Fran O'Sullivan doesn't like it when commentators present their readers with "very thin analysis". Perhaps she ought to stop doing so, then.

A wee while ago a bit of a spat took place between my (disclosure) Otago colleague, (full disclosure) friend and (way too much information) Guy-I'd-Turn-Gay-For, Bryce Edwards, and a couple of columnists at the New Zealand Herald. You see, as I'm sure all of you exceptionally well informed Pundit readers already know, Bryce puts together a (usually) daily compilation of political reportage, analysis and provocation from the MSM and blogs that serves as a basis for his own analysis of the issues of the day, which the Herald then carries in its on-line version. And two members of the Herald's full-time commentariat, John Armstrong and Fran O'Sullivan, took exception to how Bryce's analysis dealt with their particular contributions to the national discourse - before condemning the entire basis of his project (as well as the efforts of all the other leeching moochers out there who dare - DARE! - to try and emulate on-line the heroic deeds of Real Journalists (TM)).

I didn't get around to writing anything about this storm-in-something-smaller-than-a-teacup at the time. Others did so, Bryce was more than able to defend himself, and frankly the episode struck me as nothing more than a couple of old timers bitching about the fact that the new boy on the block wasn't giving them the full and unconditional respect they so obviously deserved (and dared to write about politics from a left wing perspective, to boot!) But nevertheless, one particular comment that Fran O'Sullivan made on her Facebook page about Bryce's work kind of stuck in my craw: 

Started off as a reasonable curation job but has morphed into the links purely being background for his left-wing thesis of the day - and some of the more recent examples beyond peurile (sic) - so he can get his name in lights off the back of a lot of other people's work. This is not robust political analysis but TVNZ et al swallow it. Sort of like whirling dervish opinion with each swirl gathering someone else's hard work to bolster very thin analysis.

Now, like any other person with free access to the interwebz and a Facebook account, Fran O'Sullivan can choose to slag off in highly personal terms other people's work. That's entirely her prerogative, just as if others think it reflects badly on her as an individual, then that's theirs. But remember, Fran O'Sullivan isn't just another chattering voice filling the cloud with packets of irrelevant data. She's also a Very Important Columnist in the New Zealand Herald, who does Real Journalism Work to bring to her readers Informed and Insightful Commentary on The Issues That Really Matter. So if she's going to start throwing stones at others for "not [giving] robust political analysis" and providing only "very thin analysis", then she better check she hasn't taken up residence in a glasshouse.

Exhibit A. In her Saturday column, Fran tells us that: 

I tuned in to the first debate between Barack Obama and Mitt Romney wanting to know when the United States would begin to seriously wean itself off its diet of debt.

What a disappointment.

One could point out that other commentators actually thought there was quite a bit of discussion between the two candidates about this issue, and that their proposed approach to it marks a significant point of policy difference between them. But fair enough ... Fran would have liked to have seen even more substantive debate on the point. She is, after all, a Serious Person who has Real Concerns for The Issues That Really Matter.

Which makes it a bit strange that she then leaps from expressing her deep despair that "a once proud capitalistic country has become so mired in debt, [and] so unprepared to live within its means" to railing against "the Federal Reserve ... priming the US economy by printing money."

I recognise that the space constraints of a print column can mean an author isn't able to fully expand on every point she wishes to make, but it sure looks here like Fran is of the belief that the "quantitative easing" (more on this in a moment) policies adopted by the Federal Reserve are the same thing as increasing the national debt through ongoing deficit spending. Or, as she puts it, "In financial terms it's like giving a drunk more booze to wean him off last night's hangover."

But ... no. It's not. It's really not. The ballooning US national debt problem is the result of the Federal Government not taking in enough money (because of past tax cuts and the generally depressed state of the economy), whilst still spending lots and lots (on things like bailouts for Wall Street, wars in the Middle East, as well as domestic "entitlement" programmes and the like). Simply put, the US is having to borrow from others (China especially) the money it is unwilling to either get from its own people (through taxes) or cut out of its budgeted spending.

