McCain denounces “fat cats.” Obama fumes about “predatory lending” and promises to “punish those who set this fire.” It’s easier to heap polemics on bankers than to chastise sinners in the hands of an angry market—especially when you’re angling for their votes. But mortgage-backed securities only become toxic if borrowers break their word. It’s bad business to leverage 30 to 1, yet for every unscrupulous CEO gold-plating his Gulfstream, thousands of Americans were signing on the line then not making good.

Last night, following the failure of the bailout bill, champagne flowed at free-market think tanks. Talk radio hailed people power for turning the socialist tide. But this was no triumph of principle or broad resolve to take face consequences squarely. Americans were persuaded that Wall Street was getting favors they weren’t. The same gluttonous impulse that convinced us that everyone is entitled to a Sub-Zero refrigerator overlooking miles of granite countertops was making sure some pinstriped suit didn’t get a bigger cut. Anyone who thought Americans were drawing in government’s reins was projecting a fantasy.

(Memo to the cork poppers: We’ll still get a bailout bill—and it will be worse than the first version. Dems will lard in goodies for their left wing or the GOP will slash the capital gains tax to lure those few dollars left in American savings accounts into AIG stock.)

Bottom line: this is as much a Main Street crisis as a Wall Street one. And the same citizens that conservatives are praising for restraining the House aren’t taking responsibility for living under the delusion that they’d earned easy money or that paper gains made them rich.

In a recent issue, the New Yorker ran a piece about how the Chinese people experienced the Olympics. The author relates that the Communist state barricaded whole sections of the country and allowed drivers to use their cars only on designated days. Yet the Chinese cooperated, apparently perceiving no intrusion. A memorable exchange revealed just how easily the population is sated. The writer had invited a local friend to join him at a rowing event—

Wei Ziqi called the night before with a question about raincoats. “Do they give them out free?” he asked.

“I don’t think so,” I said. “Why would they do that?”

“I was watching on TV,” he said. “Everybody in the stands has the same color raincoat.”

I said that the coats were probably being sold at venues, but Wei Ziqi was shrewder.

“You’re not allowed to use umbrellas, right?”

This was true, because of security concerns.

“Well, if they don’t let people use umbrellas,” he said, “then maybe they give out raincoats.”

I didn’t quite understand the logic, but the following day, after we passed through security at the Shunyi Olympic Rowing-Canoeing Park, about twenty miles outside Beijing, the first think we saw was a woman handing out cheap plastic ponchos. It was like that at every event—the organizers knew their crowd. The Chinese love freebies, and there were always volunteers distributing something: plastic flags, cheap cardboard binoculars, fans with the McDonald’s logo. … There was a brief rainburst, and the family sat happily in their free ponchos.

We’re not so far away.