My point is that if the economy stays off the rails Toyota isn’t going to be in any better shape. European car companies are already lining up. Chinese car companies are lining up. You can’t run a company in an industry that sucks down capital when the the financial system is broken.

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I don’t know about Toyota, that might be true for Honda though. Toyota made 40 billion the last 3 years while GM lost 60. Even last quarter in ‘car-mageddon’ they managed to pull in 1.5 billion.

This quarter is going to be hideous, so they probably only eek’d out a small profit or broke even. But with their massive equity and cash/investments they could ride out probably 10 years of this.

Additionally, if the economy stayed ‘off the rails’ and the gov’t sat on its hands, GM is done by Christmas, that is 22% market share up for grabs…I’d wager close to half of that goes to Toyota. Good Christmas present for them.

I agree the difference between the Japan situation in the 90s and the US now is the reaction time. If I remember correctly, massive injections started about 7-8 years into the thing.

Whether or not there bubble was greater there than the US now…that remains to be seen still I think, but hopefully that remains true, lol.

The problem is more with what they didn’t do — and that is straighten the banks before cutting interest rates and trying stimulus programs and so forth. Consequently all this stuff was like pushing on a string. It wasn’t until they copied the Swedes and started injecting money into the banks that things turned around.

Also they were way too tentative. Too many baby steps that the Japanese like so well. When you do stimulus you need to do it fast and on a large scale. The “massive” stimulus you’re talking about is only massive if looked at over a period of years. It was actually very little dribbled out over a long period.

The bubble was far greater than anything we’re seeing here. For example, with respect to the real estate bubble, at one point before the crash the value of real estate in Tokyo was greater than the value of all the world’s stock markets, which if you think about it is sort of shorthand for the capitalized value of the world’s GDP. At no point was the value of all US real estate in the same category, and the US is a lot of real estate.

Their timing was also terrible in that they didn’t start anything of any scale until deflation has set in. Once deflation sets in you can be truly cooked. A major stimulus before deflation occurs has a very good chance of succeeding; a major stimulus after deflation is established has to be magnitudes greater to get the same result.

Finally we don’t have the same problem with the savings rate and the postal service that the Japanese have. This is too complex to get into here but it’s a huge and difficult part of the Japanese puzzle.

I’ve actually done OK in Japan but part of that of course is currency.

They were definitely on the edge. My point is that if the economy stays off the rails Toyota isn’t going to be in any better shape. European car companies are already lining up. Chinese car companies are lining up. You can’t run a company in an industry that sucks down capital when the the financial system is broken.

FWIW here is an OP Ed piece you may find interesting:

http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=1&hp

Massive government intervention and NOT letting big things fail is not the solution here.

May I direct your gaze to Japan in..um, lets say, oh, 1990-early 90s, almost 20 years ago…total meltdown there, banking and real estate (sound familiar?). Japan tried to prop it up, put ‘stimulus’ in the system, massive public sector hiring, etc… then big time gov’t bailouts (took a lot longer than America’s 9 months, but it came just the same – 97-98ish), they would not let anything go under it felt like.

Nikkei Index in 1990? 40,000
Nikkei index today? 7,960

-80% return is a pretty good investment for 20 years right? The were so bad they ‘bridged’ one crisis to the next.

So if we extrapolate the same results here, (if America chooses the same path),the DOW topped out at around 14,000, that means we should be seeing 2,800 in a decade or so. (Side note: I hate using the DOW as a benchmark…I want to use S&P, but the majority don’t associate with it)