Trillions and Quadrillions

My HuffPo of 29July08, entitled, Billions and Trillions, provided an almost startling number: $240 billion or $0.24 trillion. That was the total amount the United States spent, in 2008 dollars, for the Manhattan Project (to bring a quick end to World War II), the Marshall Plan (which built the foundation for a strong Western Europe against communism) and the Apollo Project (which was the seed that bankrupted the Soviet Union, leading to the end of the Cold War). Startling, because that was cheap, recalling Congress just setting aside $700 billion to rescue Wall Street and Barack Obama negotiating a trillion dollar stimulus package with the Congress.

On October 14, I followed with Billions and Trillions Revisited. I noted that the average U.S. Department of Energy annual budget for renewable energy research over the past decade was under $1 billion. The brand new nuclear-powered aircraft carrier, the USS H.W. Bush, which will be commissioned on 10January09, cost taxpayers $4.5 billion. This will be our tenth Nimitz-class carrier, and the last.

However, on the horizon are the Gerald R. Ford class nuclear carriers, the first to cost $8 billion, not including the $5 billion R&D being expended to insure for the producing the finest. It's a toss-up if the initial version will be called the Gerald R. Ford or America. The second has already been reserved as the USS Arizona. We're now up to $21 billion to scare the Russians and Chinese into they, likewise, investing in their future.

Do we have a vote on these matters? I have a problem with big ticket Defense expenditures in these days of rinky-dink terrorism. But the first one of this new series is still on the drawing board. Obama Team: you want to initiate change and reduce (or, at least delay) spending? Here is one for consideration.

But to go on, the profits of the top four oil companies alone were $100 billion in 2007 and Nobel Laureate Joseph Stiglitz in his book estimates the cost of the Middle East wars to be $3,000 billion or $3 trillion. In June, the International Energy Agency said that the world needs to spend $45 trillion to halve planet-warming carbon dioxide by 2050. We have a growing problem because it's hard to focus on Peak Oil and Global Warming when oil is selling for $40/barrel and it is freezing outside. According to some reports, Europe and other parts of the world are experiencing record low temperatures. Remember. too, that my most recent post feared that no vital decisions would be made on these issue because there is no present energy or environmental crisis.

Well, anyway, summer is still to come, who knows what next shock looms and we are beginning to enter new territory: quadrillion dollars. A Katrina victim is suing the U.S. Army Corps of Engineers for $3 quadrillion. NASA once reported that an ounce of anti-matter would cost $2.3 quadrillion to manufacture, if they could do it. All this is meaningless, of course, but five years ago, CNN.com reported that global warming solutions could cost up to $18 quadrillion, which was the highest end determination of expenditures required by 2100 of the United Nation's Intergovernmental Panel on Climate Change in 2003. But who takes them seriously? Not the G8 nations.

There is, though, at least one almost official sounding sum from the Bank of International Settlements: $1.144 quadrillion, which was the amount of outstanding derivatives worldwide at the end of last year. That would be equal to about $170,000 for each of the 6.7 billion people on Planet Earth. Mind you, this is funny money, for the current value of all the stocks and bonds around the globe is less than one tenth of a quadrillion dollars. Derivatives are unregulated and high-risk credit bets. Think Bernard Madoff. Warren Buffett, in a 2003 Fortune magazine issue, called derivatives the equivalent of financial weapons of mass destruction, and, surely enough, they actually exploded this fall.

But a quadrillion is 1,000,000,000,000,000--and only has 15 zeros. I calculated in SIMPLE SOLUTIONS for Planet Earth (see box on right) that the odds of any of us being born were 1 chance in 1 with 34 zeros. A googol has 1 followed by 100 zeros. There are many stories, but the most accurate one is that the founders of Google misspelled googol, and, anyway, google.com was available, and googol.com was not. For the record, the largest number with a name is the googleplex, which is one followed by...bah, this is getting too scientific. So we have a long way to go before our economy runs out of numbers.

Comments

[BARRISTER]

Sir:

Forgive me for veering off topic somewhat, but, essentially we are on the same track.

I saw a Documentary yesterday evening on National Geographic TV, I think it was, about the American RV Manufacturer Winnebago.

This company puts the lie to all those other American companies who offshore any, ANY part of their work.
Winnebago manufactures, yes, manufactures over 95% of the components which go into its vehicles IN HOUSE!!!!!! It is amazing.

This is a true AMERICAN Company, and I hope that its shares are all or mostly American owned.

