Gordon Campbell on the Reserve Bank, and the death of Lou Reed

A curiously meandering interview on RNZ’s Business programme by Reserve Bank governor Graeme Wheeler, this morning. During it, Wheeler shed crocodile tears on behalf of “consumers and investors” being hurt by the interest rate policy of central banks, which was having ‘negative spillover’ and pushing up the exchange rate in countries such as New Zealand. The nerve of the Fed and the Bank of England! Don’t they know that doing that sort of damage to our economy is the sole prerogative of our Reserve Bank?

What particularly seemed to irk Wheeler was the ‘forward guidance’ policy being pursued by those major central banks, whereby the Fed and the B of E are projecting likely conditions for as much two to three years ahead, and linking their key decisions to the rate of unemployment, as well as to inflationary expectations. (We prefer to leave unemployment concerns to the wisdom of the market.) Wheeler worried aloud whether central banks may not seem “credible” if they fail to deliver on their plans to re-invigorate struggling economies. As an example of the negative spillover that Wheeler had in mind, he pointed to the Fed’s decision to keep current settings in place with respect to the US stimulus package, in the light of evidence that although the rate of unemployment had fallen in the US, this had not been due to virtuous growth, but because discouraged workers were dropping out of the job market. Therefore, and as a result of the Fed holding fire a bit longer until genuine signs of progress are evident in the US unemployment figures…the US dollar has weakened, thus pushing up our own exchange rate.

Very vexing to our exporters, no doubt. But it seems a bit rich for Wheeler to claim to be moved by the plight of exporters and consumers. (Never been an issue before.) Moreover, he says, such people may come to feel to believe that central banks are less “credible” if they then fail to deliver on their wider objectives. (Better not even to try.) In sum, Wheeler’s basic problem seemed to be that other major central banks are now considering factors such as unemployment. Far better in Wheelerville, to plough on regardless of such issues. That, apparently, would be far more “credible.” As indicated, no similar outpouring of compassion or credibility angst has been evident from the RB over the past 20 years, when interest rates hikes (and the related rise in exchange rates) were being deployed with the sole purpose of clobbering inflation.

It is also very revealing that Wheeler should lament the cost in credibility when the Fed carries out ‘ forward guidance” with respect to unemployment when – it transpires near the end of the RNZ interview – our Reserve Bank itself carries out ‘forward guidance” with a two year timeframe with respect to monetary policy. No worries in that situation about “credibility” and the impact on exchange rates and the forward signals this might send to currency speculators etc etc. Perhaps that because doing damage to the economy in the name of the ideologically correct target – inflation – is seen by the RB mandarins as a good thing, while managing the economy by considering the impact of your actions on unemployment is considered as better left to the mercies of the market.

No doubt, the decision by the Fed to retain its current course on behalf of US citizens is causing problems for the New Zealand exchange rate and for Wheeler. Notably, it is leaving him less head room to hike interest rates here in order to clobber an inflation “problem” that is being almost entirely driven, as always, by house prices. True to form our exchange rate fell last week, on the understanding that interest rates here will not rise again before March, 2014. Come March though, you can bet there will be no crocodile tears for exporters, consumers, investors etc as interest rates /exchange rates get hiked – because the damage will be being done for ideologically correct reasons

Lou Reed, 1942-2013
By now, we’ve all gone through an initial sorting of favourite Lou Reed tracks and memories of personal events with which Reed and the Velvet Underground were entwined. For people of a certain generation and inclination, Reed embodied the period post-hippie, pre-punk. He was the reality principle who came along to tell us what a bunch of saps we’d been. (Attack, as John Cale said of Reed, was his natural mode of expression.) Not that he wasn’t a romantic, too. From the Velvets to the Berlin album, Reed told us that the serious pursuit of sensation came at a price ….even if hey, the whole stupid display of desire and self-immolation was also grimly amusing, when it wasn’t simply hateful. For a while, Reed was the elder brother/uncle who was either an inspiration or a cautionary tale, or both. Like most innovators, he had usually moved on by the time his fans and imitators climbed on board.

His muse for three years in the mid-1970s was Rachel. It was a message from her, and the culmination of a long running feud with his record company (like Elvis, he had signed up with the dead-eyed moguls at RCA) that caused Reed to melt down during a concert in Wellington at the time. He stopped the gig and invited everyone to come back the next night. Which we did. This was when he was still doing the Rock’n’Roll Animal material. It was a creative time that (typically) he described as strictly a cash-in opportunity:

All the albums I put out after this are going to be things I want to put out. No more bullshit, no more dyed hair, faggot junkie trip. I mimic me better than anyone else, so if everybody else is making money ripping me off, I figure maybe I better get in on it. Why not? I created Lou Reed. I have nothing even faintly in common with that guy but I can play him well—- really well.

OK…and sha la la, man. By 1979, the epic song “Street Hassle” was the apex and creative dead end of that period of hardboiled decadence. Using Bruce Springsteen as the hapless narrator on part of the “Street Hassle” song was also a perfectly apt move – whether as a cash in and ironic commentary (“Tramps like us, we were born to pay”) or as an explicit contrast with Springsteen’s newer, softer form of street romanticism. By the time Reed finally settled down with Laurie Anderson and their dogs into his ‘serious man of letters’ phase, few people would have begrudged him his apparent ease with his new life. Ultimately, it seemed like the right destination for a literate, middle class rebel to reach. Again though, there was a price to pay. The music from Street Hassle in 1979 onwards was – with one notable exception – of declining value, hard as some people tried to make a case for stuff like The Blue Mask and New York.

The exception was Songs for Drella, released in 1990. This was a song suite that Reed and John Cale wrote and performed as a tribute/celebration of the life of Andy Warhol. In sharp and affectionate detail, Reed/Cale managed to make a universal story out of Warhol’s escape from small-town USA and his finding of inspiration and acceptance in New York. It also dealt with the loss of Warhol’s inspiration once the Factory and its denizens had gone. The Factory couldn’t go on, but without the craziness swirling around him, could Warhol be much more than just a reclusive shadow of himself…? It was a question that Reed probably asked of himself. It comes with the territory, with getting older:

I know it seems that friends are right
hello daylight, goodbye night
but starlight is so quiet here
Think I’ll slowly slip away

What can I do by myself
it’s good to here from someone else
it’s good to hear a crazy voice…

If I have to live in fear
my ideas will slowly slip away
If I have to live in fear
I’m afraid my life will slip away…

Which could explain why, in the song’s killer last line, Reed makes a sharp distinction between himself, and Warhol. Kind of fascinating though, that it should have been the commemorating of Warhol that forced Reed to focus back again onto the circumstances of his own greatest work, and the effort inspired his best album in a decade, and better than anything he did subsequently. To that extent, Songs for Drella functions pretty well as Reed’s epitaph, too. Certainly, tracks from it such as “Open House” and the “Slip Away” song were the Reed tracks I ended up playing most often, yesterday: