short selling

Since I'm not very smart, I was confused on why shorting is beneficial in markets. Thankfully, Susan is around to help me with this:

Far from being an "evil" practice, short-selling is important for price discovery. It conveys negative information and makes pricing more efficient. When optimists buy and pessimists sit on their hands, the result is an upward bias in prices.

Some proponents even argue that short-selling can act as a brake in a down market, since the shorts must eventually buy in order to cover or close out their positions.

Other thoughts:

• Nice piece in Slate on the art of negotiation at the G20 by the Obama squad. I would like to add that the promise of everyone at the G20 to avoid protectionism is another plus, but then I remember that Obama insists on rescuing GM.
• The Vanity Fair piece on Bernie Madoff is amazing, but I have a few more thoughts on that that I'll save for a subsequent post.