Does free market mean privatise profits and socialise losses?

Politicians, financial experts, and economists from the developed world (and even our own self proclaimed God of capital markets from CNBC TV18) always preach us about free markets. However, what they practise is exactly oposite. On more than one occassion US government has intervened in the form of bail outs of large financial institutions instead of letting them fail:
- JPMorgan, Fed come to rescue of Bear Stearns
- U.S. seizes Fannie and Freddie
- Fed bails out AIG with $85B loan

Are "free markets" a myth and just an impractical theroy? I was wondering whether contrary to the generally pereceived notion that Capitalism is a superior economic theory (compared to socialism or communism), whether there is any single good or bad economic theory in absolute terms. The recent events in US suggest that actions of the US government were not in line with the principles of free market. Government intervened and supported financial institutions at the cost of tax payers' money instead of letting the financial institutions on the wrong side of the market fail. Those who have suffered in this mess are gullible retail investors, employees of failed institutions, and taxpayers. While top managements, credit rating agnecies, and regulators have been spared. Some US analysts and economists are pointing out that US has manipulated its key indices to wrongly reflect the health of the economy. Read this: Wall Street: The dark theory

Socialism and Communism are considered to be inferiror to Capitalism. But may be they are as good as capitalism and the problem was with their faulty implementation just as in this case. My question is whether is it a wise governance and economics for developing countries such as India to blindly follow the free market economy in absolute terms and completely close doors on other economic theories.