The problem? Exponents.

“As economists and business experts, we’ve been reluctant to admit that the underlying problem is simply about math,” Blumberg said. “Most of us have spent years in graduate school learning arcane economic theories. The post-secondary education comes after years of K-12 schooling where math and science have been underemphasized. It’s no surprise that in major business dealings, key players have neglected to punch in the correct number of zeros into their calculators.”

The issue of the correct number of zeros in a given number has become critical in recent years. While most consumers are accustomed to seeing three zeros after a single comma in their large purchases, such as the price of a $35,000 automobile or a $300,000 house, business transactions often involve multiple commas and strings of zeros that can unnerve the most savvy economist.

The central issue is that mortgage companies often overpaid for bundles of mortgages sold by lenders. For example, one thousand mortgages with an average face value of $200,000 each yields a collective worth of $200,000,000. In exponential notation, this would be expressed as…something smaller.

This number fits onto a calculator screen with two places to spare. However, when there are hundreds of these bundles being added and subtracted and multiplied and divided several times in each business day, that relatively small figure of two hundred bill…er, two hundred million grows larger than a calculator screen can display. The result is a number that is expressed in exponential notation, where the zeros behind the first one or two digits are represented as a superscript above the number ‘10’. According to experts, the number of one million expressed in exponential notation would be 10

^{6}.

“The first time it happened to me, I thought I broke my calculator,” said Jennifer Taylor, a mortgage broker who was formerly with Lehman Brothers. “I saw this ten pop up on the screen with tiny numbers above it, and I thought, ‘whoa, what’s this?’”

Taylor isn’t alone. Many business people have been hit with this phenomenon.

“I went out and bought another calculator,” Edwin Smith, a securities specialist at CityGroup Financial, admitted. “And then I thought that one was broken, too. I ended up with a bunch of different calculators.” He waved an arm toward his desk, which was covered with calculators. “Every damn brand gave me the same thing.”

The resulting confusion that occurred from the exponents displaying on the calculator screen is blamed for the overpayment of bundled mortgages by major financial institutions.

“We don’t know exactly what we paid for which bundles,” Smith admitted. “My colleagues and I remembered the word ‘bundles’ being used in our cell-phone bills, so we got those out and tried to use them as examples, but it just didn’t help.

“One of the really brilliant guys at our firm finally figured out that the tiny number above the ten stood for the number of places after the first number, but it was real hard to understand. No one wanted to admit they didn’t understand it, so we all nodded and went on with business as usual. If you admit you don’t understand something in corporate America, you’re dead meat.”

This rampant misunderstanding went on for years, Blumberg explained.

“Let’s say someone gets a number that has twelve zeros after it, but it’s supposed to be eleven. The difference is ninety trillion dollars. No, wait, ninety billion dollars. I think. Pretty sure it is,” Blumberg said.

One example of a number running out of room on the display is the National Debt Clock in downtown Manhattan. The clock recently ran out of space for the digital numbers, prompting the management agency to paste a paper “$” in front of the first digital placeholder on the giant electronic billboard in New York’s Times Square.

“We’ll probably have to change it a paper “10” pretty soon,” lamented Nancy Morgan, representative of the Durst Organization that runs the billboard. “When Seymour Durst constructed the billboard in 1989, no one ever thought that the national debt would increase to ten trillion dollars.”

Ten trillion dollars is written as a “10” with twelve zeros after it. To be accurate, the twelve placeholders aren’t all zeros; the actual amount was $10,150,603,734,720 as of October 12, 2008.

Economists, though, are quick to point out that no one really cares about the numbers that follow the first comma. According to Blumberg, “the first number is the star of the show, the one that gets everyone’s attention. The second and third numbers are kind of important, but really, who cares about what comes after them? It’s like the rest of the cast on a television sitcom. Everyone knows the big stars, but the rest of them aren’t going to register.”

Others have a different view. Neil Feynman, a physicist at Oak Ridge National Laboratory in Oak Ridge, Tennessee, is one of the scientists that have been covertly contacted by the Department of the Treasury to assist in clearing up the exponent crisis.

“Blumberg’s referring to significant figures when he mentions the first three numbers,” Feynman said. “We call them SigFigs in scientific parlance. But the numbers after them are important too. I mean, come on, after the first two numbers, we’re talking about 1.5x10

^{11}.”

When pressed for exactly what that meant, he shook his head. “It’s one-point-five times ten-to-the-eleventh."

That explanation simply didn't go far enough, however.

“It means one-hundred and fifty billion dollars. See? That’s what the whole problem is. No one can understand the numbers involved here. It’s no wonder we’re in this economic mess.”

Scientists are being sought out by the Federal Government to help resolve the crisis because of their expertise in working with exponents. Physicists in particular commonly work with extremely large numbers, necessitating the use of the expression ‘ten-to-the’ in everyday matters. The problem with this approach has been the inability of physicists to communicate with economists and business leaders.

“We tried mathematicians, but they were way too abstract,” said Paul Reichman, senior advisor to Ben Bernanke. “They were always wandering off and doing math for fun. It was like herding cats. We couldn’t get an applicable answer out of any of them.”

Physicists, Reichman said, are better suited to delivering answers that can be actually applied in the real world, but the challenge is identifying physicists who can interact intelligibly with laypersons in the economic setting. Reichman is quick to point out that he’s not referring to foreign language barriers.

“The language isn’t the problem, it’s understanding each other. We can’t get them to understand what we need, and they can’t understand why we need it.” Reichman rubbed his forehead. “It’s the most frustrating thing in the world to talk to someone in plain English, thinking that they’re getting it, and then they turn around and deliver something completely different.”

Compounding this problem is the sudden dearth of physicists willing to travel to Washington, D.C. and interact with the people who need assistance. “They’re all over in Europe trying to fix that collider thingie,” Reichman said.

The Fed isn’t giving up hope, however. Reichman told reporters that help from the Chinese government is also on the table.

“The Chinese are in a very vulnerable position. They own most of our debt, so they don’t want us to become insolvent. But they also need to keep their manufacturing base intact. Without easy loans, the American consumer can’t refinance their homes to buy cheap plastic crap. Chinese companies that make inflatable Christmas lawn decorations are being particularly hard-hit by this crisis.”

“We’ve discussed the problems that economists and business people have with adding and subtracting large numbers, and not understanding how to use exponents, and the Chinese have already initiated the design and manufacture of special calculators that have extra-large displays. Theses calculators will be able to go up to big numbers, you know, like ten gazillion, without using exponents. Just one long number. And they’re putting commas in the display,too.”

Reichman was questioned by one reporter who had made it to the junior level in a mechanical engineering curriculum before switching to journalism about the use of the term ‘gazillion’.

“It is a real number,” Reichman asserted. “That’s why you’re a journalist and I’m an economist. And the Chinese calculators are going to have separate buttons for million, billion, trillion, quadrillion, and gazillion. The individual buttons should eliminate the need for people to understand exponents. It will take time, but we will turn the corner, and the economy will be stronger in the long run.”

## 3 comments:

it's late but i will be back

wish you well

maybe

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-should have asked a high school Algebra teacher (or student). What's so hard about understanding exponents? It's much easier to understand the concept of 10 with a superscript that to figure out how many zeroes are associated with the word "gazillion" or whatever. It's also easier to do arithmetic manipulations using exponents.

graduated high school in 1960

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