USA Today reports on the SEC's success in slowing short-trading and reversing price declines in several financial stocks. What the article never explains is why the government has an interest in preventing sharp price declines in the affected stocks. Has the SEC assessed the balance sheets and growth prospects for the affected companies and determined that they are under-valued? If so, will it share this analysis? If not, then why is the SEC intervening to prevent the market from determining the price of the stock of these companies? Why do we have any more reason to be concerned about a stock's price being driven down by irrational pessimism than being driven up by irrational exuberance? Wasn't it a problem when a junk company like Priceline.com carried a market valuation of more than $150 billion? Why didn't the SEC intervene then? Most of all, why aren't any reporters asking these questions?
--Dean Baker
