OP 2019: X-class solar flare creates chaos and inflicts $2 trillion of damage
Head of FX Strategy, Saxo Bank Group
Summary: As reliant as we are on modern communications technology, this pales in comparison to our reliance on the sun. When it misbehaves, the consequences are severe indeed.
Please note: Outrageous Predictions should not be considered as Saxo Group’s official market outlook. It is instead the events and market moves deemed outliers with huge potential for upsetting consensus views. See the full list here.
All life on earth exists thanks to the stable bounty of energy hurled our way by the
sun, but Sol is not always a serene and beneficent ball of burning hydrogen. As solar
astronomers are well aware, the sun is also a seething cauldron of activity capable of
producing incredible violence in the form of solar flares, the worst of which see the
sun vomiting actual matter and radiation in the form of Coronal Mass Ejections, or
Previous swarms of flares and their associated CMEs, called solar storms, have
disrupted radio and satellite communications as well as ground-based power
transmission infrastructure in the past. The most powerful know n solar flare was
the 1859 Carrington Event, an estimated X40 class flare that lit up the earth with
a massive aurora borealis that could be seen as far south as Cuba during the day
(X-class flares are the most powerful class of flares and an X40 flare is 40x more
powerful than the minimal X1 flare).
The early telegraph equipment of the time was largely rendered inoperable; in other
cases, it could still be used even though turned off. In the summer of 2012, the earth
got lucky when it missed a giant, multi-X-class flare by a matte r of a weeks as its
associated CME washed across the earth’s orbital path a week after the earth had
transited (flares are directional and only last a matter of hours).
In 2019, as Solar Cycle 25 kicks into gear, the earth isn’t so lucky and a solar storm
strikes the Western hemisphere, taking down most satellites on the wrong side of the
earth at the time and unleashing untold chaos on GPS-reliant air and surface travel/
logistics and electric power infrastructure.
The bill? Around $2 trillion, which is actually some 20% less than the worst-case
scenario estimated by a Lloyds-sponsored study on the potential financial risks from
solar storms back in 2013.