Mr.P, I agree that a retail investor like you or I cannot short. However, hedge funds and dealers work through prime brokers, like goldman, morgan stanley, etc to short whatever they want to. All the prime broker has to do is locate a party that is willing to loan shares and they can short it for the hedge fund or dealer.
The NS problem arises when the prime brokers don't locate the shares, so they don't borrow the shares, so they are never delivered (fail to deliver) after the "phantom" shares are sold into the market. The dealers on the other side of the transaction who "fail to receive" the shares keep their yapper shut and don't demand delivery because they are in the same position with other dealers. In other words, I won't ask you to deliver shares you owe me if you don't ask me to deliver the shares I owe you. I think this happens alot on the ECN's like arca and right in here in the gool ol USA.