We should re-instate the uptick rule:
The uptick rule is a securities trading rule used to regulate short selling in financial markets. The rule mandates, subject to certain exceptions, that when sold, a listed security must either be sold short at a price above the price at which the immediately preceding sale was effected, or at the last sale price if it is higher than the last different price. In 1938, the SEC adopted the uptick rule, more formally known as rule 10a-1, after conducting an inquiry into the effects of concentrated short selling during the market break of 1937. 
The NASD and Nasdaq adopted their own short sale price tests based on the last bid rather than on the last reported sale.[2
This will allow the market to function more calmly rather than quicly going into a death spiral.
We should limit the use of Exchange Traded Funds to multiply the market's movements. Right now a trader can purchase an investment vehicle to doubles or triples the short selling of the major indexes. This, especially when done in concert with others is an attack on our system.
Of Course they could theoretically be wiped by surprising good news but the fact is there are informed investors who are using the fundamentals of our system against us.
In general we need to limit the speculation that causes wild swings in any of our markets. Credit, Stock, Oil, etc. The movements should be based on real information and market conditions, and not "psychology" of trading and other virtual factors.
The free market is a better mechanism than public planning or any other form of economic distribution. However, we must make sure that these markets stay free by allowing the masses to work their will, rather than a few insiders crashing the system.