Zachary Goldfarb, a Washington Post staff writer, discusses (p. A10, “SEC Moves to Limit Short Sales of Stocks”) this SEC proposal - sympathetically.  The article is naïve - buying the complaint of “High-profile Wall Street executives” that short sellers “played an outsized role in crashing the stock values of several major financial services companies.”  Now, it is certainly true that when an asset value is falling, some will anticipate further declines and sell short - just as many will anticipate…

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In the House Financial Services Committee hearing Monday on Bernard Madoff’s $50 billion alleged Ponzi scheme, some good points were raised by Congress members of both parties. One was particularly relevant:

Representative Stephen F. Lynch, Democrat of Massachusetts, said short-sellers seemed to know about the Madoff fraud and the S.E.C. should have seen it coming. “The short-sellers knew it was coming and they invested in it — how did they know and the S.E.C didn’t,” Mr. Lynch asserted. “These short-sellers were able…

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Since the $700 billion bailout was first proposed, whatever the stock markets did, much of the press took that as a sign that the market wanted more government intervention. The markets sinking on Sept. 29, the day the House voted down the first bailout bill (although much of the sinking was before the bailout was defeated), was a sign that markets needed the bailout. Then, when it went up about 500 points the next day, it was somehow explained as…

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