Total Collapse: Greece Reverts To Barter Economy For First Time Since Nazi Occupation

Tyler Durden's picture

Months ago, when Alexis Tsipras, Yanis Varoufakis, and their Syriza compatriots had just swept to power behind an ambitious anti-austerity platform and bold promises about a brighter future for the beleaguered Greek state, we warned that Greece was one or two vacuous threats away from being "digitally bombed back to barter status."

Subsequently, the Greek economy began to deteriorate in the face of increasingly fraught negotiations between Athens and creditors, with Brussels blaming the economic slide on Syriza’s unwillingness to implement reforms, while analysts and commentators noted that relentless deposit flight and the weakened state of the Greek banking sector was contributing to a liquidity crisis and severe credit contraction. 

As of May, 60 businesses were closed and 613 jobs were lost for each business day that the crisis persisted without a resolution. 

On the heels of Tsipras’ referendum call and the imposition of capital controls, the bottom fell out completely as businesses found that supplier credit was increasingly difficult to come by, leaving Greeks to consider the possibility that the country would soon face a shortage of imported goods. 

On Tuesday, we brought you the latest on the Greek economy when we noted that according to data presented at an extraordinary meeting of the Hellenic Confederation of Commerce and Entrepreneurship, retail sales have fallen 70%, while The Athens Medical Association recently warned that 7,500 doctors have left the country since 2010. 

Now, the situation has gotten so bad that our prediction from February has come true. That is, Greece is reverting to a barter economy. Reuters has more:

Wild boar and power cuts were Greek cotton farmer Mimis Tsakanikas' biggest worries until a bank shutdown last month left him stranded without cash to pay suppliers, and his customers without money to pay him.

 

Squeezed on all sides, the 41-year-old farmer began informal bartering to get around the cash crunch. He now pays some of his workers in kind with his clover crop and exchanges equipment with other farmers instead of buying or renting machinery.

 

Tsakanikas is part of a growing barter economy that some Greeks deplore as a step backward from modernity, but others embrace as a practical means of short-term economic survival.

 

When he rented a field this month, he agreed to pay with part of his clover production.

 

"It's a nightmare. I owe many people money now - gas stations and firms that service machinery. I have to go to the bank every single day, and the money I can take out is not enough," said Tsakanikas, who also grows vegetables and corn on 148 acres (60 hectares) of farmland.

 

"I've begun bartering in some forms - it existed in the past but now it is growing... Times have become really tough, and friends and relatives help each other out."

So Greece, the birthplace of Western civilization and democratic governance, is now literally sliding backwards in history.

The nation - which has already suffered the humiliation of becoming the first developed country to default to the IMF and which was nearly reduced to accepting "humanitarian aid" from Brussels when a Grexit looked imminent a few weeks back - is now transacting in clover, hay, and cheese. Here’s Reuters again:

Tradenow, a Website started three years ago to facilitate barter of everything from food to technology, says the number of users and the volume of transactions have doubled since capital controls came into effect on June 29.

 

"Before capital controls, we were reaching out to companies to encourage them to register," says Yiannis Deliyiannis, the company's chief executive. 

 

"Now companies themselves are getting in touch with us to get registered."

 

He rattles off a list of firms using the site to strike deals with suppliers: a car repairs shop that exchanged tyres with another firm for a new shower cubicle, a burglar alarm provider offering services in return for paper and advertising, an Athens butcher that trades daily meat supplies for services.

 

In the lush yellow and green fields outside Lamia dotted with cotton, peanut and olive groves, barter is also flourishing on an informal basis outside the online platforms.

 

Kostas Zavlagas, who produces cotton, wheat, and clover recounted how he gave bales of hay and machine parts to another farmer who did not have cash to pay him.

 

"He is going to pay me back in some sort of product when he is able to, maybe in cheese.”

Yes, "maybe in cheese", but certainly not in euros, especially if the growing divisions within Syriza render Athens unable to pass a third set of prior actions through parliament next week.

Should the vote not pass, it’s not clear if Greece will be able to obtain the funds it needs to pay €3.2 billion to the ECB on August 20 - a missed payment would endanger the liquidity lifeline that is the only thing keeping any euros at all circulating in the Greek economy.

On the bright side, "barter has been a part of everyday life for Greeks for a long time" economist Haris Lambropoulos told Reuters. The only difference is that now, "it is a more structured and organised phenomenon."

