The contrasting investment messages of UK and Germany

BBC business editor Robert Peston at Davos

Davos: There is about $3 trillion of investment funds represented here in Davos by assorted heads of sovereign wealth funds, insurance companies, hedge funds and so on.

Which is why the world leaders who throng this place become super-salesman for their countries.

So for example the President of the Bundesbank and member of the board of the European Central Bank, Axel Weber, looked those investors in the eye yesterday - in one of Davos's more interesting private meetings - and more-or-less dared them to short-sell the euro.

I am told by one of the investors that it was an impressive display of German confidence.

"He said that Germany had deployed the equivalent of its entire GDP on making a success of its national reunification" said the investor. "And he said we should assume Germany will do the same to save and strengthen the eurozone".

I am told that those who left the meeting were a bit less sure than they might have been that betting against the euro was a sure thing.

I should however point out that if those moneymen had - like me - spent a bit of time talking to individual finance ministers of EU nations and members if the European Commission, any belief they may have had that the eurozone's woes are behind it would have been shattered.

Because what emerged from my conversations was a profound unease with the way that Germany is bossing the process of deciding the size of the eurozone rescue fund and - more importantly - the conditions to be imposed on potential and actual beneficiaries of the rescue finance.

What's worse for investors, there still seems precious little recognition among Europe's political elite that the weakness of the eurozone's banks is arguably the more important cause of the eurozone's fragility than conventional government deficits.

On that analysis, Greece - whose crisis was a consequence of state profligacy and disastrously poor public accounting - would be the exception that proves the rule.

By contrast, Ireland and Spain were models of conventional fiscal rectitude in the boom years.

The point, as you know, is that Ireland went kaput because its government could not afford to recapitalise its bloated, lossmaking banks.

And Spain is viewed by investors as a possible accident waiting to happen because of its failure - in investors' view - to properly own up to how much capital needs to be injected into its savings banks.

As for Portugal, its difficulties are seen as a kind of "lite" hybrid of Greece and Spain - part intractable deficit, part banks that need capital.

But I digress from the simple uninteresting point that world leaders who come here tend to claim that their economies are doing brilliantly - or perhaps not as badly as some may have thought.

Those European finance ministers I've met may have incompatible prescriptions for bolstering the eurozone. They may be myopic about the weakness of the banks. But they refuse to countenance the notion - which is a commonplace among the bankers and investors - that the eurozone's woes may worsen.

As for the leaders of other nations, from Asia to South America, they're like market-stall traders offering bargain Rolexes: you would need locking up if you don't build your car plant or research centre on their soil, they say.

There is however one world leader whose message might be seen as refreshingly honest or chillingly frank. This is what David Cameron is saying here:

"Average government debt in the EU is almost 80% of GDP. Some countries are again borrowing five, six or seven per cent of GDP again this year. The figure for the UK is more than 10%. This is clearly unsustainable and action cannot be put off...

"Remember what we started with in the UK: an economy built on the worst deficit, the most leveraged banks, the most indebted households, the biggest housing boom and unsustainable levels of public spending and immigration. And now think of where we need to go: an economy based not on consumption and debt but on savings and investment; not on government spending but on entrepreneurial dynamism; not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade."

As Mr Cameron says, correcting the structural flaws in the British economy won't be easy. And it's obvious why he is accentuating the negative: he needs to argue to a domestic audience that there's no alternative to public-sector austerity to remedy the deficit, and that the siren claims of the shadow chancellor, Ed Balls - that the cuts are excessive - are a straight route to the rocks of economic crisis.

But here's the thing. At a time when the UK economy has contracted again, the Davos money men (not my sexism, but the industry's) might not understand the politics of Mr Cameron's dour diagnosis of Britain's ills.

They might simply notice that the UK's structural weaknesses aren't trivial - and might feel there are less risky places in the world to deploy their funds. Some would see that as unfortunate, to put it mildly.

Update 10:22: This seemed to me to be the most arresting part of David Cameron's speech this morning at Davos:

"If you're looking to set up a headquarters abroad, are you going to invest where your premises can be taken away from you? Where contracts are routinely dishonoured? Where there's the threat of political upheaval?

"Or are you going to invest where there are property rights, the rule of law, democratic accountability?"

The British prime minister was making the case to global investors for placing their capital in Europe's liberal democracies - and he warned them against betting too much on what he called the "authoritarian capitalism" of China, Russia and other fast growing emerging economies.

Some will see this as a provocative statement at an event thronged with the so-called authoritarian capitalists.

But this was the prime minister doing what I said earlier all world leaders do here - which is try to flog their nations' or regions' comparative advantage to investors.

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.