It is a complicated topic to try to explain on a message board without basically writing a book. In theory what the poster is saying is true, however he neglects to cover a couple of important points.
Number one. Any open positions require monies on deposit with the clearing firm which far exceeds the value of what the MM has shorted. (especially on stocks under 50 cents) This is why the MM is under pressure from his compliance dept to close out open positions as soon as possible. One of my best friends' wife is the compliance officer over one of the big trading desks. If an MM is short or long a position for more than 2 or three days, he is usually sitting in front of her explaining why in very fast fashion.
Number two. The ability to short stock comes from the market maker or specialist's (in the case of the AMEX or the NYSE) capacity to "make a market and provide liquidity". If it is abused, the regulators from the NASD will and do fine the heck out of the abusers. It is not uncommon to see these fines levied either. This discourages abuse. It is rather difficult for them to argue that a huge short postion that is never closed out was entered in the normal everyday course of providing liquidity.
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