According to the WSJ "The euro plunged to a fresh four-year low Tuesday, sliding below $1.22 as reports that Germany will issue new restrictions on some types of bearish bets on stocks and bonds sparked uneasiness in financial markets. U.S. stocks fell deeper into the red and investors poured into safer-haven U.S. government debt."
I think that one of the problems with regulation is that it prevents the market from following its natural course. Market failures will continue to exist, not matter the amount of regulation established. According the WSJ "The moves came after Germany's financial regular said it is banning naked short-selling of certain euro-zone debt offerings and credit default swaps as well as some financial stocks effective at midnight local time. Under naked short selling, the shares being sold aren't borrowed in advance." In my perspective I think that short selling is a good thing; Short selling works as an indicator of the financial situation of a security or in this case a country. Thus, prohibiting the existance of short selling is prohibiting the flow of information. The problem with Greece is not whether it is being short but rather its financial and management situation. The fact that it can be short is an indicator of the situation.
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