It's begun- Shorters beginning to close their PNV positions, page-8

That's a new one, a futures market without shorting. When you decide to take a long futures position, what is the person on the other side taking?

Stock loan temporarily increases the supply of stock, which exerts a one off decreasing pressure on prices, and increases liquidity, which tends to increase price. The long term buy and hold investors don't help liquidity or price discovery because they don't trade. The index investors aren't very much help here either because they are not price sensitive... they buy because the stock is on a list and hold it until it is removed from the list. This leaves the fundamental value players and the traders. The traders are there to provide liquidity and dont care too much for value, the fundamental players make it their business to research and understand the stock and its valuation. They step in to buy low if they think it's too cheap and sell/short if they think the price is too high. Take away any of those players and you find that your market doesn't function very well... too much of one group... also not good for market efficiency.