Monday, May 18, 2009

Ponzi/Madoff pyramid schemes and Albania's 1997 "Lottery Uprising"

An article by Kerin Hope in Athens on May 14, 2009 titled "Positive Growth Forecast for Albania" stated that Albania appeared as "an unlikely bright spot on Europe's economic map" because of its modest economic growth compared to other European nations. Notwithstanding the world's current economic downturn created, in part, by the Ponzi-like Madoff pyramid schemes in thre USA, Albania's positive economic progress was truly good news, however, it did bring to mind how Albania also experienced financial pyramids in the mid-nineties.

According to a letter titled "Financial Collapse"(The New Yorker, THE MAIL, Page 3, April 27, 2009), "(During) Albania's experience with financial pyramids in the many as two-thirds of the Albanian population invested in schemes, with little or no prospect for long-term payouts. At their peak, the investors' liabilities approached half of Albania's gross national product. The result, in 1997, was a large-scale financial collapse accompanied by general revolt.

Known locally in Albania as the "Lottery Uprising," it ended with more than fifteen hundred dead, the goverment replaced, foreign nationals evacuated, and seven thousand UN peacekeepers on the ground. It is likely that no other society has ever been so completely saturated by pyramid schemes that the state is brought to the point of failure."

Yes, pyramid scehmes are economically disasterous for all involved, but they are also politically dangerous. That made the good news about Albania's current positive economic outlook and stability doubly welcome. Bravo Albania!


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