MASTERS THESIS DEFENSE BY OLADEJI A BELLO SUPERVISOR: IEVGENIIA DIADKO EUROPEAN ECONOMIC CRISIS AND ITS CONTRIBUTING FACTORS

3 PARTS OF THE THESIS PART 1 THEORETICAL FOUNDATION OF THE ECONOMIC CRISIS PART 2 ANALYSIS OF THE ECONOMIC CONSEQUENCES OF THE ECONOMIC CRISIS IN EUROPE PART 3 PROSPECTIVE MEASURES OF OVERCOMING THE ECONOMIC CRISIS IN EUROPE

AIM, OBJECTIVES AND OBJECT OF THIS THESIS AIM This thesis is going to analyze the European sovereign crisis and determine the causes of this crisis. It is going to start by discussing the conception of the Euros as single currency and then the paper discusses the problems that were ignored during the formation of the euro-zone. OBJECTIVES This thesis will examine in depth the causes of this crisis which are - the US sub-prime crisis and the European property bubble, government fiscal profligacy and global finance, finally the ECB’s inability to act as a central bank (lender of last resort). This paper is going to analyze in details the causes of the European sovereign crisis and also look at proposed solutions. Will discuss facts to note and learn from about the European crisis. OBJECT OF THIS THESIS Identify the main economic markers of the Economic crisis, Identify main mistakes made and how to remedy them, provide reasonable analytical possible remedies and facts to consider in order to prevent such large global economic crisis.

KEY THEORETICAL IDEA

KEY THEORETICAL RESULTS

FISCAL POLICY BY MEMBER STATES

PROPOSAL Historically, the prominence of fiscal policy as a policy tool has waxed and waned. I propose the use of fiscal policies to strengthen the Euro. 1. There should be a creation of a Fiscal Union to stand alongside the Monetary Union. 2. The EU also needs to increase government role in the flow of market. 3. There is need for more rigid fiscal policies – i.e. implement tax cuts, more flexible interest rates and more rigid bank reserve requirements. There is one currency and one rate and not all EU countries are favoured by such rate. 4. Lastly, more constructive fiscal policy” would help mitigate the negative impact that structural reforms have on demand and would be consistent with the longer-term aim of closer integration as the current fiscal policies would have worked better in a country.

COST OF THE EFFICIANCY OF MY PROPOSAL I cannot calculate the cost of economic bailout but this I can say-  European governments injected €440 billion ($605 billion) between 2007 and 2011 into bank bailouts and provided guarantees of €1.1 trillion.  €172bn is the amount requred for Greece bailout.  In my opinion it will cost nothing less than $1 trillion to implement fiscal and monetory policies i.e. bailout of the European crisis