That's a big problem and it needs to be fixed - as Fran quite rightly notes. But how is it related to the real bugbear she's writing about ... the Federal Reserve's policy of "quantitative easing" (or, colloquially, "printing money") to try and stimulate the economy? Well, it sort of sounds the same - isn't the Government "printing money" to increase its supply in the economy just like the Government "borrowing money" to spend on its activities? Both seem to involve using money "you don't really have" to try and paper over fundamental weaknesses in your economic performance.

Well,  if the US was using the money it is printing (which is an oversimplification of the process, but let's run with it) to pretend to pay off its existing debts, or to directly finance its deficit spending, then Fran might have a point in conflating the two issues. But that isn't what it is doing at all. It instead is using the "new money" to buy things like long-term bonds and mortgage-backed securities from private holders ... in essence, it is using the money to entice banks and other financial institutions to give up holding certain sorts of assets in the hope that they'll then lend the money they get for those assets to new private sector borrowers, which in turn will help stimulate the wider economy. 

Now, whether or not this policy is a good one, or will even work, is not the point here. The point instead is that there need not be any direct link between a country's debt problems (the topic with which Fran started her column) and a decision to run a quantitative easing policy. The former is a question of fiscal policy. The latter is a question of monetary policy. Which is why Switzerland, a country that has run budget surpluses for the last 5 years and so hardly is "unprepared to live within its means" also commenced a quantitative easing programme in 2011.

And in case there remains any doubt about the difference between the two issues, I'll let the Chair of the Federal Reserve explain it himself:

What's the relationship between monetary policy and fiscal policy? To answer this question, it may help to begin with the more basic question of how monetary and fiscal policy differ.

In short, monetary policy and fiscal policy involve quite different sets of actors, decisions, and tools. Fiscal policy involves decisions about how much the government should spend, how much it should tax, and how much it should borrow. At the federal level, those decisions are made by the Administration and the Congress. Fiscal policy determines the size of the federal budget deficit, which is the difference between federal spending and revenues in a year. Borrowing to finance budget deficits increases the government's total outstanding debt.

As I have discussed, monetary policy is the responsibility of the Federal Reserve--or, more specifically, the Federal Open Market Committee, which includes members of the Federal Reserve's Board of Governors and presidents of Federal Reserve Banks. Unlike fiscal policy, monetary policy does not involve any taxation, transfer payments, or purchases of goods and services. Instead, as I mentioned, monetary policy mainly involves the purchase and sale of securities. The securities that the Fed purchases in the conduct of monetary policy are held in our portfolio and earn interest. The great bulk of these interest earnings is sent to the Treasury, thereby helping reduce the government deficit. In the past three years, the Fed remitted $200 billion to the federal government. Ultimately, the securities held by the Fed will mature or will be sold back into the market. So the odds are high that the purchase programs that the Fed has undertaken in support of the recovery will end up reducing, not increasing, the federal debt, both through the interest earnings we send the Treasury and because a stronger economy tends to lead to higher tax revenues and reduced government spending (on unemployment benefits, for example).

So at the least, I'd suggest Fran is guilty of a very sloppy transition from a genuine problem to a somewhat unrelated policy, which risks confusing the reader as to the relationship between the two. At the worst, Fran opens herself up to accusations that she just doesn't understand the difference between fiscal policy and monetary policy. Which is something that you'd expect a Very Important Columnist in the New Zealand Herald, who does Real Journalism Work to bring to her readers Informed and Insightful Commentary on The Issues That Really Matter, to have a handle on.

I've then got a bunch of other rather pedestrian gripes about her analysis.

