short selling is not the problem, page-13

Absolutely ridiculous to blame short selling on market volatility- to ban short selling on financials because someone spread a rumour on Societe Generale is the wrong approach- the market regulator needs to go in hard on who is spreading that rumour and the incessant insider trading that we all know happens in the markets. Look at the trades and follow the money trail, simple. Yet somehow it seems a blind eye is always turned.

Study after study shows shorts help in price discovery- i.e. if there are large short positions that cause a drop in price then the long money comes in based on their own valuation. If the long money isnt convinced the share goes down. simple. Eg recently there was a lot of talk that the US hedge funds shorting our banks as a bet on the collapse of the Aussie housing market- lot of people just saw it as a buying opportunity and the hedgies got toasted.

So go after the real problem regulators.