The reason most bears don't understand why short selling needs to be regulated is because they treat the market like a casino. As such, they want things to be fair. They want to be able to short at will, anytime, anywhere, anyhow. They want instruments that offer them super leverage. They even want the uptick rule to be gone forever. As such, they are generally clueless what the stock market is about -- why it's there and how it functions.
Bullish investors, on the other hand, treat the market as an investment. They make an investment in a company's stock in hopes of gaining a positive return for the risk they take. They are taking the risk in supplying their money to the cash equities market so companies can borrow money to grow their business. They are in essence doing a good thing for the companies and for America. Yes, shorts take risk too but the kind of risk is quite different.
With investors' help, individual companies can access the capital markets and efficiently raise risk capital to grow their business, or borrow money if they run into temporary problems. So the onus should be put on the short sellers. Investors should be more protected than short sellers because investors provide a very important function to the market place. The uptick rule helps make the marketplace process more efficient.
You may think Proctor & Gamble, for example, is a safe company and nothing can happen to them even if people gang up and short their stock, but I can assure you that one of these days if they don't have access to cash equities market due to huge and fast plunging stock market prices, the company can go belly up. Most companies have some form of debt and need working capital that is borrowed. Note that Proctor & Gamble has 32 billion in debt: http://finance.yahoo.com/q/ks?s=PG+Key+Statistics . Could PG go bankrupt if stock market plunges 70-90% and stays there for awhile? You bet PG can go bankrupt, similar to Lehman. The question then becomes, "Will the govt or anybody step in and save Proctor & Gamble if the company couldn't borrow enough for working capital?"
The truth is, Lehman could have survived had the credit markets not froze on them. There was so much fear (as result of massive and fast decline of stock prices everywhere) that no one would extend them credit (or, as the case may be, they weren't extended sufficient credit.)
This is how a great company could go belly up (not so much because nobody wants to buy their products but because of a freeze in working capital), and in short fashion. It is very important the govt at the very least reinstates the uptick rule.
Sure puts some light on short selling, doesn't it? Perhaps you may want to study what is the function of the stock market, no? That's why I sometimes say that bears are like cancers. Sometimes they destroy everything around them without understanding the consequences fully.