For example, Fran helpfully tells us that; "In the United States it's called 'quantitative easing'". Which is true, I guess ... but neglects to mention that the same policy being pursued in the United Kingdom and Switzerland also is called "quantitative easing", while the policy first got its name when pursued in Japan in the 1990s. In fact, you could just tell your readers that "this policy is called 'quantitative easing'", rather than make it out to be some sort of US-specific phenomenon.

Then Fran proceeds to inform us that "Federal Reserve chairman Ben Bernanke has indicated quantitative easing will end soon. But few serious players in the financial markets believe this is a final move." Possibly that is because the serious players in the financial markets don't get their information second hand from newspaper columnists, but instead look at what the Federal Reserve actually said:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. ... The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. 

Do you see what that statement is saying? The Federal Reserve will keep putting $40 billion a month (of "newly printed money") into the economy for as long as it takes to get the unemployment rate down to a decent level. That's an open-ended commitment, not a statement that its actions will "end soon".

And finally, Fran opines that "the US desperately [needs bi-partisan cooperation] if it is to tackle the snowballing fiscal problems it faces as a result of the Bush tax cuts and Obama's Medicare." Let's give her the "Bush tax cuts" point, while carefully noting that lots and lots of Democrats in Congress voted for them, too. But "Obama's Medicare" as the (or even a) primary cause of the US's snowballing fiscal problems? Does she really mean the US's socialised healthcare programme for those over 65 which was put in place in ... 1965 (when Barak Obama was all of 4 years old)? The same programme that Romney (falsely, as it happens) accused Obama in the presidential debate of cutting by the tune of $716 billion over the next decade? Meaning Obama is responsible for this programme blowing out the US budget deficit ... how exactly? 

Or could Fran actually have meant "Obamacare" generally - the Affordable Care Act that is pretty much the sole policy win he got out of Congress in his term in office? The mandatory insurance coverage provisions of which, it is true, the Congressional Budget Office (CBO) thinks will involve "a net cost of $1,168 billion over the 2012–2022 period". Which sounds like an awful lot of money, until you realise that; "The Pentagon’s budget, including war costs, is $670 billion this year, or about 18 percent of total federal spending." So, you know, if you're going to point at things responsible for why the US can't afford to live like it does, there's a pretty big tank sitting right in the middle of the room. Furthermore, the CBO also thinks that "the budgetary impact of other provisions of the Affordable Care Act ... in the aggregate reduce budget deficits." So it's overall assessment of the policy is that it will end up saving the US money over time.

But all of this (believe it or not) is but a prelude to my main problem with Fran's column. You see, the bulk of Fran's article is a lament about the effect that the US's quantitative easing policy is having on the US dollar and its strength relative to New Zealand's. The point is that it is generally assumed that the more US dollars there are swirling around in the world economy, the greater their supply vis-a-vis the New Zealand dollar, and hence the lower their relative value. Fran seems to see this as the real goal of the US's quantitative easing policy - to keep the "NZ dollar [and other currencies] artificially high as a result of the deliberate US policy to lower the dollar and make its own exports more competitive."

This may or may not be true - I'd just note that it isn't what the Federal Reserve says it is trying to achieve (although it could be lying about the reasons for its actions, I guess). And it may or may not be true that quantitative easing actually is responsible for an "artificially depressed" US dollar in relation to the New Zealand one - although Ben Bernanke says it isn't (but I guess he could be lying about this, too). Let's for the moment accept both claims as gospel. That then poses a huge problem for New Zealand. 

Fran sums it up thus:

As China's growth motor slows our export industries are feeling the pressure of trying to compete in an environment where the NZ dollar is artificially high as a result of the deliberate US policy to lower the dollar and make its own exports more competitive. 


[I]n an environment where our economy is being made more marginal by the inability of Obama, Bernanke and also Romney to really face up to the need for the US to be a responsible player in the global economic environment, New Zealand also needs to pay more attention to its economic survival.

