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Paul Singer: This threat is

'head-and-shoulders' above
all others
Lawrence Delevingne | @ldelevingne
Tuesday, 29 Jul 2014 | 1:44 PM ET
Pixelparticle | iStock / 360 | Getty Images
Concept image of an electromagnetic field
Billionaire hedge fund manager Paul Singer has issued an unusual warning
for investors, calling the threat of a widespread blackout from an
electromagnetic surge the "most significant danger" in the world.
Called an "electromagnetic pulse" or EMP, the events can occur naturally
from solar storms or artificially from a high-altitude explosion of nuclear
weapons.
"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," Singer
wrote to clients of his $24.8 billion Elliott Management on Monday in a
standard investment update letter. "Even horrendous nuclear war, except in
its most extreme form, can [be] a relatively localized issue, and the threat
from asteroids can (possibly) be mitigated."
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"(A natural EMP event) today would cause a massive disruption to the
electric grid, possibly shutting it down entirely for months or longer, with
unimaginable consequences," Singer wrote. "Only two years ago, the sun let
loose with a Carrington-magnitude burst, but the position of the earth at the
time prevented the burst from hitting it. The chances of additional events of
such magnitude may be far greater than most people think."
Carrington refers to a solar storm in 1859 that caused telegraph systems
to fail around the world.
Singer warned that a man-made EMP attack would be even worse.
"It would not cause any blast or radiation damage, but such an attack would
have consequences even more catastrophic than a severe solar storm. It
could not only bring down the grid, but also lay down a very intense, very fast
pulse across the continent, damaging or destroying electronic switches,
devices, computers and transformers across America," the letter said.
A spokesman for Elliott declined further comment.
The letter called on leaders to protect the power grid and essential electronic
devices. He also said that spare parts should be stockpiled and that
government and other groups should prepare an emergency response plan.
"Why are we writing about this topic? Because in any analysis of societal
risk, EMP stands all by itself. Congressional committees are studying this
problem, and federal legislation is laboriously working its way through the
process," the letter said. "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."
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Lawmakers are aware of the threat.
"The consequences of such an attack could be catastrophic; all electronics,
power systems, and information systems could be shut down," Rep. Scott
Perry said in prepared remarks during an EMP hearing in May held by the
U.S. House Committee on Homeland Security. "This could then cascade into
interdependent infrastructures such as water, gas, and telecommunications.
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While we understand this is an extreme case, we must always be prepared in
case a rogue state decides to utilize this technology."
By CNBC's Lawrence Delevingne
Lawrence Delevingne
Enterprise Reporter
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