Keep the Uptick Rule in Place

You mention the uptick rule, and immediately everyone who benefits from instant trading and from impatient shorting is all over you, saying "this company collapsed because of the leverage," or that company collapsed because of the "bad loans."

Of course.

I know that. I suggested selling many of these bad-guy companies for months.

But there's an issue here that none of these people understand, and the issue is one of confidence. The reason why the uptick rule was put in was that it was too easy to sow panic in the Great Crash, too easy to get people to sell by hitting out bids and creating what was at times an illusion of imminent bankruptcy. That's what happened to Morgan Stanley (MS - commentary - Cramer's Take). That's what happened to Goldman Sachs (GS - commentary - Cramer's Take).

We just need to slow things down catch our breath.

Now, let's deal head-on with Lehman Brothers. The issue with Lehman was not its insolvency. Heck, almost every bank is insolvent in this country if you showed no forbearance. The issue was speed. The shorting without upticks, the pushdowns, the bear raids, the credit default swaps all coalesced to make it so the company and the government couldn't rescue it in time.

If there was even a chance that the uptick rule could have helped save Lehman, than it is worth having. What's the economic interest in being able to short quickly? What's the economic interest in allowing people to prey on fears, which are much more powerful than hype and enthusiasm? Why do we want the two on even footing? If the darned thing is a fraud, there will be plenty of buyers out there who will pay up.

The rule wasn't broke; why fix it?

Now, again, I want to make sure people realize that 1.) I love shorting, and think it is terrific, 2.) I recognize that Lehman was in trouble and so are many of the banks, but 3.) It doesn't take a genius to see that the speed with which equities collapsed directly affected the underlying businesses.

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Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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