Maybe so, but this is one "structured and ordered phenomenon" that many Greeks would likely just as soon do without and indeed, the new barter economy is drawing comparisons to a period in Greece’s history that has gotten quite a bit of attention over the course of the last few months, and on that note, we’ll give the last word to Christos Stamatis, who runs the barter website Mermix:

"Of course, a barter economy is something that we shouldn't aspire to and should be a thing of the past - the last time we had it on a large scale was when we were under [Nazi] occupation."

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COSMOS's picture

I would put  my faith in a Slice of Cheese before a Sheet of Fiat.  At least I can eat the cheese.

Not to forget, the calorie count of a slice of cheese is fixed by nature and cant be devalued/decreased away.

Creepy A. Cracker's picture

Cut the cheese properly and you can clear a room.  So many advantages...

Meat Hammer's picture

Physical gold and silver, anyone?

Charming Anarchist's picture

Sure, why not? 

The beauty of freedom is that blocks of cheese could suffice as money In Greece just the same.  More competing currencies, the better, I reckon.  Anything can be money. 

 

J Jason Djfmam's picture

Beware of tungsten bars wrapped in cheese!

Joe Tierney's picture

Print me some cheese....it's the 1st of the month and I owe bills....

Icelandicsaga...............................................'s picture

During and after the war, Greeks used gold sovrreigns for purchases of items like rental houses in Athens, scooters, any stuff of value that barter did not cover. Forvdecades through the 50s, the Saudis would only take gold for purchases of oil by the west. One reason we went off gold under Nixon was when the French started demanding gold in balance of trade exchanges. We made a deal with the Saudis and other oil producers ..we have your back if you let dollar be the...petrodollar, aka world reserve currency. That era IS coming to an end, the birth pangs of the new system will be bloody indeed, difficult and messy.

COSMOS's picture

Sure Joe I will churn you some cheese.  That is the beauty of it.  Someone has to work to make it, instead of just holding down the print button.

847328_3527's picture

Gold coins and silver were excellent stores of wealth and for barter items during Germany's hyperinflation according to Fergusson [sp?] in his book, When Money Dies.

lasvegaspersona's picture

I doubt that...the very reason Greece is in it's current situation is that it's people ask for more than they produce (a fairly common phenomenon) and this is not conducive to business. Who would start a plant in a deeply socialist country that has just elected commies. The threat of nationalization would scare anyone with any sense away.

Greece needs to balance the budget (and that will mean default.) They should hang on a bit longer though as the system itself may fail and a new better one emerge. They are swimming against the tide and for now just need to stay afloat.

Excursionist's picture

Careful! You're going against a popular ZH narrative that it's all the bankers' fault.

Calmyourself's picture

Not all believe that narrative.  To the thoughtful; the bankers, oligarchy, politicians greedy public workers and yes the common people who wanted more than they could produce all conspired consciously or not they are all to blame some more than others....   Bankers..

Jaspergers's picture

"Who would start a plant in a deeply socialist country that has just elected commies."

<-- THIS idiot LOL. Wish me luck! Swimming upstream ain't easy but I'm eating lots of salmon (while it's still available).

+1

Fish Gone Bad's picture

I think the suggested upper limit of salmon is 3 pounds per week.  Quantities greater than this predispose one to bleeding disorders. 

FGB

worbsid's picture

I think that would be East Coast salmon.  West Coast Fukushimaed salmon upper limit would be based on radiation tolerance.

robertocarlos's picture

Why do they need plants? You can manufacture everything in small garages. Build your own car, it's easy.

COSMOS's picture

A moly tube frame or even mild steel, and off shelf components and one can make a fun little car to drive around.  Who needs those crappy beeeamers or benzzzzs

invisible touch's picture

most of non food business in europ is 80 % made of vendors importing chinese goods and margin 30% on it.

how the fuck you want 500 millions cunts to keep their jobs if 1/3 is public service, and de facto unable to be because private sector not selling goods because they have no money to import because nobody buy because of taxes raise to keep public services... 

 

what ? sooo.....socialism ? oh, ok then...

 

 

White Mountains's picture

Get together and start using BitCoin.  Problem solved.  Be your own bank.

bamawatson's picture

one problem with bitcoin. as a practical matter, it essentially requires internet. "they' can shut it all down in an instant. also, here in the U.S. we already have, in place, draconion absurd irs regs pertaining to bit coin ... .... "they" will implement, activate, rigidly enforce said regs when it suits "them". i believe in the sound fundamentals of bitcoin (in fact the worst thing about bitcoin is the name). However all transactions are forever recorded, traceable, taxable.

cheech_wizard's picture

and internet requires electricity...

