A weekend topic starting with the Globe and Mail. "So who is paying for this massive wave of purchases by the Fed, the Bank of Canada and others? For now, nobody. Central banks are simply crediting themselves with the funds they need. In a fiat money system, they can do so with a few key strokes. In practice, things don’t always go so smoothly. The Bank of Japan began QE nearly 20 years ago. Many other central banks adopted their own versions during the financial crisis more than a decade ago. Most of these transactions have never been reversed. Rather than being temporary, most QE now looks permanent."

"Followers of modern monetary theory or MMT, once considered a fringe school of economics, argue governments should ignore deficits and happily create as much money as is necessary to support the economy, create jobs and achieve other objectives. Only a few months ago, MMT seemed revolutionary. Now it simply looks like a description of what central banks are already doing."

From The Guardian. "Ronald Reagan’s 1986 wisecrack – 'The nine most terrifying words in the English language are: I’m from the government and I’m here to help' – would not get a lot of laughs today. In much of the world, people are desperate for the government to show up and rise to the challenge of the coronavirus pandemic. Some social scientists and historians argue that this pandemic could become a turning point in social history – on a par with the New Deal in the US or the post-war Labour government in the UK."

"The coronavirus pandemic could also boost statism of another kind – more Big Brother than Great Society – by providing cover for governments to restrict civil liberties and entrench themselves in power. There are few signs yet that China’s leaders will be held accountable for their failure to contain the outbreak at its source, and their response to criticism has been further suppression of dissent and science."

The Sun Sentinel in Florida. "Many borrowers have flooded social media with accounts of contacting their mortgage servicers, large and small, with requests to skip payments, then being told they can skip only three months and must repay them in a lump sum on the fourth month. Michael Zemon, of Pembroke Pines, said he tried to explain to his mortgage servicer what options are required for his Fannie Mae loan 'and they had no idea what I was talking about.' He added, 'I’m waiting for a supervisor to call me back tomorrow.'"

"Only when the borrower nears the end of the forbearance period will the servicer begin to discuss repayment options, after asking whether the borrower can repay the full amount of missed payments."

The San Francisco Chronicle in California. "The coronavirus pandemic has shuttered municipal buildings across the Bay Area. Yet outside of courthouses and city halls across the Bay Area, one obscure legal proceeding continues to unfold: the auctioning off of foreclosed properties. Every week more than a dozen such auctions are taking place from San Francisco to Redwood City to Oakland, as auctioneers rattle off addresses and prices, and would-be investors gather around and bid for a chance to take ownership of a home where the previous owner has fallen behind on loan payments."

"On Thursday, attorney Tom LaLanne showed up to City Hall on behalf of a client who had been in negotiation with the lender on a forbearance agreement. He had planned to ask the court to temporarily enjoin the sale to allow more time to work out a deal, refinance the debt or sell. 'Superior Court is so bogged down we couldn’t get a hearing,' he said."

The Sydney Morning Herald in Australia. "A migration slump following the coronavirus outbreak could temporarily shrink Sydney’s population and leave it at more than 200,000 fewer people than expected by 2025, raising doubts about the timetable for major infrastructure projects. The report’s author, economist Terry Rawnsley, said the departure of around 300,000 temporary visa holders from Australia this year may even 'push Sydney’s population backwards' temporarily."

"Subdued population growth will take a toll on demand for new housing construction which is an important driver of economic growth. Sydney’s population growth had been slowing even before the coronavirus outbreak. Last financial year the city's population increased by 1.7 per cent, the lowest rate in seven years."

From Stuff New Zealand. "Given a choice between altering my belief system and ignoring facts; I usually prefer to ignore facts. I've spent decades investing in the things I believe in and the cost of discarding these ideas is too painful compared to the simplicity of ignoring evidence. Helpfully I do not have many beliefs. Which brings me to Air New Zealand. The Efficient Market Hypothesis, which I stubbornly remained attached to decades after I knew it was bunkum, is the idea that the price of an asset is a function of all of the available information. This assumes rational investors and some liquidity in the market."

"At three dollars a share Air New Zealand is worth about $3.4 billion, which for a business making $400m before tax seems about right. Since then its revenue has fallen 98 per cent. The state has had to lend it 900m and has the option to turn that into equity. Most of her planes are parked up. International travel has ended and it could be a year before there's any significant revenue from overseas customers."

"The airline's major assets, aircrafts, are going to be hard to sell in the current market. It owes lenders 2.3 billion, not including the 900 million mentioned above. Yet at the time of writing the share price was $1.36 and at that level the market capital is $1.5 billion. It is difficult to see any justification for this valuation. Air New Zealand isn't going anywhere, financially or literally. Whatever value that can be salvaged from its domestic operation will go to repaying its lenders. There won't be any dividend between now and the next Beatles reunion tour."

"Its share price should be two small rocks and a piece of string. You can do the same analysis for most of the major firms on any bourse in the OECD; I picked Air New Zealand only for most readers' familiarity with it."

"Many believe that an economy that was closed can simply be opened and the massive bubble created by a decade of cheap credit will be re-inflated as easily as Adrian Orr prints electronic money. We are in for a shock. Once we are released from home detention we shall find a desolate landscape of mass unemployment, closed shops and a collapsing housing market. Investors are stuck in a mental mindscape of a world they know and a belief in the power of governments and central banks to stimulate away any economic crisis."

"The reality of the road that lies ahead is too painful to accept. It is easier to ignore the facts than face reality."

