From what you read in the news, and hear from Southern GOP Senators, you'd think that this was a banner year for Japanese automakers operating in the US. Or at the very least that Toyota, Hyundai, and the other automaker "transplants," that is foreign auto firms producing in the US, are currently experiencing a bit of schadenfreude watching their long time nemesis GM on the ropes. But. It just isn't so. And here's why.

Foreign automakers producing in the US are perfectly aware that the destruction of the Detroit Three would only hasten a sharp decline in their own ability to operate, and profit, in the North American market. In order to understand precisely why it is that Sen. Shelby and his comrades have gone all quixotic seeking to kill off GM in the name of Japanese efficiency while their beaus running transplant factories in the South shake their heads, it helps to look at the work of Chalmers Johnson.

In his book MITI and the Japanese Miracle Chalmers Johnson sets up a typology of political economies. Basically a political economy in this sense is the set of assumptions that undergird the way in which national governments go about making economic policy.

These may either be market based, in that they believe that the market is the best mechanism for implementing economic policy. Or, alternately, the may be plan based, seeing a large role for the government to step in and shape the way in which the economy develops. Second, these political economies can either be rational, where they base their assumptions in either the market or plan, but are not so bound to the system that they refuse to recognize it may fail; or they are ideological, when the means dictated by the system outweigh whether it is successful in bringing home the bacon.

Traditionally, Japanese political economy has been plan rational, there is central direction, but it is market conforming. The more extremist elements of the GOP, and a disturbing number of socially liberal Democrats indulge who indulge them, are market ideologues. They believe that the market must be allowed to do what it does, even if that requires great human sacrifice. And, see, that's the crux of the divide between Sen. Shelby and his erstwhile beaus operating transplant factories in Alabama and elsewhere.

Toyota, and the rest of the transplants, are not married to the market ideology that animates the GOP. In fact, they shudder at it, because to them it carries the possibility that in offering up GM and Detroit up for sacrifice to the gods of the market, they might end up putting the guys who keep their North American plants humming, out of business. And it's not just the Japanese, even the South Korean PM has come out in support of a bailout.

With no bailout plan yet agreed upon, Japanese and Korean automakers are mostly avoiding commenting on what the U.S. authorities should be doing. For one thing, it might look as if they're crowing when rivals are in need of emergency surgery. Those who have spoken have offered qualified support for U.S. government aid for their struggling rivals. Among them, Nissan Chief Executive Officer Carlos Ghosn and Honda CEO Takeo Fukui have indicated that they back bailouts in principle. Fukui, for instance, said on Nov. 6 that he isn't opposed to the U.S. government helping automakers as long as fair competition is maintained. The Honda boss, who would also like to see the Japanese government intervene to weaken the soaring yen, added that it's only natural for a government to support one of its country's key industries.

n Korea, a bailout is also garnering support. President Lee Myung Bak told reporters in Washington on Nov. 16 that a bailout was vital because of links between the U.S. auto industry and the Korean economy. "I'm in favor of the efforts to rescue the U.S. auto industry," Korean newspapers reported Lee as saying. Hyundai, Korea's biggest carmaker, also wishes Detroit well. "We recognize there may be extraordinary situations [which] may require unprecedented actions to assure [the auto industry's] long-term viability and a healthy American economy," says Hyundai spokesman Oles Gadacz.

Although there is a macro-economic argument that is being made: that these companies support a bailout because they see the need for cooperation in the short term, the truth of the matter blows the assumptions of the market ideologues like Sen. Shelby out of the water. There are two major issues that lie behind the support of the transplants for a bailout package for Detroit: 1) A shared supply chain, and 2) The effect of American economic decline on the rate of exchange.

First, is the matter of a shared supply chain. Market ideologues would have you believe that every man, and company is and island. Thus, the collapse of GM has no impact on the ability of Toyota to produce. That's simply bullshit. There's no prettier way to put it. Because all automakers in the US share a common supply chain, if one goes under it takes suppliers with it. And, that means that the rest suddenly have parts shortages that shut factories down. When dealing with specialized parts in volume, the assumption that you can go out to Autozone and buy another doesn't hold.

When tolerances are 1/1000 inch or less, quality matters, and you can't have a new supplier pop up overnight. The only people who believe this bullshit are market ideologues who are willing to sacrifice their fellow Americans, and America, in support of their misguided belief in the power of the market. It's like trying to talk sense with a suicide bomber, they are blinded by their own beliefs, and reality loses meaning to them. Want to understand just how intertwined the supply chains of Detroit and the transplants. Consider this.

According to CSM Worldwide, 58% of GM's suppliers—and 65% of Ford's—also provision the Asian transplant factories. A GM, Ford, or Chrysler bankruptcy could send hundreds of supplier companies into bankruptcy or liquidation, jeopardizing production at Honda, Toyota, Nissan, Hyundai, Mercedes, and BMW plants for months.

The numbers from the CSM report are revealing.

For the market ideologues among you, I can hear the hackles of "they'll bring it in from Japan" ringing out. Which, while a long trip, seems reasonable until the recent appreciation of the Yen versus the dollar is taken into account. And, it the rise of the yen hasn't even come close to where it could end up.

Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession, said Akio Mikuni, president of credit ratings agency Mikuni & Co.

The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes “drastic measures” to help bail out the U.S. economy, Mikuni said. Treasury yields, which are near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere, Mikuni said...

Let's put this in perspective with a hypothetical case.

One of the Japanese transplants just lost a transmission supplier, but luckily there is a plant in Japan with excess capacity. The cost for that transmission is 227,000 yen. At this time last year, the US Dollar bought around 113 Japanese yen. Which means that in late 2007, this transmission would have cost $2008.85. With the appreciation of the yen, so that that same US Dollar, now only buys 90.4 yen, means that this same transmission now costs $2508.29. This is an almost 25% price hike in the course of a year, and remember it could get much, much worse.

If the US Dollar were to fall to 50 yen, then the cost of this transmission would soar to $4540, and this doesn't include the added cost of transport. Is there anyone stupid enough to believe that there's demand out there for a Toyota Camry that costs $40-45,000. Because, that's precisely what it will cost if the company has to import parts from Japanese plants.

The long and short of what's happening here is that the clockwork version of the economy that Sen. Shelby and their ilk believe will save America simply doesn't exist. Even in the best of times, the destruction of the supplier base would result in an almost total shutdown of North American auto production. In these times, it would be enough to make a major economic recession, an economic downturn to outdo the Great Depression. As for those who insist that they are in fact an island, I suggest that they try to live without benefiting from the labor of others, it won't last long. And if there's justice in this world, they'll keep the act up until they starve or freeze to death. We are in this thing together, and until we purge the market ideologues willing to make human sacrifice to the market from our political leadership, we are all in danger together.