Ban the Bear

Eliezer Yudkowsky

I applaud the SEC's courageous move to ban short selling. Isn't that brilliant? I wonder why they didn't think of that during the Great Depression.

However, I feel that this valiant effort does not go far enough.

All selling of stocks should be banned. Once you buy a stock, you have to hold it forever.

Sure, this might make the market a little less liquid. But once stock prices can only go up, we'll all be rich!

Or maybe we should just try something simpler: pass a law making it illegal for stock prices to go down.

I applaud the SEC's courageous move to ban short selling. Isn't that brilliant? I wonder why they didn't think of that during the Great Depression.

However, I feel that this valiant effort does not go far enough.

All selling of stocks should be banned. Once you buy a stock, you have to hold it forever.

Sure, this might make the market a little less liquid. But once stock prices can only go up, we'll all be rich!

Or maybe we should just try something simpler: pass a law making it illegal for stock prices to go down.

We have so many regulators we effectively have no regulation (but lotsa transaction costs).

Well put, except it's not true. As we're seeing now, the inefficiency introduced by regulations is more than compensated by the investor confidence resulting from a stable market.

We're going to spend hundreds of billions of dollars to save potentially trillions in losses. $100 million of regulation and oversight, applied at the right time, could have done the same.