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Greece resorts to Barter networks

In recent years Europe has been hit by a severe sovereign debt crisis that has tested governments’ abilities to impose austerity measures and the euro-zone’s resolve to support its members. Greece has been hit the hardest by the recent crisis and has been the main focus of the markets and of debate concerning the viability of the euro-zone. As of March 2011 Greece’s debt as a percentage of its G.D.P. reached 142.8% and its unemployment has soared to 15.9%. Standard & Poor’s gives Greek debt a CC rating, one of the worst in the European Union, indicating that it is perilously close to defaulting on its debt. Recently The New York Times published an article exploring how Greeks have turned to barter networks in response to the poor state of their economy. The barter networks are primarily sprouting up in smaller communities, like Volos, and are using the “Local Alternative Unit” to exchange goods and services. In the past year the Volos network has grown substantially from 50 to 400 members.

With respect to what we have learned in class, a barter system has its own advantages and drawbacks. Obviously there are inherent inefficiencies linked to the valuation of goods and services. If I am selling eggs, my price will fluctuate depending on what potential buyers can offer. I might not have any need for a babysitter, but desperately need someone to fix my computer. On the other hand, with such a high rate of unemployment a barter system might allow people with limited monetary funds but a supply of skilled knowledge and or goods to enter back into the local economy. Regardless of how well the barter networks are operating, that they are cropping up says a lot about Greece’s faith in its economy. One aspect of networks that I do not believe we have addressed is how people’s opinion of a network influences how productive it is. For Greece’s economy it looks like a downward spiral as it crumbles from within and the players that make the economy function pull out.

http://www.nytimes.com/2011/10/02/world/europe/in-greece-barter-networks-surge.html?scp=2&sq=greece&st=cse

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