How to deal with a BAD Supervisor.?Pls Advice..URGENT HELP NEEDED?

I am writing coz of desperation .Our supervisor has been picking on one of my fellow colleague almost everyday. But eversince this supervisor joined in and took charge of our dept. four months ago, our morales are extremely down. The whole team was down. He starts picking on one of my fellow colleague almost everyday.He would makes bad remarks(calling him names) in front of customers.HE was constantly scoulded in front of customers for small trival matters.Once, he claims he's doing this to him is for his own good.(But, he is a gd worker) Our supervisor has the habit of saying he's useless, numskull, idiot and no "brainer" Yes, he did made a mistake one time but our supervisor just like picking on him. Currently, our morales are extremely low and we felt bad abt our colleague cos apart from the past mistake,he did ok in his job. We have had brought up the matter to our manageress but apparently nothing has been done. Last month, he wrote a memo that whenever we sees him walks by, he expected to be greeted. Just last week, we were so busy attending to our customers and he waked passed us. later that day, all of us were summoned to his office. all four of us were scoulded and interrogated on why he wasnt being greetd when he walked by.He DEMANDED an apology from each one of us. One of my colleague tried to reason out with him and he was fired on the spot. Now only three of us left in our dept. We did checked with our manageress but she said reason given to her was my colleague was rude to him which was totally untrue. He lost his rice bowl (he is the only sole bread winner of his family) and now everyone of us feared the same will happen to us. Our supervsior has no respect for us,calling us "bunch of idiots". He is still picking on him on daily basis and we felt so HELPLESS. We are really lost and pls advice and help us what is the best thing to do without losing our rice bowls....Can anyone be kind enough to advise ..Thanks