Right on, sister! So what are we going to do about it? Because Fran's with Hugh Fletcher, who had "the guts to speak out about this situation saying the 'fatalistic acceptance of a high exchange rate and big current account deficits is not good enough.'" Is she then going to join with the GreensLabour and New Zealand First in advocating that the Government's Policy Target Agreement with the Reserve Bank be amended to require it to intervene and seek to bring the dollar down - perhaps through New Zealand's own version of quantitative easing? 

No, she's got a much more radical and hard-hitting solution to the problem in mind:

Once he has finished buttering up the Hollywood moguls, Prime Minister John Key might think about giving a serve to the next incumbent in the White House over the current failure of the US to live up to the economic tenets that it has previously prided itself on.

That's right. On Planet Fran, the best way to respond to this existential crisis to our very economic survival is ... for the PM to get on the phone to the President of the United States and tell him that he and his nation must - MUST! - mend their ways. Never mind that we're an inconsequential nation of 4 million people at the bottom of the world whose PM gets to talk to the President roughly once every blue moon. Or that the policy she's complaining about actually is being implemented by the Federal Reserve Board, which is an independent body that the President does not control. Or that it has adopted this policy in an attempt to jumpstart a US economy that remains mired in its worst funk since the 1930s, besides which minor matters like "the need for the US to be a responsible player in the global economic environment" pale into less than insignifcance.

No - I'm sure that despite all of these minor and (quite frankly) carping points, a call from John to Barak or Mitt that passes on Fran's thoughts on the matter will sort everything out in a jiffy. Now ... I must remember ... what was that point Fran was making about commentators who only provide their readers with "very thin analysis"?

Comments (22)

by Chris Trotter on October 07, 2012
Chris Trotter

Magnificent, Andrew. A tour de force. Bravo!

by Robert Winter on October 07, 2012
Robert Winter

I echo Chris. You do us great service.

by Ian MacKay on October 07, 2012
Ian MacKay

You are so lucky Andrew that poor tired old Fran would not respond to your column because she will have tears in her eyes and a lump in her throat. You will have upset her with facts and figures which will shame her. Bully boy.

By the way I learned more about monetary policy and fiscal policy and quatitative easing than ever before. Thanks

by Frank Macskasy on October 07, 2012
Frank Macskasy

Ditto, Ian. I certainly learned a thing or  three from Andrew's  column.

Andrew - well done. And one thing that your column exposed, at the end, is that those who criticise Labour/Green/NZF initiatives to change Reserve Bank policies, which focus solely on inflation, have no alternative solutions themselves.

Green's co-leader Russell Norman was interviewed today on Q+A and the Panel thereafter pooh-poohed his ideas on how to ease the value of the NZ dollar (and they were well thought-through ideas.). Yet, they came up with no ONE SINGLE ALTERNATIVE.

In fact, one of them suggested that the Greens stick to environmental issues...!

Anyhoo, I digress.

This was a well-written piece, and I hope that certain individuals learn from it. Good journalism is achieved not by carping at bloggers, but by producing work that will inform readers and give us Unwashed Masses a better insight into the complex world around us.

I would suspect that Armstrong and O'Sullivan, between them, have a wealth of experience, insights, and knowledge about the deeper, inner workings of this country - so let's see it. Shine the light on the darker, shadowy recesses of politics and the economy. Leave sniping at bloggers to other bloggers (that's our job).


by Raymond A Francis on October 07, 2012
Raymond A Francis

I feel you almost had more fun than is decent writing that Andrew

Well done, very imformative

by Tim Watkin on October 07, 2012
Tim Watkin

Russel Norman's announcement that the Greens want to try some QE here in NZ, in large part because of our high dollar and the currency-dropping impact of QE in numerous other countries (not just the US, UK and Switzerland) puts the debate behind Andrew's criticism of Fran in an interesting light.


by Pete Sime on October 07, 2012
Pete Sime

That was a joy to read. It sounds like the appropriate expression when it comes to you and Bryce is hetero life mate

by Dennis Horne on October 07, 2012
Dennis Horne

Fearful of writing a thin analysis, I shall aim for flabby. That way I can compete on an equal footing.

