".  As Veronique de Rugy and Philippe Locoude point out on Reason.com:

"The $700 billion-plus bailout bill-signed into law in response to recent investment bank collapses and lack of liquidity in the economy-will likely have a similar effect by distorting basic mechanisms that would allow markets to price securities accurately and efficiently."

Government intervention in the market only serves to distort the price system either directly or indirectly, which it has been doing for many years already.  The claim that the current financial crisis is proof that Capitalism has failed is fatally flawed because the US economy is not a Capitalistic system.  Sure, the US economy has property, prices and profits, but the Government does not allow them the function freely without its meddling interference.  I think a more accurate claim is that it is, in fact, government intervention in the economy that has failed.  

Everyday new government interventions in the economy are enacted to deal with the current crisis with the assumption that one of these interventions will eventually work.  Unfortunately the only thing this will lead to is further distortions in an already misdirected financial system that has been ravaged by one policy after another.  

The nasty unintended consequences of crony capitalism are to blame for the current situation, yet how does the government respond? To further strengthen crony capitalism through bailout packages.  Sounds like a winning formula!