The recent backlash against short sellers is only the latest wave of scapegoating of the minority of market participants who engage in this basic kind of transaction. Every practitioner and scholar of the financial markets know that short selling, far from destabilizing the functioning of the markets, it actually makes them more efficient. Let me be clear, I am not speaking of fraudulent practices nor of naked shorting. Restricting short selling only favors "irrational exuberance," for it is akin to tie one of the two hands of the forces that make a price reflect the market's assessment of the value of a corporation. You can find an articulate discussion as to why restricting short selling is deleterious for the financial markets in http://blogs.wsj.com/marketbeat/2008/09/19/five-reasons-why-the-short-selling-ban-stinks/ Furthermore, I would like to point out [the following appeared as a comment in the above referenced blog] that there is a growing body of research that posits restrictions on short sales are one of the causes of bubbles and excessive price volatility. In a recent presentation Michael Lipkin exemplified with the case of identical stocks traded both in Shanghai (no shorts) and Hong Kong (shorts allowed) how shorting decreases volatility(http://www.ieor.columbia.edu/pdf-files/Lipkin_M_09_08_08.pdf p. 34-5)