Or maybe not. English is not my strong point; clearly I struggle with what we once called "Comprehension". O'Sullivan finishes her column:

"Once he has finished buttering up the Hollywood moguls, Prime Minister John Key might think about giving a serve to the next incumbent in the White House over the current failure of the US to live up to the economic tenets that it has previously prided itself on."

Is Fran pooh-poohing Mr Key for bending over for the Hollywood set, and mocking him for actually being powerless in America? Apparently not, nothing metaphorical here.

Likewise, I suppose, I must take Andrew literally: "... friend and (way too much information) Guy-I'd-Turn-Gay-For ... "

Well, I'll be blowed.

by John Norman on October 07, 2012
John Norman
Neat piece, Andrew. Your take from BB's explanation included the following - "The securities that the Fed purchases in the conduct of monetary policy are held in our portfolio and earn interest. The great bulk of these interest earnings is sent to the Treasury, thereby helping reduce the government deficit." Had me think that perhaps Fran, as so many US 'followers' hath been beset by Tea Partiers who have taken BB's point to their own bizarre meaning of returns to the Treasury not to offset deficit BUT in providing profit returns to its very own state bank and related bank board members.
by John Norman on October 07, 2012
John Norman
Also like to add how the piece picks out an illuminating Fedz deployment of $40bn a month incentivizing job growth. We might suppose that September's dramatic lowering of unemployment(o.3 percent) was in part attributable to this tactic. Amazingly, stateside, media, pundits, commentariat have not thus far been able explain the turn of events. After a whole year demanding President Obama show unemployment below 8 percent, Romney(such a black sheep) could only meet the news with "they aint signing on, see." Whereas Goldman Sach's Hatzius(you might catch detail at my blog soon) felt the figures were "genuine." Her call was backed with solid scrutiny of BLS(Labor Bureau) report stats. Yes, media could use more scrupulously 'search-centered' journalism, which is the hallmark of good online work.
by stuart munro on October 08, 2012
stuart munro

Hmm ... I suspect quantitative easing, like Labour's loans for solar conversions, of being more of a gift for banks than workers. In any case, NZ Treasury doing nothing (operating instructions for the last five decades) is no longer the mark of extreme cleverness, if it ever was.

I think John calling Barack & giving him a piece of his mind might do very well. I understand a Canadian has recently vacated his cell at Guantanamo, & if John were not to return, well, his cat might miss him, but frankly the cat would get over it.

by Tom Semmens on October 08, 2012
Tom Semmens

An article where Andrew Geddis delicately and delightfully cuts out the heart of Fran O'Sullivan's article with a spoon. Beautiful.

by Peter Tenby on October 08, 2012
Peter Tenby

A right winger engaging in hypocrisy of the first order?!

Colour me shocked and surprised, nay surprised and very much shocked!

Only one thing left to say:

by Philip Grimmett on October 08, 2012
Philip Grimmett

The silence is deafening!     .        .          .      . I think that Government is becoming less relevant  over time, increasingly like the USA where corporate money influences, nay, determines ' government' policy. SOOO,  the 'government' becomes the facade for big business interests. Pretty simple really. Follow the money.   Government needs to have more power to balance the 'free market'.  Who is running the show?  Business or Government?  Who paid out for the leaky homes,  Pike River,  South Canterbury Finance,  Rena Grounding, Warner Bros,  America's Cup bid,  RWC, Air NZ.  Clearly the Government has no idea about creating a prosperous country or we wouldn't be in the parlous stare we find ourselves in.    Sell off the assets to pay for maintaining a falling standard of living for many folks!  We are better off than many countries - says Joyce.  Yeah right ,wing.  

by Philip Grimmett on October 08, 2012
Philip Grimmett

Fran also devalues quality journalism.  If this is the standard it's no wonder people are not buying newspapers any more for insightful analysis.  The blog o'sphere offers so much more, with less pecuniary interest.  Main stream journalism has become more  like hired guns, or pimps. Tragic.  Our universities need to fill the vacuum.

by Tim Watkin on October 09, 2012
Tim Watkin

I'm not going to get caught up in the debate on this particular piece and anyway, Fran's big enough to look after herself. But Philip you've gone too far for me.