The Los Angeles Times. "For more than a decade, California lawmakers have pushed with increasing urgency to build more housing near transit stops and job centers. Density, they've reasoned, is the best way to control the exploding cost of living and reduce residents' reliance on carbon-spewing vehicles in a state best known for its sprawling suburbs. But now density has a new foe: the coronavirus. Skeptics of greater urbanization say the pandemic has proved that they were right all along."

"New York's governor Andrew Cuomo, has blamed high-rise apartment complexes and busy subways for the city's plight. 'Why are we seeing this level of infection? Why cities across the country? It’s very simple. It’s about density,' Cuomo said at a recent news conference, punctuating his statement with a PowerPoint slide emblazoned with 'DENSITY' in all capital letters. The coronavirus, the governor continued, 'is very contagious. The dense environments are its feeding grounds.'"

The Victorville Daily Press in California. "In 1933, H.G. Wells predicted a future that included a global economic slump that led to a world war and devastating global plague. Eventually the countries with the strongest militaries formed a 'benevolent dictatorship.' A new world order was imposed on earth to end conflict and promote harmony. My armchair predictions for our post-COVID-19 future are not quite that dark."

"The COVID-19 social distancing regimen will deal a death blow to the liberal planners who had California teetering toward high-density regulations for everything from single-family housing to dog kennels. Five-story tall apartment buildings crammed into residential neighborhoods were so close to reality, the planners could smell victory. But, alas, the glorious dream of apartments placed on top of shops with rapid transit rail stops just outside was foiled by this damn virus. How can these people ever save our planet if we need extra space to stay alive? Oh my God, what a dilemma."

"Now, one issue this virus has put on life support is globalism. COVID-19 has accomplished what nationalist movements everywhere failed to do by making citizens of every country keenly aware of the consequences that come with letting down their guards regarding immigration, unfettered international travel and foreign manufacturing. In my view, that’s one positive to come from this tragic event."

"A problematic local issue that must be addressed quite soon — possibly before the future arrives — is what we do with the homeless folks who’ve been living in empty hotel rooms, vacant houses and trailers provided by our government. While you contemplate an answer, consider who and how the owners of those properties will be compensated for repairs and maintenance once they’re vacated."

From Prospect Magazine. "There’s a scene in the 1971 film Willy Wonka & the Chocolate Factory where Charlie, having been unsuccessful before in finding a prize-winning golden ticket in his chocolate bar, uncovers one in a bar he opens in the street. Within seconds, a mob—a mob of adults—has descended on him. 'Run Charlie!' the shopkeeper says. 'Run all the way home, and don’t stop until you get there!'"

"The idea that adults could care so much about something supposedly for children, that they could inflate its value to the point of senseless mania, was every bit as intriguing as the factory itself. What I didn’t realise was that, while I was endlessly rewatching Willy Wonka, I was living through a golden ticket mania unlike any other."

"It was the 1990s, and the craze was Beanie Babies. You might remember these pocket-sized stuffed animals. Ty Warner, the eccentric founder of Ty Inc, both invented the toys and marketed them in a way that was entirely new to his industry. Warner would supply Beanie Babies only to independent shops, and even then, would only allow each store to have a limited supply. He announced new lines at random intervals, rather than waiting for Christmas or summer, and withdrew designs with no warning."

"Warner thought he was simply creating scarcity for his own product, thereby urging parents to snap up a certain bear before it was gone. But he was also creating a craze that could only have existed in this exact point in time, when a combination of media, upwardly-mobile ambition and a brand new buyers’ market came together to create a fad to rival the Tulip mania of Old Amsterdam."

"First, there was eBay. The auction site that began with the sale of a broken laser pointer in 1995 was providing ordinary people a new way to sell ordinary things at extraordinary prices. The popularity of the site led to the mass-adoption of a phrase that was previously only used by antique dealers: this could be worth something."

"Warner’s habit of abruptly discontinuing toys added to a sense that anyone could have something trivial that was nonetheless hugely valuable. Snort the Bull, purchased for five dollars, could suddenly be sold for $6,500. Peanut the Elephant could go for $7,000. And so, people began buying up Beanie Babies in their hundreds, creating riots in toy stores and the death of at least one security guard. Most of the people who bought these Beanie Babies didn’t see themselves as collectors—no, they were simply savvy investors."

"The craze became a news item for 24-hour cable news channels that had no shortage of children, enthusiasts and 'experts' who were willing to be interviewed about their collections. The coverage drove the market to a fever pitch that went on for years. A couple divorcing in 1999 were forced to split up their collection on the courtroom floor, under the supervision of a judge."

"And then? It ended. The children who’d first loved Beanie Babies grew out of them, and without the steady backbone of the legitimate enthusiasts, the market ceased to exist. While the craze might have died, the impulses that drove it kept barrelling along. Recent bubbles may have been more Bitcoin than Beanie, but the adult need to obsess over childish things has found other modes of expression: The Harry Potter frenzy of the early noughties, the iron grip of comic books on modern cinema, the Disney Princess BuzzFeed quizzes that grown adults use to self-classify as Annas, Elsas and the rest."

"The people who thought they could get rich from Beanie Babies were ultimately left with nothing but a bag of less-than-magic beans. People are still trying to flog their Beanie Babies on Ebay for thousands, hoping against all odds that their Princess Diana bear really is worth the small fortune that they were promised. Listings for Beanie Babies are common; sales are, unfortunately, rare."