Deakin University finance lecturer Chris Ratcliffe said the ban on short selling, where investors profit on the flagging fortunes of corporations, was only a "bandaid" solution that would have little long-term effect on the market.

"Short selling is part of an efficient market and there seems to be support for it in a bull market but when a bear market appears there are some in government that want to put the handbrake on the practice," he said.

Mr Ratcliffe said there had been previous attempts by governments to stop the practice, which had resulted in short-term stability, but a downturn had occurred once the ban was lifted.

"It's a bandaid solution," he said.

Australian Securities Exchange chairman Maurice Newman said that the US Government's proposed bailout of troubled American financial institutions would encourage bad business practice.

However, Mr Ratcliffe said the plan was the right approach.

"There isn't much room to move for these institutions and their collapse means a dramatic slide in investor confidence," he said.

Last week was a rollercoaster ride for the world markets with Wall Street suffering heavy losses and New Zealand in recession for the first time in a decade.

Mr Ratcliffe said Prime Minister Kevin Rudd's visit to New York last week would have a small impact on the Australian market although he said this week's market would primarily respond to the Reserve Bank and Treasury's co-ordination of the marketplace.

Wan non MP David Hawker criticised Mr Rudd's visit to New York as having "zero impact" on the world economy.

Mr Hawker said he was disappointed by the Government's response to Opposition Leader Malcolm Turnbull's offer of a bipartisan approach on the economy.

M r Ratcliffe said Australia was well-placed to weather the financial storm although he believed Wall Street's instability was a reflection of the shifting of economic power from the US to developing nations such as China, India, Russia and Brazil.

"If the United States is not in recession it is certainly the closest thing to it at the moment," he said.

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