Like imposing a curfew on a city beset by looting, extraordinary times sometimes call for extraordinary measures. Stupidly, those same times also lend themselves to scapegoating. Short sellers are always a convenient villain, but they didn't start this riot. So why are retail investors who wisely tried to hedge positions in a bear market the only ones being locked up today?

Granted, things had gotten out of control. The Securities and Exchange Commission's action Friday forbidding short selling in nearly 800 financial stocks for the next two weeks might have been the only way to stop the madness.

But it's also deeply embarrassing for any honest proponent of a fair and free market. Morgan Stanley (MS) got what it wanted after sobbing bitterly to regulators that it would be undone by a situation that it helped create. And yet retail investors trying to hedge portfolios by buying into bearish exchange-traded funds were the ones who were mauled.

True, professional bear raids contributed to the collapse of Lehman Brothers. But capitalism isn't pretty. Shorting might feel unseemly, but it's a vital part of the equation of getting asset prices right. As Barry Ritholtz, chief executive and head of research at Fusion IQ, has pointed out repeatedly, short selling is a symptom, not a cause, of our current rot.

If the banana-republic nationalization of Fannie Mae (FNM), Freddie Mac (FRE) and American International Group (AIG) weren't bad enough, this type of ham-handed intervention should do wonders for our market's credibility. Go ahead and snicker when Russia closes it stock market for two days to stop wholesale selling. Then remember the SEC has decreed by fiat that our own market must only go up. And to retail investors hedging against that 20% drop in their nest eggs it has said: "Eat my shorts."

Short ETFs like those managed by ProShares and Rydex , designed to go up when the broad market goes down, are among the few places an investor could see any light in this darkest of markets. It's one thing for professionals to naked short a firm to death. It's quite another for regular folks trading in legitimate, cheap and accessible ETFs like UltraShort S&P 500 Proshares (SDS) to be stripped naked. Individual investors who made what seemed like a prudent call and jumped into bear funds to hedge their positions might as well just throw up their hands (that is, if they're not just throwing up).

There's no shortage of targets to blame for this mess: Alan Greenspan, the ratings agencies, the regulators, predatory lenders and the investment banks themselves, hocking as they were over-engineered financial products. And yet, for now at least, the shorts are taking the fall. If only they had been heeded long ago.