According to the Financial Times, 25% of US corporations have increased investment in Asia since the euro crisis began, but only 3% have increased spending in Europe. Shopping for bargains in distressed European assets has diminished, while even the financial sector, in which Europe was thought to enjoy a comparative advantage, has shifted its focus.
Is an anti-austerity faction beginning to emerge among European business leaders? The article quotes Sergio Marchionne, who heads Fiat in Europe and its Chrysler subsidiary in the US, to the effect that more rather than less government intervention in markets is needed. To be sure, Marchionne's position may be determined by conditions in the auto industry, where global overcapacity and misallocation of resources is a problem. But there is a broader feeling that Europe is entering a phase of stagnation similar to that of Japan. At least one element of business sentiment is thus moving close to Paul Krugman's view that Europe has sacrificed too much to the banks while doing too little to revive the animal spirits of entrepreneurs.
The problem, however, is that a workable political coalition in favor of European stimulus will depend on the geographic distribution of discontent CEOs. To put it in a nutshell, not enough German executives share Marchionne's view that governments need to spend more at home in order to stimulate demand.