The point is that all companies can keep all their work onshore, even if the costs increase, because in so doing they create a class of people who earn living wages who can purchase their products.

This is what made America rich in the first place.

IOffshoring has put us on the brink of extinction.

lets see what the wisemen do.

[Patrick Takahashi - Huffpost Blogger]

To some degree, the Obama Administration will be heading in this direction, as, for example, there will be tax breaks for creating American jobs. I went one step further in my HuffPost of December 31, 2008 on Simple Solutions for 2009, where I recommended that the Obama stimulus package largely be provided to us, but, in the form of debit cards which only can be used to purchase American products. While the amount to each individual/couple filing taxes was purposefully set high, at $3000/$6000, this total sum is still much less than the $700 billion provided to Wall Street.

[FogBelter]

Mr Takahashi, I truly enjoyed your piece and found the kicker to be this ...

"So we have a long way to go before our economy runs out of numbers."

People, in their panic often forget that Man invented the concept of numbers as he invented the concept of economy. A collapsing economy isn't a natural disaster it is a man made disaster. Since we invented economy to start with we can reinvent it once it falls apart. Not being myopic is the key, as well as recognizing there is an abundance of opportunity (as there are an abundance of numbers) at our disposal to correct our problems if we take our man made economic reality in context.

[Patrick Takahashi - Huffpost Blogger]

I can only agree with you. However, for those reading this particular comment, one point has puzzled me regarding this economic collapse and implications for our future. Too many of my colleagues around the world are convinced that we passed the tipping point and, the combination of Peak Oil, Global Warming and Economic Depression (although this might occur a few years from now) will so discombobulate our society that we are, in fact, headed for doomsday, where lifestyles will become severely compromised, survivors will be those who smartly convert to transitional communities with defense capabilities and much of the world will just die off. Now, I personally cannot accept this level of pessimism, for I don't see much of this attitude among our economic and political leaders. I keep citing the '70s as a period when everything went wrong, but the world somehow recovered. Will it be different this time?

[FogBelter]

Mr Takahashi, I think for those who turned a certain brand of Economics into their Religion it is the End of the World. Do the recent suicides of billionaires and millionaires reflect the mere loss of money, or something more substantial? My Great-Uncle made a fortune before the Crash of '29 and lost it all. Luckily he was a dentist and could rebuild his fortune overtime ... when he passed on, at 92, he was wealthy again, living in a spacious condo atop Nob Hill with the most amazing view of the Golden Gate Bridge I have ever seen. Money comes back ... opportunity comes back.

I think the millionaires and billionaires who have killed themselves, and your colleagues with the "headed for doomsday" outlook are suffering from the same thing ... the recognition that their God has forsaken them. They put all their belief in a system that is now crumbling, and perhaps a lifetime of dedication to a limited way of thinking requires its failure to lead to the end of the world.

I do think if we we stay stubbornly locked into the mindset of reinstating a system that was based on avarice and creative methods of fraud, rather than being nimble and developing something new, more equitable and resilient, we are in for hard times ... but doomsday? It all comes down to choices and the ability to surrender oneself to a new reality.

[nova07]

The risk of derivatives depends on how they are used in the context of a portfolio/investment. To just say that all derivatives are unregulated high-risk credit bets is extremely misleading to anyone who reads your post who doesn't understand how they work.

[Patrick Takahashi - Huffpost Blogger]

I simply used a reasonably standard definition from the field. I guess I mostly wanted to insert the attitude of Warren Buffett. But thanks for the heads up.

[FogBelter]

Derivatives work by playing float ... like check kiting. They indeed have value until they don't.

[WCanyon]

"International Energy Agency said that the world needs to spend $45 trillion to halve planet-warming carbon dioxide by 2050" whaaa? We need to spend 1/1000000th of that to make sure global warming is still happening first -- guess what, it's not obvious that it is, even though CO2 levels continue to rise. I wish the commitees that award research grants were forced to fund research against said theory for any theory less than 20 years old. Or something anything to bring balance. But making billion-dollar decisions on a brand new theory seems unwise.

[Patrick Takahashi - Huffpost Blogger]

Anytime I mention global warming in my postings, there is almost surely a comment or two questioning the validity of the reality, manytimes traceable to organizations like the Heartland Institute, which are generally funded by the oil industry. However, when there is an article saying climate change is a hoax, there are hundreds of angry responses from the readership. But this is the nature of the Huffington Post.

[mommadona]

Thank you.

Very entertaining and enlightening!

[Patrick Takahashi - Huffpost Blogger]

Thank you. A few compliments now and then help. Aloha.