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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Pareto's picture

but barter - if successful - and it most always is - will demonstrate Greece's ability to price discover, exchange goods/services independent of the government (and its associated tax), and independent of the Euro and its associated non-sustainable debt obligations.  its the next best thing closest to economic freedom and it is a necessary precursor to bringing back the drachma, in my opinion.  Good for Greece.  Fuck the Troika and fuck the ECB

dontgoforit's picture

What I've heard is that the Greeks make a national pastime out of not paying their taxes, so what's happening today with barter is pretty much business as usual.

vesna's picture

Fuck the Merkel... bljak

ThrowAwayYourTV's picture

The only thing that will work is total debt forgivness followed by a re-boot. You corner anything, I don't care if its a baby mouse it will come out after you.

astoriajoe's picture

hellenicoin?

Even if you don't like cryptos, it'd be easier to deal with than barter in this case, if only for accounting purposes.  Silver or gold is fine, too, but can anyone afford them? I don't think Miles Franklin is set up to take feta.

larry david's picture

This is bullish for the Dow,  right? 

Pumpkin's picture

When the tax man shows up for his part, he can cut the cheese.

Charming Anarchist's picture

The beauty of freedom is that there is no reason why cheese in Greece can not rise in value --- if the Greeks so choose --- such that the tax man may pre-emptively offer to accept cheese knowing he can skim some off of the top. 

mog's picture
Greece Reverts To Barter Economy For First Time Since Nazi Occupation

 

What the hell does anyone expect!

They ARE under Nazi occupation.

It happens under Nazi occupation.

Only difference - the Fourth Reich not the Third.

Merkel not Hitler.

Banks not tanks.

Same outcome different operendi.

And Greeks starving, cold and homeless.

The German leopard hasn't changed its spots - or diet.

Tribulation Blues's picture
Tribulation Blues (not verified) mog Jul 29, 2015 1:15 PM

It is coming to the USA shortly..... it will come upon us as a snare after Obama is assassanited.

Daniel 7 says the AC will be the leader of a powerful and diverse nation that breaks in pieces many other nations. Also that he will be diverse from all other leaders of that nation, (first black) also that he will be the 11th leader to come out of the powerful nation, (Obama is  the 11th POTUS since WW2 when the US became a superpower)

Daniel 11, says he will change times and laws, and have no desire of women! See numerous late Nov 2008 prophecies from Jesus also confirming the AC is Obama at revelation12.ca

We now await assassination and then resurrection by Satan.... Revelation 13... the prophecies say it will the Bush/Clinton Cabal..

Seek_Truth's picture

False prophet.

There will be no assassination.

There won't be any asteroid either.

You don't understand Daniel 7 & 11 or Revelation 12 & 13, that is very clear.

TalkToLind's picture

TalkToLind has bottles of good Sibirskaya Strong Vodka, Greek women holla. 

Bill of Rights's picture

The Greek youth must be physically and mentally broken otherwise they should be burning shit to the ground.

wmbz's picture

The youth were most likely lost and confused once they could not find the app for that on their i-phone.

falak pema's picture

I thought Draghi had pushed the QE button for Greece.

Joebloinvestor's picture

I predicted this one.

Look at the social media for "swap service" connections.

Watch the crackdown start.

kublia khan's picture

need to get a fiat paper system up and running fast or all the parasites will need to find a real job producing something. cant have that.

large_wooden_badger's picture

The parasites are the useful idiots that "legitimize" the need for the centralized state. Fiat is the lifeblood of government!

VWAndy's picture

Fiat is the lifes blood of corrupt government.

large_wooden_badger's picture

You speak the truth, but I've yet to see a non-corrupt government to draw any comparison

VWAndy's picture

I hope one day we can prove that one up.

VWAndy's picture

Are you the Kublia khan from youtube?

delivered's picture

From Tanks to Banks, this should be the next story told about Germany's continual effort to conquer Europe. Tanks and brute military force eventually failed in the first half of the 20th century so after being humiliated not once but twice during WWI and WWII, Germany has found its footing and discovered a new and improved way to impoverish Europe - Financial Terror. Make no mistake about it as Germany has a bone to pick with Europe and for that matter, the balance of the world to once again highlight their superiority and being masters of the universe.

What's amazing to me beyond the shear lunancy or stupidity of the Greeks (as under either scenario, leave of stay, financial collapse was bound to occur as the economy implodes), is that the rest of Southern Europe is just standing by, watching, and waiting their turn for the next round of Germany control and occupation. France, Italy, Spain, and Portugal (to round out what's left of Southern Europe) appear to be frozen, awaiting some miracle economic transformation or for the debt gods to come down and vanquish their debt, just like Tony Robbins (playing himself) did to Hal (played by Jack Black in Shallow Hal) with his "Banana Hands" when he shocked Hal with his personal therapy and "Devils be Gone" reference. 

For these other countries, the time to act is NOW! I've stated before and will mention again that the best time to enter BK and restructure is when you actually have financial resources or liquidity, to execute a plan that while painful in the short-term, will allow for building blocks to be established again to support long-term growth. The biggest mistake Greece made was not executing its BK/restructuring early enough but rather waited until it had nothing left and thus, placed itself in a situation that chapter 7 (liquidation) was the only option versus chapter 11 (restructuring). So my advice to any and all other countries in the Euro that are running the risk of German domination, wake-up fools and act immediately and if not, get ready to really know what it means to "dance for the man (or woman in this case).

Funny how history repeats itself but if you remember, Hilter displayed aggressive behavior and expansion efforts well before WWII ignited. No different today with Germany other than moving from Tanks to Banks. 

large_wooden_badger's picture

Moral hazard is but another tool in the German arsenal, they got the PIIGS addicted to debt like crack babies, crying for more sugar.

