I understand the shorting means you borrow the shares and sell them first, and pay them back later. So this is two-step process and things can go wrong in each step. For example:
- What if you can't find anyone willing to lend you the shares to short? Does it happen often? In real world, do we know actually know the individual/institutions we are borrowing shares from?
- What if after you sell the stocks, there aren't any stocks for you to buy back? Then you end up owing shares to your borrowers? Will this happen in real life?
- I guess there must be some kinds of public ledger that keeps track of who borrows shares from whom. And there are also mechanisms to enforce the borrower must pay back. Otherwise, people can simply run away. I'm curious to know about how those enforcement mechanisms work.