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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robertocarlos's picture

I like to plead and then beg before resorting to barter. This is about sex right?

homiegot's picture

Not one mention of gold or silver. Because in a SHTF scenario, fucking worthless.

Crocodile's picture

Tell that to the Venezuelans or Argentinians, who have a serious currency crisis tied to the USD (causing hyper-inflation); they would have loved to have their savings in the metals...they would be far ahead of their neighbors.  Diversity & moderation in all things except for One.

homiegot's picture

My point is, when things get to the point like they are in Greece, goods and services are more valubale than stores of wealth like gold or silver.

PoasterToaster's picture
PoasterToaster (not verified) homiegot Jul 29, 2015 7:39 PM

For a short time until the crises passes.  And if it goes on for long, it hardly matters anyway.

People always have trouble including durations of time and changes in conditions when they game things out.

Death By Cold Steel Report's picture

@homiegot This is a farmers trading website, and was established in 2013 August. That says it all, because its not a open to all barter site. Here's there about page.

mermix belongs to farmers, and it is built and supported by those whose will is to share their machinery

homiegot's picture

Disgruntled precious metal bugs are out in force.

Nobody Important's picture

QUOTTE: "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."
And now you are under IMF/Eurozone occupation, so basically the same situation!

Bankster Kibble's picture

I'm waiting for the Greek govenment to notify all those registered members of the barter clearing house that their transactions are considered "income" and are taxable.  Don't we do that here in USA?

The Duke of New York A No.1's picture

I wonder how much one of Tsipras' ear's would be worth?.

Burticus's picture

Barter depends on a confluence of wants, which constrains the division of labor and aggregate production.

Throughout history, gold & silver always served as a perfect medium of exchange, enabling specialization and efficient commerce.

Too bad ze Geeks trusted electrons on a computer and paper instead.

rhymemepoet's picture

Who run barter town

razorthin's picture

Ironically, a major step forward.

Meremortal's picture

Total collapse?

Barter economy?

So gold must be a zillion euros an ounce in Greece by now, right?

Jerk_Store's picture

No, but you could probably get some cheese for a silver dime

Dominus Ludificatio's picture

We love the undergound economy.Scew the taxman.Free markets takes on a new meaning.

Guard1an's picture

 

"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."

 

Now it's Merkel occupation. 

user2011's picture

Sell the citizenships to the Chinese.  All the rich Chinese want to get out of China.    Time to harvest their illy earned money.

talisman's picture

[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]

How many bushels of rotten tomatoes and dead fish
will the ECB accept in barter exchange to satisfy  this debt payment ???

Sauerkraut-Opinion's picture

Return to the basics ! 

May be the Greeks slowly remember the wonderful times when the ATM was spitting out money at any occasion and cars were paid with Euros based on olives, hay and tax evasion - and when pensions increased at a regular basis out of thin air.....

May be the Greeks know start to rethink about earliy retirement, high pensions for those who don't work anymore and empty hands who are still in business and responsibility. And may be they start thinking about blaming the Germans for having given them so much support over the last three years of idle time.

I think that break might be the only way to move something, to reorganize this failed country

 

PoasterToaster's picture
PoasterToaster (not verified) Sauerkraut-Opinion Jul 29, 2015 9:21 PM

Maybe "The Greeks" are just the victims of a planned takeover of their assets.  "The Greeks" have no more power than "The Americans" do in changing their slavemasters.

GoldIsMoney's picture

Very easy for all countries, stop being slaves. But what the dream of too many, get slavemasters of their own. There ist but one economic schhool which despieses that. And they are never heard of, they are never invited to "discussione" of experts. The Experts always are thos which promote this disfunctional systems.

nah's picture

I dont belive it

.

Make me a movie, I want to hear it in American.  I want to hear the people.

Leri's picture

Up to recent Greece was on every main TV channel in prime time. Now th the real problems start no mentioning anymore.

For Mrs Merkel grexit is off the table. She does not want to discuss it anymore. What an arrogance..

I hope sincerely that Greece will stand up. The only problem is that they do not know who to trust in their own country...

L

Milton Keynes's picture

this isn't a collapse of the economy, it's a collapse of the banking sector. 

 

 

Kprime's picture

dead on.  the economy is still there but the government and the bankers can't participate.  The people and the goods are still there but Fiat has gone to hell in a hand basket.

onmail's picture

No sane person would like to eat maggot ridden euroPeon cheese.

Kprime's picture

I'll trade you 2 monkeys, a nigger, and a big white house.   Oh wait that's most of the us government and they're worthless.  Damn I should have invested in something other than live stock, flippin houses and slaves.

guidoamm's picture

It is ironic that the very moment society is forced to return to a system that should exemplify what sound money is, it is despised and considered a step backwards in the evolution of civilization.

The crux of our predicament today in the West hinges on private property. The modern monetary system precludes private property. Hence the reason that title has gradually migrated from the individual to the corporation and, eventually, to the financial sphere of the economy.

Our monetary system forces us to exchange something we own outright for something we do not own and have no control over. 

By exchaning our skills, ideas and time for the type of money that is imposed upon us, we partake in an exchange that is asymmetrical. Ergo, we exchange something we own outright for something that not only do we not acquire ownership of but that is also constantly devalued and that we owe interest on.

