A threat we are not prepared to face
Read time: 4-5mins
In 2021 as I was finishing my Bachelor's degree, I wrote this article after the overnight shutdown of the Facebook servers - After the global outage caused by Crowdstrike and Microsoft, I decided to share it again.
Article below:
Have you ever asked yourself what would happen if the internet shuts down ?
On the 4th of October 2021, Facebook servers shut down causing the Whatsapp and Instagram Apps also to not work. So let’s ask ourselves a question : Were we prepared for that ? Well yes, people were still using platforms like Telegram, Signal and mail for texting, others were using Twitter and TikTok for scrolling etc… But if the internet suddenly stops working, what would happen to the financial markets such as real estate, stocks, cryptocurrencies ? Let us look for a way to be prepared for it.
The carrington event:
In 1859 mankind witnessed the Carrington event, named after the scientist Richard Carrington, this phenomenon is also known as a geomagnetic storm. On a calm afternoon of September, Carrington witnessed a sudden flash of increased brightness on the surface of the Sun that lasted for a few minutes while watching the observable Universe with his telescope. At that time we didn’t know what this light was but today we know that it is a solar flare. The same night a few hours later, we noticed green and blue lights travelling across the skies which are today known as the Aurora Borealis. At that time of course, people were very shocked and the solar flare caused the whole telegraph system to shut down but there was no internet or satelites so life moved on as if nothing happened. So what would happen if a Carrington event of that caliber strikes us today, specifically to financial markets ?
We are for almost two years now, the victims of the COVID-19 pandemic and we were absolutely not prepared for it even if scientists kept warning us. For weeks we did not know what we were facing and globally, most of the businesses stopped working and are still recovering from it today. Now if a virus of 100 nanometers of diameter can cause us to stay at home for 1 year, what would be the impact of a solar storm ?
Risks we face in front of a Solar Flare:
Relax, we people do not risk anything violent or apocalyptic because the earth amosphere will shield us from x-rays, gamma rays and cosmic radiations but our society and our routine will be affected. How is that ?
In former times, messages, money transfers or even news took days, sometimes months to get to destination, people would even do the delivery as a job. Today you can be in Tokyo and still facetime a friend who is in Europe or Brasil, you can send mails and get immediate answers, buy stocks from the NYSE even if you are in Africa etc… but all of this is not really wireless. In fact the 380 underwater cables that are spanning a lenght of over 1.2 million kms connect all the continents and are the reason we can do all we do today, alongside the 6542 satelites orbiting the planet at the moment. These cables are not really affected by geomagnetic currents but due to their lenght we had to install repeaters along certain gaps and those repeaters are susceptible to fail and if they do, an entire cable that connects two continents, instantly disconnects them.
What if the power grid is down ?
Let’s imagine the worst case scenario where our power grid gets knocked, that could cause a wolrdwide blackout, but not only because our satelites will also be disabled, which means we will not be able to buy stocks or crypto anymore but that is not our biggest concern since we won’t be able to place phone calls, we will not be able to know what is happening since google or the TV are not functionning anymore, we will also not be able to charge our electronic devices which means no more zoom meetings ; navigation systems would break which means no more airplanes and last but not least places that accept credit cards will not be able to take payments. Unfortunately it gets worse, our health would also be affected since all of the material in hospitals are electronic so hospitals won’t be able to work normally. This is without mentionning the unability to maintain the stock of food because how can you do that without refrigirating systems, also that means no more ice cream. To sum up, this would cause a global mess followed by a movement of panic.
In that scenario, lots of markets would collapse but curiously markets like the real estate or the stock market would not because we would simply do it the old way, a piece of paper and a pen and you are good to go, it would be a lot slower, but it would survive. Most of us would also have to go back to the unfashionned way : barter. And since neither banks or financial instruments would be available, the people who have been saving a heavy load of cash or simply people that bought gold would be saved. What an irony, the most powerful tool we created is the internet, because there is no off switch that could turn off the whole thing, but here is the off switch right in front of our eyes sitting at a few million kilometers : a hot ball of glowing gasses at the heart of our solar system.
Real estate in the 19th century :
The probability of happening of a Carrington event According to the PNAS, Proceedings of the National Academy of Science of the US, the probability of a Carrington event happening is once every 150 years, and we are not sheltered from it. In 2012 there was an unusual and strong solar superstorm that luckily got dodged by 9 days. In fact when the storm passed, our planet was 9 days behind in the rotation cycle from the path of the storm.
The famous boxer Mike Tyson once said « everyone has a strategy, until they get kicked in the mouth ». So let us not give up what we need most for what we want now and unlike the COVID-19 pandemic, be prepared. The potential that would cost us a Carrington event financially is not shy of 2 Trillion USD, which represents 2.5% of world’s GDP. Of course it will only be a matter of time before the competent authorities fix the problem, which could be a week or a month, and life in the 21st century will go back to its fullest.
Aouani Khalil
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https://heconomist.ch/2021/10/19/a-threat-we-are-not-prepared-to-face/