I really hope Greece can kick this smack. I hope someone does an academic analysis of the emerging Greek barter economy, it will come in handy when the US goes down the same road. Of course, in the US not only will we have the opportunity of learning to barter, but we will be doing it in between the attacking hordes of the FSA.

Good times!

GoldIsMoney's picture

No clues, no ideas, but a lot of hate in yourself. I hope you'll be alway far away from me. And I just wish you all the hate fall back on yourself. as you radiate it.

large_wooden_badger's picture

Thanks, I've been called worse.

Did you shave your beaver before you milked it?

general ambivalent's picture

Seems like a reactionary logic narrative. The Germans were not the aggressors in WWI or WWII. In fact, much of WWII was a direct result of worldwide economic suppression, attempting to send Germany back to the stone age so that they could never fight again. And this tactic had been employed before the 20th century as well against the Germans.

Further, denazification was an attempt to completely destroy traditional German culture and thinking while making the country safe for a return of democracy and Judaism. The anti-German movement is an interesting cultural time to study, kids began to question their parents role in Nazism, outing them, and suggesting that Germany was still a Nazi state only with a new passive image.

While there is some truth to this, it hides a deeper problem: that fascism was a response to the failings of democracy, and democracy's denazification program was its own form of totalitarian control. We have moved to more subtle and irrational means of control, and the Western world has a deep anti-German worldview.

Batman11's picture

Iceland survived capital controls with no reported problems.

It also shows the benfits of having your own currency and facing your problems immediately:

1) Default

2) Close down failing banks

3) Imprison criminal bankers

4) Impose capital controls before all the money has left the country

 

Charming Anarchist's picture

I am not sure things need to be that complicated. 

I reckon that if folks start avoiding fiat by trading in alternate currencies, pms, cheese, anything, barter, whatever, the beast will starve.

"You can not have money problems if you do not have money."

_SILENCER's picture

 

Shows to go ya. Paper doesn't mean shit when it's time to get things handled.

large_wooden_badger's picture

Next generation Greek Tinder sites, trading sex for goats and chickens

Batman11's picture

It's Syriza's fault.

Placing the blame doesn't help the creditors get their money back.

Debt reductions early on would have provided creditors with the lowest losses.

Tip - Don't lend money to people who can't pay it back.

It's called prudent lending.

Batman11's picture

"Only lending to people who can pay you back?

Are you sure?

No one told me" a typical banker

Payday loans, sub-prime, student loans, sub-prime auto loans .......... 

PoasterToaster's picture
PoasterToaster (not verified) Batman11 Jul 29, 2015 1:29 PM

Loaning money to rich people or governments always carries the highest risk.  It wasn't the people that were "sub prime", it was the State and its manipulations that required sub prime into existence.  It is the financiers who created sub prime to profit, while assigning blame to people who are underemployed.

Poor people do not have any power.  Blame lies with the master class.

large_wooden_badger's picture

Allow me to introduce you to a little something called "moral hazard". Makes banksters rich!

chosen's picture

Barter is good.  No taxes, no receipts, no VAT, you can sell or buy from who you want when you want.  The problem is a lot of service jobs do not work well with barter.  Well, learn to fix it yourself. 

rex-lacrymarum's picture

There is a more profound problem as well: there can be no rational economic calculation without money. Perhaps the Greeks will begin to use gold again - there are a great many sovereigns circulating in Greece, as they were once used as money there and have remained popular. This would be a way of restoring a monetary economy - really a sine qua non in a complex modern economy based on the division of labor - while preserving many of the advantages you have mentioned. 

PoasterToaster's picture
PoasterToaster (not verified) Jul 29, 2015 1:27 PM

The amazing thing about fiat currency is that it allows a master class to remotely siphon every single transaction between any two people.  No extra work is needed, the ownership of the currency is enough to enable this theft, with no one the wiser.

Barter cuts the theives out of the loop, which is why it has had such a bad name in the "education" system that US children are sentenced to for 13 years.  With today's information technology, imagine the kind of system that could be created around barter and similar arrangements in terms of efficiency and even international trade.

Oligarchs the world over could be dispossessed of their most prized tool of slavery.

large_wooden_badger's picture

Very true, in the digital age just about everything can be quantified in relative terms, in real time, per specific attributes depending on the goods or services. Relative terms would fluctuate naturally per the rules of price discovery, or supply and demand.

Charming Anarchist's picture

I would take things a step further and say that the digital age makes it less necessary to quantify everything.  This is to say that folks who are impulsive have more opportunity act upon their impulses.

There is no law of nature that says markets must be stable or predictable.

large_wooden_badger's picture

The proof of what you are saying are sites like craigslist, except for the serial killers. Also, the "local" aspect of a good or service is a huge factor in pricing some things.

Bastiat's picture

More austerity!! Raise the tax rate!  That will make those bad bonds perform!  Punish! 

laomei's picture

barter is a great system to be honest.  first off it's virtually untrackable, it's not realistic to tax it... i mean, sure, in theory you can tax on fair market value, but when you are doing it because there is no liquidity, then the fair market value is essentially "zero" unless the government is happy to accept chickens and some hay.

 

what barter does though is result in useless people being cut off, and i think that's a good thing.

VWAndy's picture

Good luck buying up all the sellouts with fiats true value.

Hobbleknee's picture

Actually, barter sucks. What happens when I need shoes, and I don't have anything that the shoemaker needs? You spend a month trading crap back and forth to get what the shoemaker needs. And who's taking care of business, while you're trading a TV for chickens for cheese for the car repair for a phone... that the shoemaker needs?

Money is what leads to specialization. Without it, we are all reduced to hunters and gatherers.