“Cargo Cult Regulation” de Warren Meyer (Coyote blog)
Short-selling allows the other 99.9% who are not owners to sell part of the asset anyway, casting their financial vote for the value of the company. Short-selling shortens bubbles, hastens the reckoning, and in the process generally reduces the wreckage on the back end.
“Optimism Quickly Fading” de Don Boudreaux (Café Hayek)
To ban short-selling of stocks is to short-circuit an important mechanism through which people share their knowledge and expectations with others. Banning a mechanism that better allows share prices to reflect the expectation that the underlying assets are not worth as much as current market prices suggest does nothing to change the underlying reality. Such a ban merely distorts knowledge of this reality.
“Don’t Shoot the Speculators” de L.Gordon Cravitz (WSJ)
Speculators don’t get much respect. Short sellers last year were blamed for their trades warning about the credit crisis, and commodities traders are now accused of causing higher oil prices. Even when traders are later proven right — maybe especially when they’re proven right — we blame them for delivering the bad news.
Maybe it’s human nature to reject Shakespeare’s warning and shoot the messenger.