Barter is the essence of what economic exchange shoud be. Barter guarantees not only an exchange of equal value but it also guarantees full ownership of the product exchanged. 

Full ownership of the items exchanged is directly related to the accumulation of wealth thus to the increase in productive capital which leads to productive investment. 

In being forcded to engage in barter, individuals should finally realize that money cannot exist prior to there being something to exchange. 

Fractional reserve banking creates money before there being anything to exchange. In so doing, it inherently creates debt which is arithmetically not payable. When you do that over decades, you induce the migration of ownership towards the entities that control the currency leaving the majority of society in debt. 

The Greeks should realize they can leave the Euro and create a new monetary system based on the full ownership thus reinvigorating the economy by spreading wealth rather than concentrating it.

 

Cold-Pragmatism's picture

What a load of rubbish. Read some of my past commentaries on this very issue. You couldn't be more wrong. You have absolutely no understanding of value. You have no understanding of fractional reserve banking and how monetization of debt is accomplished. You have absolutely confused the issue between value, and utility and their relationship and how they vary with one another.

PLEASE, read my comments on this very stuff. You are in serious need of an education. It is thinking like yours that helps the elites to get away with what they do. You don't know it, but your playing right into the hands of the 1%.

Too many people are following this very stuff that you are passing here, guidoamm. This understanding you have, WAS valid about 100 years ago, it isn't today. You are 100 years behind the times, guidoamm.

Read my past comments, and stop reading the rubbish on the internet it is ALL wrong. The modern financial system doesn't work this way, its still a dishonest and even criminal in the way it works, but not the way you think.

In reality, it is worse, and even more sinister.

My god, the amount of people that are so confused with this stupid concept of fractional reserve banking.....its not like that anymore!!! Ever since we went off the gold standard, it is now DIRECT INJECTION BY CENTRAL BANKS, that now causes debt!

guidoamm's picture

We must first agree on our respective base positions.

I hold that savings brought about by foregone consumption of prior production is a prerequisite for productive investment. Ergo, money cannot exist prior to there being something to exchange.

If you agree, then, my contention may be a different take on the problem but it is most certainly not “rubbish”.

Direct injections by central banks are merely the arithmetical extension of this monetary system. At the outset however, you have fractional reserve banking that creates the conditions to, eventually, eliminate restrictions to gearing (that are perceived as an obstacle in wealth creation i.e. Glass Stegal) and, eventually, bring you direct central bank injections.

This dynamic is brought about by the diminishing marginal utility of debt.

The constant however, remains the transfer of title towards the entities that have control of the currency.

Our predicament hinges on two fundamental problems. First, the currency is imposed by law. Second, individuals do not acquire ownership of the money received in exchange for their efforts. Lack of ownership is borne out by law (you are passable of jail time if you burn a Dollar note for example) as it is borne out by the fact that you have no control over the value of the money you receive as compensation.

The reason you have no control of the value of the money is because in this monetary system, the diminishing marginal utility of debt guarantees that the currency is arithmetically devalued which, in turn, causes the gradual increase in the fiscal and regulatory burden upon society. This dynamic is also directly related to the gradual monopolization of business and industry. The logical ramification of this dynamic is the off shoring of manufacturing and the concomitant increase in unemployment.

In exchanging your labor for this variety of money, you are therefore exchanging something you own outright for something you do not own and have no control over. Ergo, you are engaging in an exchange the value of which is arithmetically skewed from the outset.

SystemOfaDrown's picture

Meanwhile: Johnny Depp and Warren Buffett are buying Greek islands.
Its a 1% world people!

GoldIsMoney's picture

If I'd the money I would do the same. They are not able to bring room into existence without work. But it's easy for banks to bring debt into an dover the world, the funny thing is they call this debts money. But only fiat-money is debt. And fiat-money is the big black hole in which everything cruches. Sooner or later all the fiat-money fail. And stupidity forces one to try another round of accumulating debt, because "this time is different" and it's never ever different. It's uncovered promise, and it starts with the first ¢ of debt states offer.

It would be reasonable to change that, but there are limits to reason but no limits for stupidity and so it win over and over again. And the death toll just is counting.

GoldIsMoney's picture

The trouble of the Greeks is the same trouble for any ciitzen world-wide. Believing that does something good. And believing a system which is build on defraud. Sorry, they pay the price and ever otehr "civilized" country will. It's not a question if, but only when. And because bartering is uncomfortable, they will start using some sort of money instead. If the would be less dumb than others, they would remove all the politicians and buraucrats, And change every € they can get into PM and start coining real money. And they would put all the central bankers into jail, but no they still do expect something good from government. Einsteins question can be answered. There is no limit to stupidity in men...

RabbitChow's picture

Hey joe, you got hershey bar?

Maestro Maestro's picture

Tsipras and all the politicians that abstained or voted for the bailout, to jail.

 

Close ALL embassies of European nations in Greece, recall Greek ambassadors.

 

Issue gold, silver or commodity referenced national currency [This is how much gold we have and this is how much we print].  Ackowledge gold and silver as true money.

 

That's all folks.

 

Problem solved.

 

BANKERS ARE ANIMALS.

unklemunky's picture

Actually, this is a real market. This is what thr bankers should fear.

IndianaJohn's picture

Trotting out the NAZI in the ending paragraph is a slur on the author. http://thegreateststorynevertold.tv/