Bad ideas and sacrificial lambs

Following in the misguided footsteps of market regulators in Britain, the U.S. SEC is instituting a “temporary ban” on short selling in the U.S. markets.  In a week of depressing, frightening bad ideas, mindless grandstanding, and scapegoating, this may stand out as the worst example of panicked non-thinking.

The last major country to institute a “temporary ban” on short selling was that bastion of free enterprise and forward thinking, Malaysia, which banned short selling during the Asian currency crisis in 1998. They got around to lifting the ban seven years later.

Chris Cox caved to political pressure and threats, lobbed by dim wit politicians who truly don’t understand the way the stock market works. Short sellers aren’t the problem, and never were. But every horror show has to have a villain. Free markets, it seems, are really only good in theory.

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