First came the warning from scientists. Now a major hedge fund is reiterating the alert: A massive electromagnetic pulse could wipe out electric grids and cause “unimaginable consequences” for the global economy—and it’s time to start preparing.
Two years ago the earth narrowly avoided a major plasma eruption from the sun in an event called a coronal mass ejection. NASA’s report on the near catastrophe, released last week, described the July 2012 solar emission as the largest event in at least 150 years, rivaling the 1859 “Carrington Event” solar storm that struck earth and disabled the then-new telegraph system.
“While these pages are typically chock full of scary or depressing scenarios, there is one risk that is head-and-shoulders above all the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence,” billionaire Paul Singer’s Elliott Management warned investors in a letter dated July 28 and obtained by Bloomberg News. The risk comes from the sun’s natural, periodic ejections or the detonation of a nuclear weapon at a high altitude, which would cause the same destructive consequences to the electrical system over a wide area.
As Bloomberg Businessweek noted earlier this month, preparing for a crippling solar storm is just a further cost of doing business for industries around the world. The fallout could play havoc with airlines, electrical utilities, and any business that relies on GPS tools. There is plenty of concern among experts that businesses and governments aren’t prepared for a mega-storm; the U.S. government usually gives only 30 minutes’ warning about geomagnetic disruptions.
A 2013 report by Lloyd’s of London warned that a massive solar storm event could, among other things, disrupt financial markets, food supplies, transportation systems, and hospital services at an economic cost of as much as $2.6 trillion—more than 20 times the cost of damages from such major U.S. hurricanes as Katrina and Sandy.
Perhaps more jarringly, additional research cited by NASA has found a 12 percent chance that a massive solar storm like the one we avoided two summers ago could strike the planet in the next decade. “Why are we writing about this topic? Because in any analysis of societal risk, EMP (electromagnetic pulse) stands all by itself,” warns the letter from Elliott Management, which manages about $25 billion. “We think that raising people’s consciousness about what should be a bipartisan push to make the country (and the world) safer from this kind of event is a good thing to do.”