April 18, 2009
Either leave the rules the way that they are or impose a symmetric restriction on opening long positions i.e., a downtick rule to open long positions.
The notion that debasing the dollar as fast as possible constitutes 'confidence' is nuts. Actually the best 'confidence' that can be had would be to (1) enforce the rules no matter what they may be and (2) to make sure that stock prices aren't too high when purchased. If it is true that short selling lowers stock prices (and there is no evidence that it does) the objective of making sure that stock prices aren't too high is attained.
If it is somehow necessary to change the rule some kind of circuit breaker both up and down would be far preferable to any universal prohibition.
In recent years the SEC has attempted to make it easier for the uninformed to be directly involved in the market. To wit, decimalizing prices so that those who couldn't understand binary fractions could still be comfortable. Maybe it would have been better if they had bought a mutual fund. Some people do their own plumbing, electrical work, fix their own cars and trade stocks. Others feel less confident in their abilities to do one or more of these things and hire a 'professional' to do it. Perhaps the SEC would serve the public better to stop trying to make it easy for the most simple-minded fool to do his own investing.