The R-Group business was controlled by the family members with voting conducted to accept or reject potentially too high profile or risky work orders. The fundamental mission of the R-Group began with fighting the Nazis in WWII. In the decades since that war, the team had learned that there was always someone or something that would step up into the role of the next adversary. Quip liked to say they had taken the Robin Hood operating parameters and added digital content to keep the wealth intact for those who actually earned it. R-Group assignments supported individuals’ and even governments’ fights against human injustice as well as helped maintain a level of balance between powers.
The services provided over the years to its discreet customers had allowed the wealth of the R-Group to grow. As such, no one in the group needed to work, but their ethics and conscience compelled them to stay at it and remain vigilant against the world’s cyber enemies. Sometimes they walked a very fine line in fighting the evils they encountered, yet remained ethical to a fault. Over the years the team had increased their financial prowess, exhibited insightfulness of people overall, and thus were adept at staying farther ahead of the technology curve than any entity, including well-funded governments.
Otto paused for a few minutes, then asked, “Wolfgang, I’ve known you a long time, and I sense you are going to add more observations that will convey your annoyance at this situation.”
Wolfgang chose his words carefully before he answered, “Someone or something is driving commodity prices down to the breaking point. At this rate, world order will be irrevocably changed in six months.
“Otto, you and I have discussed this already. However, we needed to bring Quip up to speed and add any new information to what we currently know.”
Otto asked, “Do we know who yet? Any new development since we spoke last?”
Wolfgang cautiously continued, “We only know what is happening, not who is driving it.
“What we are seeing, Quip, is a very old, yet very simplistic, business model called predatory pricing. A company or a group of like-minded companies band together and offer goods at a lower price that market leaders can’t match. The incumbent begins to lose market share if they hold their price, or they match the predatory pricing, thus causing them to bleed red ink on their income statements. The initial market leader either exits that market or they implode against the onslaught.
“Television sets, stereo equipment, and computer chips all have these types of business casualties covered in text books. It took a lot to get western governments to see the problem for what it was, and then pass legislation to help safeguard their home industries.
“The predatory pricing model looks like it has been dusted off, freshened up a bit, and is now being used in the commodity markets. The difference today being whole populations and nations appear to be the targets. In several cases, the issue is affecting multiple countries or even all in waves. The commodity building blocks of our civilization are being destabilized to the benefit of the consumers yet the detriment of the producers. The world depends upon orderly markets behaving in a predictable manner. At present, I am seeing just the opposite.”
Quip again nodded then questioned, “But, Wolfgang, isn’t a lower commodity price a good thing? Doesn’t cheaper commodity pricing lower the per-unit cost of the outputted item, which means you and I pay less for finished products?”
Otto interjected, “Yes, it does … for a while. When the producing entities can’t match the unprofitable price that the commodity is being traded for, they are forced to exit the business or sell to their former competitors, now market leaders, at greatly reduced prices. In time, the market-makers for the commodity become oligopolies or monopolies that are capable of commodity price extortion to the buyers, then ultimately you and me.”
Wolfgang agreed but added, “While Otto is correct in his statement, it actually goes farther than that. Dropping a commodity price to a very attractive level also puts financial pressure on competing technologies that could be used instead.
“For instance, with the price of oil so low, transportation and heating utilities are not investing in competing technologies like renewable energy. As a knock-on effect, companies in those industries stop investing in their products and either sell or exit into bankruptcies. This process is very short-sighted, and while the buying public gets a cheaper price on their petroleum for transportation and heating their homes, their future is being mortgaged right under their noses. This can also have a chilling effect on their investment portfolio, though they might not realize it for an extended period with mutual funds.”
Otto then offered, “We are beginning to see signs of political opportunism where some commodity producing countries are starting to feel victimized in this process.
“My friend in Brazil, Thiago Bernardes, has reached out to us for some help in understanding all the sides of the issue. Brazil’s economy is very much built upon the commodity prices they receive in the world market. Drive the price down and revenues shrink. Too low and it can prematurely drive companies out of business, which also reduces the government revenues from licensing and taxation. That then has a chilling effect on the economy as a whole, throwing people out of work, which drives political unrest. The social programs of each government, designed to create a financial safety net under its citizens, is now unsustainable, which also adds fuel to the fire.”
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