When the boss starts to make obviously bad decisions like this, it is a sign that you should be looking for a new job before the company folds. Get out now while you are still on good terms. Keep your job while you look for the new one, as it will make it easier to get the new one if you are employed.
Be honest in your interviews about why you want to leave your current company, but don't make a big thing about being resentful. It is understandable that the situation makes you feel bad, but you have to focus on the positive things that you can do, not the negative things that are done around you.
I'm sorry that you have this problem, but work is a transient thing and not worth getting emotional about. Save your emotions for something important, like family and friends.
You've already had some problems with another employee there, and now you have this new one. The supervision there seems to be lacking in ability to hire and control their employees, and maybe they will get better, but their behavior seems like a crap shoot when it comes to making the right decisions.