In 2008, the credit crisis in the United States propelled shock waves across the Atlantic to Europe. Europe’s current debt crisis could send damaging waves to America's shores as well, according to international finance experts at the W. P. Carey School of Business. In wide-ranging interviews, these experts discussed the threat the European crisis poses to the United States, how the U.S. crisis may have contributed to Europe's woes, and whether European leaders are even now recognizing the lessons of the US experience.

For more than a year, the European Union has been in crisis over the huge debts faced by its weakest economies. Cutbacks in social programs and benefits have stirred unrest in those countries, as well as in better-off nations in the Eurozone. The specter of sovereign default looms across the continent. The way out of Europe's volatile debt crisis is likely to involve painful belt-tightening, increased emergency aid, and eventually a restructuring of debt in the most troubled countries, according to finance experts at the W. P. Carey School of Business.

Finance scholars have long urged corporate managers to hold less cash and assume more debt. Too much cash, the argument went, could make executives lax, encouraging imprudent acquisitions and spendthrift expansions. Debt, in contrast, brought discipline: you don't do dumb deals when you know you have to make regular interest payments. Rather than stockpiling cash, these thinkers argued, companies ought to be paying dividends. But research by W. P. Carey finance Professor Thomas Bates and co-authors suggests that managers -- prudently -- have not listened.