Stocks are plummeting. The economy is crashing. The world is ending. And — worst of all — banks have lost all confidence in each other and are refusing to lend money.

No, we’re not in any immediate peril. I’m just trying to take you back to 2008, at the height of the financial crisis that would have been assured armageddon if the government hadn’t swooped in to the rescue bankers.

Luckily for Wall Street, our typically impotent government was able to act remarkably quickly to pass a $700 billion bailout called TARP and create an array of other programs to help the financial system, in which the government had already spent $2.5 trillion and had commitments of $12.2 trillion through April 30, 2011, The New York Times reports.

And that goes without even mentioning (which is how they’d prefer it) the bailouts provided by the Federal Reserve, which, as of March of 2009, Bloomberg reports had committed $7.77 trillion in undisclosed funds to rescue the financial system — greater than half the value of America’s GDP that year.

The reasoning behind these unprecedented bailouts was that these financial institutions are so large and intricately tied into the economy that letting them go down could bring the entire economy crashing to the ground.

In other words, they’re too big to fail.

This preferential treatment of only the largest corporations raised some eyebrows, especially in the years following the most cataclysmic financial meltdown since the Great Depression, when not a single high-profile participant in the disaster was prosecuted by the Obama administration.

The latest and most notable evasion from the law by a large bank is HSBC, who, after committing fraud, cooking the books, laundering money for criminal organizations and even financing terrorists, escaped with little more than a slap on the wrist and a fine worth the equivalent of five weeks of profits for the company, with not a single individual having to pay even one cent out of their own pockets or serve one day of jail time.

Since there is no actual criminal action being taken against HSBC to prevent them from continuing to use the same business tactics, the fine can easily be factored into their books as simply the cost of doing business.

Recently, in remarks before the Senate Judiciary Committee in response to questions regarding HSBC, Attorney General Eric Holder said, “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy.”

That’s right, too big to fail also means too big to jail.

Anybody who is an advocate for free market capitalism should be appalled.

A free market is premised on a certain equality among competitors that is notably absent if the largest corporations are able to operate above the law and with no fear of failure thanks to the American taxpayers picking up the tab.

If a corporation — or individuals in an organization — breaks the law, they should be punished. If they’re “too big to jail,” maybe our retribution should be breaking up the company.

As for too big to fail, we should take a note from the 2012 EU framework for bank recovery and resolution, whose core premise is that you should let banks and financial institutions go under in as orderly a way as possible, with the financial burden assumed by creditors and depositors rather than taxpayers.

Or better yet, the next financial collapse we could try out Iceland’s approach in 2008, which was basically diametrically opposed to ours: throw rocks at parliament, prosecute the bankers and bail out the people rather than financial institutions and international creditors (and their economy is doing great!).

As Nobel prize-winning economist Joe Stiglitz noted, “What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system.”

Unfortunately for the youth in America, the failures of big business will come at taxpayer expense indefinitely unless we stand up and refuse to meekly accept too big to fail or jail.

Protecting companies from prosecution and providing trillions to bail out failed ones isn’t capitalism — that’s corporatism.

Big business can be just as anemic to free markets as big government.