EoW September 2012

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Transatlantic cable
September 2012 29
The “Wikileaks-esque” name is a reference to the ITU’s
December summit in Dubai, the World Conference on
International Telecommunications, or WCIT.
Elsewhere in telecom . . .
† As it continues to shrink its wireline business, Verizon
Communications Inc on 4th June announced that it had sent
out the latest in its series of buyout o ers: this one to 1,700
workers, mainly call-centre employees and technicians.
The buyout programme is part of a Verizon e ort to cut
its wireline costs as households either drift to competing
carriers or cancel their land-based phone lines, opting
instead to rely on cellphones.
A company spokesman said the target was to have
the employees leave by the end of July. If not enough
acceptances were received, layo s were to be a possibility.
The o er applied to less than one per cent of Verizon’s overall
workforce – 191,800 as of 31st March – and about two per
cent of its wireline workforce.
Verizon is the second-largest xed telephony provider in
the United States, after AT&T. Through several subsidiaries it
provides local landline services in 11 states and the District
of Columbia.
The economy
While the pace of growth in the US
may not be very brisk, the economy
has grown for 11 consecutive quarters
As well as being a likely major issue in the presidential election in
November, the apparently slow pace of the American economic
recovery is a matter of concern worldwide.
A credit crisis in the United States sent the world into recession
in 2008, and as a bellwether of economic health the US has only
grown in signi cance in the interim. What, then, in mid-2012, can
reliably be said about the American economy?
Floyd Norris, the chief nancial correspondent of the New
York Times, recently supplied statistics indicating that, by the
standards of other developed countries, the American economy
has in fact been doing rather well. Adjusted for in ation, it was
1.2 per cent larger in the rst quarter of this year than it was in
the peak quarter before the recession. (“A Slow Recovery in the
United States, but It’s All Relative,” 15th June).
Mr Norris charted the performance of the Group of 7
industrialised nations, including three members of the euro
zone, and that of seven other countries that use the euro.
Of the 14, the United States is alone in showing consistent
growth over the four quarters through March. Even if its pace
of growth has not been very fast, the nation has reported a
growing economy for 11 consecutive quarters.
Only Canada among the Group of 7 has done better than
the US, having bene ted from being an exporter of natural
resources to China. It also escaped the worst of the downturn
because Canadian banks, better regulated than their
American counterparts, did not nance a real estate bubble.
But Mr Norris noted that even Canada posted a decline in one
quarter of last year.
To place this in perspective, at the bottom of the recent
recession the American economy was 5.1 per cent smaller
than it had been at the peak.
The only other such episode since the Great Depression to shave
as much as 3 per cent from gross domestic product (GDP) was
the 1973-1975 recession, brought on by the shock of high oil
prices. It took seven quarters for the American economy to
regain all its losses from that downturn. This time, the recovery
from recession – the deepest since World War II – took twice
as long.
But, as noted by Mr Norris, when its economy hit its low
the United States appeared to rank in the middle group of
industrialised countries in terms of severity of recession. Portugal
appeared to have escaped, with a maximum decline of just
4.1 per cent; Spain, with a loss of slightly less than 5 per cent.
† Now, Portugal has su ered a total decline of 5.2 per cent; and
Spain may be headed to a new low. Italy, which like Spain
is nding lenders hesitant to buy government bonds, has
reported declines in GDP for three quarters.
Greece has endured 13 consecutive quarters of decline, with
no end in sight. Ireland for a time appeared to be a relative
success story, as its GDP grew at a rate of more than 4 per
cent in the rst half of 2011. But it fell back later in the year.
While comparisons may seem particularly odious during the
current euro crisis, con rmation of the resilience and steady
strengthening of the world’s largest economy has to be
reassuring.
Of related interest…
† Mexico has also been generating some welcome economic
news. When Mexican President Felipe Calderón hosted
the Group of 20 major industrialised and emerging
economies 17th-19th June, he was able to point to 17 years of
macroeconomic stability, low in ation, manageable debt, an
open economy, and increasing competitiveness.
Mexico’s GDP expanded 3.9 per cent last year, ahead of
Brazil’s growth of 2.7 per cent, and appears set to outpace
that of its larger Latin American rival again in 2012.
Nissan, Mazda and Honda have all announced that they
would build new plants in Mexico, and investments in
aerospace and electronics are also on the horizon. In the
meantime, fuelling the modest expansion, Mexican factories
are exporting record quantities of TV sets, cars, computers
and appliances, replacing some Chinese imports in the
United States.
The reversal in the fortunes of Mexico and Brazil (which
as recently as 2010 achieved annual growth of 7.5 per cent)
can be traced in a 10-year-old automotive trade accord
between the two countries.
For most of the pact’s life, Brazil sent more cars to Mexico
than it took in; but in 2011 that changed, with imports of
Mexican-made cars surging 70 per cent to $2.4 billion.
This March, Mexico agreed to cut its exports to Brazil to an
average of $1.55 billion annually for the next three years, to
be followed by restoration of free trade.
Dorothy Fabian
USA Editor