March 28, 2024

Economix Blog: Pushing Latin American Banks to Lend

View From Latin America

Dispatches on the economic landscape.

MEXICO CITY — As economic turmoil whiplashes banks in Europe and poses new threats to American financial institutions, the view from Latin America is very different. Well off the radar screen of the global economic crisis, Latin America’s banks have proven their sturdiness, emerging relatively unscathed from the collapse.

The problem, according to a study released by the World Bank on Tuesday, is that they just don’t lend very much.

Latin America’s banking crises are well behind it, part of the detritus of economic mismanagement in the 1980s and 1990s. Since then, regulators, particularly in the region’s most developed countries, have focused on ensuring the banks’ stability and resiliency. Worries about a contagion effect on the Latin American subsidiaries of European and North American banks are held in check because they have to follow local capital requirements.

But the banks have failed when it comes to contributing to social welfare and economic growth, says Augusto de la Torre, the World Bank’s chief economist for Latin America and the Caribbean, and an author of the report. The problem now is how to keep the banks stable and make them “more useful,” he said in an interview.

Credit to the private sector is low by global standards, about half of what it should be, according to calculations based on benchmarks for middle-income countries. When the banks do make loans, they are tilted in favor of consumption – think credit cards – rather than investment or mortgages. Housing loans, for example, account for 14 percent of total credit in the region compared to 58 percent in China and 47 percent in the developed countries of the G-7.

When it comes to lending to small firms, the picture is more mixed. Lending to them lags sharply behind lending to large firms, but over all, small firms in the largest Latin American economies use bank credit at rates comparable to firms in Asia and Eastern Europe; they just pay more for it, the report found.
On top of that, bank users pay higher fees than anywhere else in the world.

Mr. de la Torre says there are three causes of the banks’ hesitation. The first is that the effects of a financial crisis tend to linger for as long as 15 years as banks and regulators act cautiously against any possibility of a relapse.

The second cause is that contract rights in Latin America are generally weak and hard to enforce. While systems to manage credit card risk are easily imported and adapted to the region, “legal innovations cannot be imported,” he said.

Lastly, there is a more amorphous reason that might explain why banks are not lending, particularly to businesses: low productivity, or what Mr. de la Torre calls insufficient prospects. There may simply not be that many bankable projects. “Finance is crucial, but it’s not the whole story,” he said.

The question now is whether banks can increase their lending without creating the sort of bubbles that have led to past crises.And they must do it in an increasingly fragile global environment. Drawing from the lessons of the subprime crisis, the authors warn against rushing to close the banking gap too quickly. A “slower but more sustainable, less fiscally risky catch-up is preferable to a more ambitious program of financial sector expansion that ends badly,” the report says.

Article source: http://feeds.nytimes.com/click.phdo?i=049dbe17bad0da919f4d8b38713c1e4e

I Sing the Gadget Electronic

“I like to get old stuff working again,” Mr. Arcangel said with a nod toward the ungainly machine, which occupied a long table by a dusty boom box and a basket filled with smashed soda cans. This particular pen plotter had given him trouble, he said. Searching in vain for discontinued parts, he’d lobbed a last-ditch call at the product’s manufacturer. “They just laughed at me,” he said.

Mr. Arcangel typed a code into his keyboard and pressed “enter.” The pen plotter hiccupped, then started printing. At the sight of the tree trunk, Mr. Arcangel clasped his hands together and said, “Cool, huh?”

Mr. Arcangel, 32, is known for work that imports a sense of humanity into the technological realm, in part by making sure the technology it uses is never too slick. Unlike electronic media artists who rely on state-of-the-art equipment to make their work, Mr. Arcangel collects outmoded computer games, decrepit turntables and similar castoffs that pile up in Dumpsters and thrift stores or are posted on eBay whenever a fresh crop of gadgets has rendered them obsolete. Through a bit of ingenious meddling, he reboots this detritus to produce witty, and touchingly homemade, video and art installations.

At the 2004 Whitney Biennial, he hacked into Nintendo’s decades-old Super Mario Bros. game, removing its characters and leaving only its signature cartoon clouds edging across the horizon, to the accompaniment of its bleeping music. For a 2008 piece, “The Bruce Springsteen Born to Run Glockenspiel Addendum,” Mr. Arcangel taught himself to play the glockenspiel, then re-recorded Mr. Springsteen’s “Born to Run” LP onto vinyl, adding an original glockenspiel track to songs on the album that didn’t already include the instrument. In yet another witty ploy, he dubbed one of his favorite films, “Dazed and Confused,” with Indian-accented voices, using a recorded script reading he’d outsourced to a call center in Bangalore.

“Cory is one of the first in a young generation of digital hackers to really enter the art world,” said Barbara London, associate curator of media and performance art at the Museum of Modern Art, who has included Mr. Arcangel’s video works in several shows. “Now the boundaries between art forms are dissolving, and working digitally is just normal practice. But Cory was among the first. I think that’s really important.”

Mr. Arcangel has had a recent spate of museum solo shows, at the Hamburger Bahnhoff in Berlin, the Museum of Contemporary Art in Miami, the Barbican Center in London and now, finally, the Whitney. His potent mix of bottoms-up humor and technical wizardry has clearly struck a cultural nerve.

Mr. Arcangel’s art can conjure the video installations of Bruce Nauman or even the painted abstractions of Ellsworth Kelly or Mary Heilmann. His reprogrammed computer games bear the imprint of so-called appropriation artists, like Richard Prince and Jack Goldstein. And his do-it-yourself, jerry-built sensibility owes a debt to punk.

But it’s his fascination with the gadgetry that has shaped our lives for decades that really drives his work. And this fascination has a dark side.

For the most prominent installation in the Whitney show, for example, Mr. Arcangel has programmed a series of video bowling games from the 1970s to 2000 to throw only gutter balls. The graphics for the games he uses grow increasingly sophisticated over time. But in the end, according to Christiane Paul, the Whitney’s adjunct curator of media artists, and the “Pro Tools” organizer, “what Cory’s work does is really highlight what expectations we have of technology, and how those expectations are repeatedly frustrated.”

Article source: http://feeds.nytimes.com/click.phdo?i=6ef8fe79f3e7419a999166f10a3d1868