Hate to break it to you but if it wasn't for the bail-outs the economy, as we know it, wouldn't exist. Like it or not almost the entire economy is operating with a purchase on credit and working a JIT (Just In Time) supply system. If the banks would have folded the entire credit system would have folded.

No major business, and very few small ones, maintain enough cash on hand to run for more than a few days. Which means that if the credit system tanks all the grocery stores close their doors in three days. When the gas station runs out of gas they can't order more.

Contractors typically make payroll by maintaining a loan that tides them over until the contract pays off, either quarterly or upon a set stage of completion. If the credit system fails the loans either come due immediately or, if collateral covers them, they complete their term but cannot be renewed pending more collateral. This is where you see small time contractors selling off their personal assets to cover payroll or selling off the tools used to do business.

In essence the entire US economy would have frozen solid. Estimates vary from 25% to 75% unemployment inside of a month.

Contemplating collapse:
http://cluborlov.blogspot.com/2008/02/five-stages-of-collapse.html

Of course if the economy locks up the guys who got us into this would suffer. They would shed a bitter tear as they flew off to Aruba on their Gulfstream. Yes, they would lose their five homes and most of their physical assets but most of their money is off shore.

What your missing here is that the nation is like a ship. No matter how incompetent and feckless the passengers in first class may be they will always get a seat in the lifeboats. You and I, down here in steerage, are the first to get wet and drown. Sure I could live off of stored food, wild game and danelion greens but it is a misserable life. I'm getting too old to think roughing it is fun. And there is no guarantee we rebuild. There are conditions that can slide and just keep on sliding.

I would love to see the financial geniuses who got us here suffer. Allowing the ship to sink so those who are to blame are punished sounds good. A noble act to maintain justice and accountability. But are you really willing to drown so that the owners of JPMorgan have a bad day?

They set up the system so that they couldn't lose. In theory it shouldn't be possible for credit and market system to fail. Greenspan and all the other Randians had accepted on faith that a free market would always self-correct to optimize resource allocations. This was based on the idea that investors are rational actors. That people would always do the right thing with their own money. That people can see through scams and bad actors would be shut down before they could seriously effect the markets.

The thing is that, as anyone following cognitive sciences knows, people are not rational actors. That the wisdom of crowds, and the wisdom of markets, works fine right up until it fails to work at all.

Of course the question comes around to why these financial shenanigans have so much effect. Used to be, back in the 60s, we had a fairly diversified economy. If the financial sector failed we could ride out the storm working in manufacturing, or farming or industry. It would have worked that way except that in the mid and late 70s we started to consolidate. They aren't separate any more. They are all combined into huge corporations and all interactions are controlled by finance. Finance is better than a third of the national economy.

Free markets sound good but even if they work like a Randian dream there has to be actual competition. Walk into the local big box store and you see tooth and nail competition, right?:

"In the health aisle, the vast array of toothpaste options on display is mostly the work of two companies: Colgate-Palmolive and Procter & Gamble, which split nearly 70 percent of the U.S. market and control even such seemingly independent brands as Tom’s of Maine. And in many stores the competition between most brands is mostly choreographed anyway. Under a system known as "category management," retailers like Wal-Mart and their largest suppliers openly cooperate in determining everything from price to product placement."

Read about consolidation and the effects:
http://www.washingtonmonthly.com/features/2010/1003.lynn-longman.html