Albanian Civil War Caused By Ponzi Scheme

The Albanian civil war, also known as the Albanian rebellion, Albanian unrest or the Pyramid crisis, was a period of anarchy, civil disorder and violence in Albania in 1997, sparked by Ponzi scheme failures.


Albanians protesting...

In late 1996 and early 1997, several failed get-rich-quick schemes robbed hundreds of thousands of Albanians of their life savings. Investors poured an estimated $1 billion into various pyramid schemes -- a staggering 43% of the country's GDP.( When protestors demonstrated in the streets demanding restitution, riot police attacked them. The lack of an acceptable government solution to this problem exacerbated the situation, and the riots spread across the country. These riots, and the state of anarchy which they caused, are known as the Albanian civil war of 1997.


Weapon depots looting in 1997.

When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed. At the end of the conflict, power had transferred from the Democratic Party to the Socialist Party.


An Albanian guarding a factory

Although the Albanian civil war was a dramatic event which garnered international attention, it was but one piece of that country's long and difficult transition from an isolationist Communist state to a parliamentary democracy, which began in 1992.
The pyramid scheme phenomenon in Albania is important because its scale relative to the size of the economy was unprecedented, and because the political and social consequences of the collapse of the pyramid schemes were profound. At their peak, the nominal value of the pyramid schemes' liabilities amounted to almost half of the country's GDP. Many Albanians — about two-thirds of the population — invested in them.


Albanian rebels...

The wide appeal of Albania's schemes can be attributed to several factors, including Albanians' unfamiliarity with financial markets; the deficiencies of the country's formal financial system, which encouraged the development of an informal market and, within this market, of the pyramid schemes; and failures of governance. Although Albania's transition to a market economy was rapid and quite successful, financial sector reform was very limited. Albania's formal financial system was rudimentary.

With the banks unable to satisfy private sector demand for credit, an informal credit market based on family ties and financed by remittances grew. The informal lending companies were initially regarded as benign and even as making an important economic contribution. Operating alongside them, however, were deposit-taking companies that invested on their own account instead of making loans. These companies were the ones that turned into pyramid schemes.


Evacuation of U.S. citizens in Albania (Operation Silver Wake)

For more goto source:
http://www.globalsecurity.org/military/world/war/albania.htm