The nuns at my elementary school would periodically take the class for nature walks. We need to stop sometimes to appreciate the things around us, they said.
It's time to stop and appreciate the enormity of the numbers that we encounter every day. How massive is our economy? How huge is the subprime crisis?
What do the numbers look like?
Subprime losses have been staggering. Merrill Lynch
We get numb to these amounts. And we think, so what. What's another few billion dollars when we're talking about bank losses? Let's take a step back and appreciate the sheer magnitude of these numbers.
How much is a billion?
Let's apply a billion to a common unit of measurement: seconds. One billion seconds ago, it was the end of 1976. Gerald Ford was president and Charlie's Angels was a hit TV show. One billion seconds from now, it will be the year 2040. One billion minutes ago was almost the time of Christ. And that's just 1 billion. It's difficult to even begin to comprehend $400 billion or $1 trillion.
So, let's work with smaller numbers. What about the executives who led us into the current crisis? According to the AFL-CIO, the average S&P 500 CEO compensation for 2007 was $14.2 million. It would take a person, continuously counting one dollar per second, with no sleep or breaks, more than five months to count that much money. If a person did the counting eight hours per day, five days per week, 50 weeks per year, it would take almost two years to count the dollars that an average CEO was paid in 2007. At the same pace, it would take someone more than 138 years to count $1 billion.
What is the interest on $1 billion at 3%? That's $30 million per year. It's $2.5 million per month. That's more than $82,000 per day at 3% interest on just one of those billions.
The size of our economy is amazing. Once in awhile it's worth stepping back to ponder the enormity of our situation. Only then can one get a true sense of the staggering magnitude of the subprime crisis.