In addition the legal "short" position is not a po

In addition the legal "short" position is not a position of ownership, it is a borrowed position. The borrower's broker must find shares to borrow for the person to open a short position. Opening the short position is not a purchase it essentially a "sell". To make a margin on the open position the shorter looks to "buy" the stock at a lower price as a means of closing the open short position. In reality it is neither a buy or a sell as normal buying and selling is defined. It is merely the opening and closing of a borrowed position in an attempt to make a margin off a declining share price.

At no point does the short own the shares.

In naked shorting there is no buying or selling of shares either. This is a long argued point from both sides. Market makers argue that naked shorting is necessary to maintain liquidity in a stock and allows them to make a market on a thinly traded security. This very idea is 100% self serving only to the market maker looking to make a Vig from the trade itself. This also smacks in the face of a system that is supposed to be predicated on supply and demand. In reality, if a stock becomes so thinly traded the law of supply and demand should prevail. The sellers have set an ask that should be hit for a buyer to make the purchase as they have the "supply" of shares locked up. If no one is willing to sell lower the law of supply and demand dictates that the buyers raise their bids to meet the sellers ask price as they hold all the shares available for purchase. When a market maker creates "air" shares for sale as a "naked" short position they are artificially making a market with shares that do not exist. Supply and demand just went out the window.

If you have a widget that is of a limited number in existence the less there are in circulation the more valuable the widget becomes. Just because someone makes a counterfeit copy of that widget the counterfeit copy does not dilute the value of the real ones in circulation. This is not true in the stock market. When counterfeit shares are sold by market makers either for "liquidity" or more nefarious reasons the direct effect on all shares in circulation is dilutive. Just how in the fuck is that keeping with value derived from supply and demand? And since we all know there is no policing of this industry that has any effect on deterring or punishing criminal activity until years after a crime has been committed if ever then how can this practice be legal or in preservation of the rights of all legitimate shareholders of a NSS security? Worse yet is that there is no effective accounting method that DTC has in effect that can differentiate real shares from NSS as the trading system is now electronic and not dependent on the transfer of paper share certs that physically can be accounted for. See the video Dark Side of the Looking Glass for an in depth look into naked short selling. http://youtu.be/gpWzOjB8qtU

To be clear, shorting is a borrowed position and it is against the laws of capitalism and a supply and demand based system of value.