Spain's barter economy booms in grip of crisis
The growing parallel economy is being fuelled mainly by a clutch of websites, paid for by advertising and offering platforms for the cash-free exchange of everything from language classes and dog-walking to furniture and cars.
Madrid: It's 10.30 on a chilly winter's morning in central Madrid and retailer Emanuela Scena is opening up for business. Her shop is one of several offering second-hand goods that have sprung up in Spain's capital during the economic crisis and is packed to the rafters with clothes, books, CDs and electrical equipment.
But unlike the others, it doesn't take cash. It's part of a barter economy in goods and services that is gaining ground as the country tips into recession and already sky-high unemployment rates inch up.
Finding different ways of generating business has also inspired stores in two towns to start accepting the peseta again, encouraging customers more than a hour's drive away to root through cupboards and drawers for a currency they thought they'd surrendered for good in 2002.
"When we started (in December 2010), Spain was already in crisis. At first people didn't like the fact that everything we were exchanging was second-hand, but now they understand," Scena said.
'Abrete Sesamo' (Open Sesame) - "we liked the idea of a name suggesting Ali Baba's cave of treasures" - now gets up to 20 customers a day swapping goods for points they earn by bringing in items of their own and paying a small subscription fee.
People can also buy points just with euros, "but they're more expensive that way because we want to encourage bartering."
As a storeholder, Scena is an exception in a small but growing parallel economy that is being fuelled mainly by a clutch of websites, paid for by advertising and offering platforms for the cash-free exchange of everything from language classes and dog-walking to furniture and cars.
It has also encouraged discounting in Spain's residential property market, which collapsed in 2007 when an asset bubble burst, saddling banks with a mountain of toxic loans and making them less inclined to issue mortgages to new customers.
Sabino Liebana, whose company atodatinta sells printers and accessories via the web, is part of the expanding business-to-business barter community.
During 2010 he paid the 600-euro-per-month rent on his Madrid office with goods instead of money.
"It was mostly printers and inks, and a few computers," he said. "The landlord rented at the same price to me as to his other tenants. I gave my products to him at a discount, but never below the cost price."
He was happy to take the hit, he says, because it meant he could protect his cashflow better.
"Because of liquidity problems I think it (bartering) is something that will be used by more and more firms, especially in the service industry," he said, adding he'd "rather not say" how much profit he made last year on sales of 500,000 euros.
He has made around a dozen cash-free transactions in the past six months, mostly for advertising and web design work and often via Barcelona-based exchange portal acambiode.com.
Founded in Spain in 2001, the site covers most of the Spanish-speaking world plus Italy and Portugal.
Worldwide it has 310,000 clients, mostly small firms or professionals from across the business spectrum, and 2-3,000 more are signing up every month, director Jaime Martinez said.
The 67,000 Spain-based users seal around half a dozen either pure barter or part-cash deals daily worth some 5,000 euros each on average, or close to 10 million euros of business per year.
The site expanded rapidly when the financial crisis hit in 2008 and is now experiencing another growth spurt that Martinez expects to extend through the slump as more firms look to focus their cash outgoings on keeping themselves in business.
"We are seeing a lot more activity in Spain than in previous years," he said. "Bartering is another way of financing your purchases if you have liquidity problems, which means you can save your cash for more urgent matters."
One obvious issue for the government is how to keep track of barter transactions. Spain's tax office could not shed much light on how taxes were assessed but confirmed all barter transactions were liable for tax.
"The key issue is how the barter exchange is valued. Tax legislation contains very specific guidelines for the fiscal valuation of goods and services, and this is mostly based on market price," said tax office spokesman Luis Gonzalez, declining to elaborate further.
Acambiode.com's Martinez said in his business, both domestic and international transactions were taxed just as they would be if they were cash-based.
But Jose Maria Mollinedo, vice president of Spain's Gestha union of tax inspectors, admitted the barter economy was a "totally opaque market (that is) ... impossible to monitor."
Cheaper real estate?
In Spain, signs of funding strains are hard to miss.
Since mid-January, around half a dozen listed firms have said they are seeking to refinance their debt or secure new repayment terms.
The latter include commercial property developer Inmobiliaria Colonial and real estate manager and developer Quabit, both survivors of a crash that has seen average prices of existing property fall by 29 percent in just over four years, industry data shows.
With mortgage lending down even more sharply, dropping a third in the year to November according to official figures, conditions are ripe for a surge in barter transactions in the real estate market too.
"We have grown tremendously fast just via word of mouth," said Eneka Tamayo of sepermuta, the residential property exchange website he runs in the Basque city of San Sebastian.
Founded in 2008, it has some 6,900 homes posted and gets around 40,000-50,000 hits per month. Sellers give guide prices for their property and a wish list of what they are seeking in exchange at the same value.
Tamayo expects the number of posts to keep rising until the market recovers, "and I can't see that happening any time soon."
"Lots of people want to buy and don't know how, if they don't have work ... and if the banks aren't lending," he said. "If you already have a house, this way you don't need to raise a lot of extra (money)."
Tax is levied on barter transactions at 7 percent, the same as on cash-based property sales. But Tamayo argues that using property exchange works out cheaper.
"If you sell a home for money, you look for the highest possible price. If you exchange you hold the price as low as possible and so pay less tax," he said.
Comparisons bear the argument out.
A user of the website looking to move to Valencia has valued his four-bed flat in Leganes, part of Madrid's commuter belt, at 240,000 euros. An estate agent is selling a slightly larger flat in the same street for 435,000.
A three-bed flat in Denia, a town on the Costa Blanca north of Alicante, carries a barter valuation of 145,000 euros. In the cash market, a smaller flat three doors down is on offer for 180,000.
Time is money:
Internet-based platforms for bartering services such as English tutoring or Spanish cooking classes, known as time banks, include depersonaapersona, launched last September in Madrid by Ignacio Cristobal Martin.
"It's a bit more complicated (than exchanging goods). You have to have confidence in the other person, that they are of good faith," he said.
Martin believes that is one reason why, in a country where close to one in four of the economically active population are unemployed, his website has not attracted more than around 800 users and 5,000 hits per month.
In an effort to expand more quickly, he plans a relaunch with a tighter code of behavior for users and the capacity to blacklist those who fail to provide the services offered.
Salvaterra de Mino, in northwest Spain, has had no trouble drumming up custom for its innovative contribution to the economy, drawing shoppers from up to 100 km (60 miles) away since it launched 'operation peseta' in October.
Nearly 50 local businesses signed up for the initiative, and the town has collected the equivalent of 12,000 euros in Spain's old currency, which it swaps with banking authorities at the euro-entry conversion rate of just over 166 pesetas per euro.
"We didn't think there'd be such a big response," said Pablo Pino, who heads the local trade association. "It's also a way of putting Salvaterra on the map."
Consumers in the Madrid catchment area have managed to cash in, too. The town of Villamayor de Santiago, southeast of the capital, ran an identical scheme that ended on February 17 - though not for want of pesetas.
Some 1.7 billion euros worth of the currency remains in circulation, according to the country's central bank, which says it has no plans to place limits on the peseta's validity. Around 14 million euros worth was exchanged directly at the bank last year.
A central bank spokesman declined to comment on whether similar initiatives might take off in other parts of the euro zone, which like Spain are sinking into recession.
Some consumers look to have missed the boat, however. France discontinued exchange facilities for the franc on February 17 and Finland will do likewise for the markka later this month.
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