Russian heavy industry gives up rubles, takes payment in barter-goods

Russia's liquidity crisis is so bad that giant factories and regional governments are conducting commerce using barter -- trading underwear for cars, food for construction work, etc. The ruble's in short supply, first because the government's bought up a ton of money to keep it from collapsing, and second, because there is so little confidence in banks that many people keep their savings in safe-deposit boxes or mattresses, rather than savings accounts.

Advertisements are beginning to appear in newspapers and online, like one that offered “2,500,000 rubles’ worth of premium underwear for any automobile,” and another promising “lumber in Krasnoyarsk for food or medicine.” A crane manufacturer in Yekaterinburg is paying its debtors with excavators...
The Hyundai factory in Taganrog, the southern seaport where Chekhov was born, rolled out a barter promotion on its Web site, offering to trade vehicles for “raw materials,” “high-tech equipment” or “other liquid goods, including finished products of various branches of industry.” Gleb Korotkov, a spokesman for the factory, said he could not be specific about what goods were meant, saying it was a “commercial secret.”
Barter deals seem to be spreading fastest in construction industries. Dmitri Smorodin, who runs a large St. Petersburg building firm, said he thought for two months before announcing in late January that he was willing to accept barter items – including food products – as payment for construction work.

Have Car, Need Briefs? In Russia, Barter Is Back

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ikegently

i have no connection to any tax agency of any kind, nor do i have a JD.
Procrastes

Finally! The missing step in the venerable puzzle.

It’s nice to see the underwear gnomes are pitching in to help with the crises, but it sounds like they are planning a getaway.
ikegently

i do have a fondness for tea.
Takuan

why couldn’t they burn one a year? Just one? They killed four million Vietnamese and fifty thousand Americans to keep an arms industry going that didn’t change a thing politically (in South East Asia anyway). They’ve just killed one million Iraqis and five thousand Americans to keep a few oil companies happy, why couldn’t the people who pay the taxes pick just one and burn him? It would really help revenues and what’s the life of the most unpopular public blood-sucker in the bigger picture?
Cicada

@22 Eerily similar to Athenian ostracism. On the other hand, unlike ostracism, you can’t recall a pile of ashes if you suddenly need ‘em. (Aristides, say)
Anonymous

Jct: Best of all, when the local currency is pegged to the Time Standard of Money (how many dollars/hour child labor) Hours earned locally can be intertraded with other timebanks globally!
In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours.
U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
See my banking systems engineering analysis at http://youtube.com/kingofthepaupers with an index of articles at http://johnturmel.com/kotp.htm
Takuan

I’d risk it.
mdh

I wonder if there is an “Ivanslist”?
ill lich

So. . . how long before the communists regain control of the Duma?
thickdot

I have some left over Sterno cans from camping last summer. Anyone want to trade?
Daemon

“A crane manufacturer in Yekaterinburg is paying its debtors with excavators… ”

Wow, you know the economy is broken when companies are paying people who owe them with heavy machinery.

‘Cuz, you know, normally you’d be wanting your debtors to be paying YOU in something.
dnl2ba

Either that’s a lot of underwear, or “underwear” is a euphemism/metonym.
Takuan

creditor, debtor what’s the difference?
Takuan

(yes, Greenspan did used to call me for advice)
Takuan

so even less tax paid feeding back. Death spiral
rasz

Its bad because American Mutual funds decided to rape east Euro stock exchanges at the end of the year. We have analogous situation in Poland. US Mutual funds flooded our market with shorts and Foreign exchange options, they were able to sink our currency almost 40% in few months.
Look at the dollar
http://www.money.pl/pieniadze/kurs/usd,787.html
and at one of many companies that “invested” in Foreign exchange options aka got raped by US Mutual funds
http://www.money.pl/gielda/spolki_gpw/zm;ropczyce;sa,RPC,informacje.html
WarLord

Part of the fallout of oil at $40 a bbl.
piko

Funny thing is, this is what happened in 1919-1921 (ish) when the Bolsheviks tried to stamp out the market economy entirely
Anonymous

In Soviet Russia – The Buck Stops YOU!
~]3
ridl

When I lived in Olympia, WA, I heard stories about how the ultra-awesome Food Co-Ops used to have a barter board for people to post offers for work and services and sundry. And then the IRS made them take it down. Really. Barter can’t be taxed, therefore it is illegal in the Land of the Free.
ikegently

RE: RIDL

Barter is not illegal. However, not paying taxes on bartering is illegal. Fair market value of the goods exchanged must be declared in the same way that a cash payment would be declared. See section 1.61-2(d)(1) of the tax code.

As an aside, I see no reason why this should be objectionable. Why should I, who deal in cash, be responsible for paying for our nations roads, bridges, schools, etc, and those who barter get to enjoy them without paying their share? Taxes are good. They allow us to live in a society where the government at least can try to provide services. Sure, the providing of those services is imperfect, but circumventing the taxation process is irresponsible and burdensome on the rest of society.
Takuan

anyone who says they voluntarily pay taxes, doesn’t.
ikegently

I’m not saying there is anything wrong with legally minimizing the amount of taxes you pay. who wouldn’t? but i view cheating as very wrong.
markmarkmark

Wow.

This is amazing, and a step back from the mistakes that mother Russia has been making forever
ridl

I heard this story from people involved. You may know the law better than the IRS, Ike, but they did demand that the barter board be removed from the grounds of the Olympia Food Co-op. What choice did the Co-op have but to comply? (They still manage to host a “free store”, tho’).

That said, I don’t object to taxes either unless they fund a system I fundamentally disagree with or with priorities I find offensive. Such as the current ratio of military and “homeland security” spending to education, health care, clean energy, environmental protection and restoration, social security, etc. I’d prefer a less coercive, more democratic model, an ability to conscientiously object to war taxes, to earmark our contribution to fund the true goods that pooling our resources allows without having to choose between jail or blood on our hands. I also imagine a “budget by ballot”. It needn’t be micromanagement, it could just set concrete budget priorities, forcing true representation from our representatives. Such is my revolutionary daydream.
Takuan

how about a tax system where everyone cheerfully pays, but once a year they get to vote for one civil servant or elected rep to burn at the stake?
ikegently

As I have no direct knowledge of the situation at the Olympia Food Co-op, I can’t comment on that situation specifically. However, bartering is definitely legal and is covered in the IRS codes. What gets people into trouble is when they think that they do not need to report their transactions for tax purposes.

I agree that it would be nice to be able to object to war taxes without decreasing the amount of money that goes for education funding. That would be beautiful. And it would make us really think if we want to be fighting a war to begin with.
- Antinous / Moderator
  
  Why stop with bartered goods? We should be paying taxes on bartered services as well. If I clean the bathroom and hubby (if there were one) mows the lawn, we should be honest and pay income taxes on what we would have paid a maid and a gardener. Sex taxes would be a double whammy. A pair of hookers can get mighty expensive, and an hour of loving could mean several hundred dollars for early childhood education, low-cost healthcare and safe bridges…once it’s safely in the coffers of the US Treasury.
ikegently

Perhaps the Olympia Food Co-op got in trouble for running a barter exchange and not filing form 1099-B. see: http://www.irs.gov/businesses/small/article/0,,id=188094,00.html
ikegently

I know you are being sarcastic, Antinous, but I’ll bite and point out that services are already covered under the barter tax codes. You should consult a tax attorney for further info.
ridl

Hmmm… Ike Gently… you don’t happen to run a Holistic Tax Agency, do you?