[bayes]

Perhaps I'm stupid - certainly I'm no economist - but I don't see what's wrong with naked short selling.

For a market to work well you want liquidity, in order for the traded prices to reflect all the information known to market participants. One of the problems in the UK electricity market (which happens to be my day job) is that relatively few companies trade other than those who physically produce or use electricity, which hampers the effectiveness of the markets and (probably) increases the prices customers end up paying for their electricity.

So why are shares so different to any other market? Why should only people who physically own them be able to trade them?

Presumably the attraction of such a policy is that it allows share prices to remain artificially high. Even if many market participants believe that a price is too high, they won't necessarily be able to act on that belief, and the bubble will remain inflated. But is that such a good thing in the long run?