<some fools never learn>

White Mountains's picture

I bet you have almost zero cash.  All your money (if you have any) is in the form of electronic digits your local bank manages and the Federal Reserve "prints" at will.  LOL  Good luck :-)

buzzkillb's picture

Can the entire internet in a country be shut off completely? Would they just cut the ocean cables and block the satellite feeds? If the internet is up somewhere people will figure out how to broadcast it out. I guess it depends on what someone thinks shutting it all down really means.

If its blocking bitcoin transactions somehow, a VPN will be used. I don't see how anything on the internet can be completely blocked as long as somewhere will transmit the data.

Bitcoin is just as interesting to follow like gold, silver, and everything else happening. An extra thing to build into the apocalpyse toolkit is an understanding of how to network far distances and some basic computer hacking skills.

omniversling's picture

I'm onto Cheesecoin!

Greek version: Fetacoin

overqualified's picture

They're intaxicated to socialism/clientelism. That's why they know that the world would laugh at drachmas and any business idea in greece, and why they're so dependent on the eurocracy. If they were smart they would already be an offshore tax haven, free, independent and full of money coming from everywhere, but they're fool euro-peons and so they merit to be enslaved.

FinalEvent's picture

And for god sake, make it all happen with BITCOIN

Ludwig_Van's picture

Haha, never in a million years. Greece headed for the stone age - no company would think about setting up shop there. They will be.a vassal of either Northern Europe or China. Not even Russia will loan em a buck

Amish FinEng's picture

The Amish have been observing Bitcoin and even with a collapsed Greek economy, black markets, and barter prevailing that pig still ain't going anywhere.

balanced's picture

Well to be fair, Bitcoin is still up about 20% from it's pre-referendum value.

Fish Gone Bad's picture

Money is supposed to be a stable, durable storage form of value. 

Prisoners_dilemna's picture

SO the USD has lost 99% of its value over 100 years,

Bitcoin has gone from 0 purchasing power to $300 equivalent PP.

Which do you think is the better "money"?

Doña K's picture

Maxx <<Less paper work though  >>

The .gov does not like barter because there is no trace to tax the exchange. On the other hand, if the crack down on it, they are dead meat.

38BWD22's picture

Socialism, in all its forms, destroys.  We can learn a lot from Cyprus and Greece.  We can learn still more from the next European domino to fall.  The USA is not immune, not at all.

If France becomes a felled domino, then the financial tsunami from Europe will quickly hit US shores.

Preparation for the down-side is a good thing.  Savings.  Physical gold.  Healthy habits.

dontgoforit's picture

Socialism kills the healthy and the unhealthy with equal vigor.

Doña K's picture

The healthy are actually better prepared.

Prisoners_dilemna's picture

Socialism doesn't discriminate based on health.

It is however highly correlated with poor word choice.  ;-)

 

BeaverCream's picture

It's not really socialism though, it was just a usury debt institution set up by politicians that were paid off by central banks to rob the country of it's wealth. What it really is is a return to feudalism where banksters are the lords and we are the peasants. It has nothing at all to do with socialism.

HopefulCynical's picture

Bankster Feudalism is the object of Marxist philosophy.

Charming Anarchist's picture

....and the Greeks may not have a choice. 

The sooner Greeks start appreciating their dairy industry, the better.  Some how, they must aim towards self-sufficiency if they want a hope in hell. 

J Jason Djfmam's picture

Beware of Greeks bearing Swiss cheese.

doctor10's picture

not sure what's so different from the 1940's here.  The substance of the latest "agreement" , for all practical purposes

is a "German Occupation" as they would seem to take control of all the assets in Greece.

 

modern kleptocracy's - a marriage of 21st century criminal enterprises with Governement-are a remarkably bloodless tool for taking over a country.

omniversling's picture

"maybe in cheese.” 

For everything else, Cheesecard...Priceless!

Sonic the porcupine's picture

It would be interesting to see if a form of commodity money arises.

Sir SpeaksALot's picture

but it s not bad at all, Greece now is an example of an early post money system economy, you cant use money - you do barter, proving that money is not necessary. Economy is based on trust anyway, currently most trust in money, but we can trust a system without this prop.

redd_green's picture

And of course letting foreigners control your monetary policy had nothign to do with the problems they are having.   Liberalism, please.  Its the extreme opposite:  they don't collect taxes, son.

keremetski's picture

it's a fresh start. Next, intro PM as money.

Panafrican Funktron Robot's picture

Indeed.  Think about your average pawn shop.  They currently happily accept gold in exchange for the stuff they sell.  Wouldn't any business do the same in an instance of a fiat liquidity crisis?