He notices that a small child has fallen in and is drowning. Singer realizes that if he wades in, he can save the child. However, he doesn't want to get his shoes wet and so chooses to just walk on by. As expected the child dies. Singer's conduct is seriously wrong.
Absolute poverty is very bad.
There is some absolute poverty we can prevent without sacrificing anything of comparable moral significance. Therefore, we are morally required to prevent some absolute poverty. Singer argues that we must accept P1 because it is the principle which best accounts for our moral judgment in the Shallow Pond. What we are looking for is some fundamental moral principle which can account for why it is wrong to let the child die in The Shallow Pond without implying that it is wrong to let the child die in The Envelope. This principle won't do, because it implies that Singer did nothing wrong in The Vintage Sedan.