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Fun With Bailout NumbersThe financial pages discover the word quadrillion.

By Timothy NoahPosted Thursday, Oct. 9, 2008, at 6:50 PM ET

(Continued from page 1)

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The U.S. economy constitutes roughly one-quarter of the world economy. That is to say, the U.S. GDP of $14.3 trillion accounts for one-fourth of the GDP of all nations, which the World Bank calculated at $54.3 trillion for 2007. Have you ever said you wouldn't do something "for all the money in the world"? What you meant literally, probably without knowing it, was that you wouldn't do that thing even if somebody paid you $54.3 trillion. Want to reconsider?

As of last month, bank losses on subprime mortgages for homes in the United States totaled $518 billion. The alchemy of finance doubled that into $1.4 trillion in losses on U.S.-based loans and securities, according to the International Monetary Fund. These losses, which may well grow—the IMF keeps recalculating as the financial crisis worsens—constitute 50 percent of the annual total cost of running the U.S. government; 10 percent of the entire U.S. economy (as expressed in GDP); and 3 percent of the entire world economy (as expressed in GDP). This mess was made in the USA, but in today's globalized economy it is now every nation's problem.

One interesting difficulty, though. As the numbers get bigger, the opportunities for misunderstanding among nations increase exponentially, because of a peculiar and most annoying cultural difference. Human civilization has advanced to the point where it can split the atom and put a man on the moon, but it hasn't advanced far enough to arrive at a common understanding of what the word billion—and therefore the words trillion, quadrillion, etc.—actually means. It's a little bit like the international split between countries that use the Metric system of weights and measures (almost everybody) and countries that stick to the English system (the United States; the United Kingdom gave up on it in 1965). In this instance, however, the confusion is greater because the same terminology is used to describe different quantities.

It all goes back to the 15^th century, apparently, when the French worked out a system for describing numbers above 999,999,999. At first, they decided that 1 billion would be 1 million to the second power (i.e., what Americans today call 1 trillion); 1 trillion would be 1 million to the third power (i.e., what Americans call 1 quintillion); and so on. What I would call 1 billion they called 1 milliard. Then, two centuries later, they decided that terms like "1 thousand billion" and "1 thousand trillion" were unwieldy and therefore redefined all numbers above 999,999,999 as multiples not of 1 million but of 1,000. This was inelegant, because the actual numbers designated—billion, trillion, and so forth—were now inconsistent with their Latin roots (bi, tri, etc.). But language's loss was arithmetic's gain; the new designations were much easier to use.

Unfortunately, the earlier, inferior system had taken hold throughout Europe—with the Enlightenment due any minute numbers were getting a lot of use—and many of these countries were unwilling to submit to the inconvenience of an upgrade. Today, the antiquated system is used just about everywhere except the United States, the United Kingdom, Italy, Russia, Turkey, Greece, Portugal, and Brazil. Even France eventually reverted to the old system. In a nice reversal of the Metric system story, in which the United States plays the role of know-nothing villain, here the United States is the sensible hero trying in vain to peddle a superior quantification system to its hidebound, impractical fellow nations.

Astronomers and other big-number scientists have learned to steer around the varying-definition problem by avoiding terms like billion and trillion altogether, instead designating them as powers of 10. But economists and government officials around the world, having only recently become big-number users, still say billion and trillion and, increasingly, quadrillion. When they do so, there's no telling what they mean. This tower of arithmetic Babel has some potential to create a farcical scene when the G-7 finance ministers gather this Saturday at the White House.