Without assuming naked short selling, how could the 71M of shares sold short find "locates" for their positions?
I would imagine that a short seller locates the shares, borrows them, then sells them. That is say 100 shares on loan. The other side of that trade - the buyer - now owns the shares. That buyer can lend those same shares out to another short seller - say 100 shares again. Now we have 200 shares on loan.
I don't see why someone necessarily has to lose money unless you introduce credit risk (which in the non-theoretical case you absolutely should). Wouldn't you just have to unwind each of these loans?
Sure. The way to unwind the loans is for the people who loaned them to give them back, and then the people who bought them to sell them back. So shortSeller2 gives back his loaned shares to Buyer. But Buyer sells them back to shortSeller1 - and he doesn't have to sell them back for the same price he bought them, and he doesn't have to sell them to the same person. So he actually sells them to whoever will pay him the most. ShortSeller1 is paying $1/day to borrow the shares, and he sold them for $20. It's 5 days after the sale, and today Buyer1 is asking for $40. ShortSeller1 promised to return the shares after 7 days. What can he do to not lose money?
I would imagine that a short seller locates the shares, borrows them, then sells them. That is say 100 shares on loan. The other side of that trade - the buyer - now owns the shares. That buyer can lend those same shares out to another short seller - say 100 shares again. Now we have 200 shares on loan.
I don't see why someone necessarily has to lose money unless you introduce credit risk (which in the non-theoretical case you absolutely should). Wouldn't you just have to unwind each of these loans?