I wouldn't expect anymore from the HC crowd but here is some education material for you. Just because you don't agree doesn't mean you know what you're talking about.
read this http://www.mises.org/story/2527
"Short selling is part of the information-revealing process that Mises, Hayek, and others emphasized as the central aspect and advantage of the market process. In a world of uncertainty and change, information is the scarcest good, and short selling is an important source of additional information that would otherwise be lost."
http://oneminute.rationalmind.net/stock-shorting/
Short sellers have a strong incentive to uncover poorly run companies. If a short seller successfully discovers ahead of others that a company is destroying value through incompetence, bad luck or even criminal activity, he profits by shorting the stock and publicizing the information. Short sellers are similar to good investigative journalists. They make more money if they can “scoop” others with information that will drive the stock down.
It is this aspect of short selling that many company managers, regulators and others find discomforting. Yet these same managers and regulators have no problem when an investor uncovers a successful company. Why should they be opposed to someone who does the opposite, and uncovers the overvalued, incompetent, lazy or even fraudulently managed companies?
http://latimesblogs.latimes.com/money_co/2008/09/some-reaction-t.html
--- Larry Harris, a professor of finance at USC and a former SEC chief economist, as quoted by Bloomberg News: "Proposals to ban short-selling are a highly politically motivated attempts to stop reality. To ban short selling is to in effect say that the government is going to try to determine what stock prices should be."
-- Jonathan Macey, securities law professor, Yale University: Banning short sales is "an abomination. Short selling is a legitimate, critical market strategy that has incredibly important functions, including ferreting out information that could not be ferreted out any other way."
http://answers.yahoo.com/question/index?qid=20080920075500AA74lfb
What are the benefits/disadvantages of freezing short selling in the current financial crisis?
Short Selling provides numerous advantages to the market. One major advantage is that it provides liquidity. When a down trend is in play, there aren't too many buyers, but there are Short Sellers covering thinking it's not going to go down any further. This brings a more orderly decline and buying pressure into the market.
CEO's love to take the credit when their stocks are in strong uptrends, but when there business is found to be built on a faulty business model, do they also take the credit, I don't think so, all of a sudden someone else is to blame, and their mantra of Free Market Economics suddenly becomes silent and we hear the calls for intervention and regulation to support them!
----
A couple of years ago Warren Buffett said "Companies with a lot of shorting interest have very often been revealed as frauds or semi-frauds". Sums it up pretty nicely, I think.
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