There are a lot of reasons to complain about what's in our papers. And there's a lot I disagree with Fran about on all sorts of fronts. But there are few more studious and dedicated journalists in New Zealand than her. I'm sure she has good and bad weeks, does good and bad columns. We all have bad days at work.

But newsrooms are half empty and those who are there are often young. Some are in the game for the by-line or 6pm live cross, not to challenge power. Fran has stuck at the business, is willing to get stuck into various sides and often tells readers something they don't know. Left, right and any other aside, she's a proper journalist and there are few enough of them in this country.

So fair play to Andrew having a crack at one column and defending a mate for whom he's got rather odd, confused affections, but to say Fran devalues journalism is, for me, just nonsense.

by Andrew Geddis on October 09, 2012
Andrew Geddis

So fair play to Andrew having a crack at one column and defending a mate for whom he's got rather odd, confused affections, but to say Fran devalues journalism is, for me, just nonsense.

I'll second that. The bit about "Fran devalues journalism is ... just nonsense", that is. Not the "odd, confused affections" bit. I know what I feel.

by Dennis Horne on October 09, 2012
Dennis Horne

Good, that's settled then. I can carry on reading O'Sullivan without feeling wonky.

Maybe we could shift to another topic. Andrew could tell us why we don't have a Criminal Cases Review Commission? Everybody knows Peter Ellis is completely innocent yet our society seems incapable of putting it right. Pope, who fingered Scott Watson, didn't bother looking for the yacht that Ben Smart and Olivia Hope were seen to board. And we could have done without the farce of a new trial for David Bain.

by Rosina Hauiti on October 11, 2012
Rosina Hauiti

God Almighty. I am so glad to be a part of Maori media and not mainstream journalism. "She said that he sucks, I say she sucks more...but anyway my name is Andrew and I'm a better writer than both of them.I'm an academic"..."Yeah leave the sniping to us bloggers", says Frank."Here here", chorus the rest of you.ZZZZZZZZZZZZZZZZZ. Meanwhile back on the Marae, a group of women peeling veges while watching a laptop to TV hookup in the wharekai are laughing at a Youtube clip of Fred Dagg.He is explaining quantitative easing. "Did you understand that Auntie?", I ask her. "Oh sure, its when you print funny money and pretend its real until finally everyone believe it is real" she responds. Thats right Auntie - you got it.

by Andrew Geddis on October 11, 2012
Andrew Geddis


Isn't there something of an irony in you popping in as "a part of Maori media" to snipe at others for their boring habit of sniping at others for sniping at others ... or something, because I don't understand quite what your point is. However, if it is that Maori media is free from debates over the quality of analysis it presents and not open to voices that challenge the narrative you provide to your audience, then can I suggest that you aren't doing your job properly?

by Philip Grimmett on October 11, 2012
Philip Grimmett
Hi Tim From where I stand and observe MSM I see newspapers ,and TV struggling to provide quality, independent analysis. There are always exceptions, Rod Oram . I understand that you are defending your corner,fair enough.But don't underestimate the developing Alt media,via the internet.. Cheers. Apologies for typing on the go.
by Rosina Hauiti on October 11, 2012
Rosina Hauiti

Oh dear Andew, you've outed me. What can I say, except Arohamai again.I too am given to sniping from time to time.Mostly at mainstream media who seem to write for themselves than for anyone else. My money remains with Fred Dagg.Hei kona.

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