The SEC is trying to decide if it should .. . . ban all short selling, periodIf Ian Welsh knows this, why don't the SEC braniacs know it?
This smells of panic driven decision making. Regulators are in a cold sweat, and they haven't thought this through. . . .
Getting rid of short selling entirely doesn't make market meltdowns less likely. It makes them more likely. Just as letting banks use depositor money to shore up investment banking subsidiaries is throwing good money, your money, after bad. Just as allowing banks to book "good will" as regulatory reserves doesn't actually change how likely they are to be insolvent. Regulators are making decisions in the grip of stark fear and their critical faculties aren't working anymore.
And you know, when the people in charge keep coming up with instant "solutions" to the market panic, and those "solutions" actually make it easier to continue playing with somebody else's money, then I suspect that these aren't actually solutions at all, they're just somebody's pet project -- something that the banks and the Bushies had wanted to do anyway and with the panic they got their chance.