1. Nobody seems to be pointing out that many short sellers use the excess proceeds after margin, to go long something else.
2. Though it keeps getting mentioned that shorts can create synthetic positions in the derivative markets, WHY would you want to, when a large portion of the selling pressure in the underlying market has been removed anyway. Throws the risk reward ratio off unfavorably. Even if they try, derivative prices will get skewed out of whack because it will be hard for arbitrage to balance the derivative with the underlying.
The only way it makes any sense is if they are absolutely convinced that stock prices are going to drop…in which case it might allow those holding stocks to bail out in a more orderly fashion. It cannot, however, support an overpriced stock market.