The Overlooked American Triumph

As the Japanese retrench, low-hanging fruit will fall to American companies
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The triumph of American manufacturing and financial might over the Japanese continues to be the most overlooked explanation for the upward revaluation of U.S. equities.

This weekend,

General Motors

(GM) - Get Report

upped its stake in

Isuzu

. At least that's how the stories read. But, in truth, GM is taking over Isuzu because if GM hadn't stepped up, these guys would be history. There are many theories about why Isuzu was slated for the bankruptcy bin, but I feel compelled, having been a satisfied Isuzu driver for many years, to chime in with an obvious one: The Japanese were giving this thing away in their endless search for market-share dominance.

It turns out, of course, that you can't win in the end unless you make money -- something that Isuzu was never adept at. Funny thing, neither was

Nomura

in real estate or

Dai-Ichi Kangyo

in letters of credit or

Fujitsu

in mainframe computers or

Hitachi

(HIT)

in storage devices. Each of these colossal Japanese companies came over here in the last decade bent on destroying the profitability of others and then taking share.

It did not work. The Japanese did not have the wherewithal or the capital to keep losing money endlessly. Like the store that has so many loss leaders that it actually loses money on each customer, the Japanese are now coming to terms with their own failures to ever become profitable.

In banking, we saw it with

Chase

(CMB)

last week. The companies that most directly competed against Chase were Japanese. They are being blown away. I know -- I got back into

EMC

(EMC)

because of a series of articles showing how it had rolled over the Japanese. And the revenue growth that

IBM

(IBM) - Get Report

is finally putting on comes directly out of the hides of Japanese companies like Hitachi that had given away hardware to get in the door, but then fell behind technologically.

Ironically, I think things will only get worse in terms of U.S. vs. Japanese share before they get better. Our companies routinely spend billions on tech and are embracing the Net. Their companies have stopped spending on tech, and the Net seems like it hasn't caught on there at all.

As the Japanese retrench, low-hanging fruit will fall to U.S. companies. They will be part of the equation that gets us to upside surprises in earnings in finance, tech and, now, auto.

Random musings:

Company comes public, company gets money, company advertises on pro football -- something that is still watched -- company gets customers. Yes, I went to

Outpost

(COOL)

last night. I liked that high school band/wolf ad. Just liked it...

The New York Times

weighs in on the bogus

Wavephore

(WAVO)

controversy and spells my name with a K, something that had died down with the passing of

Seinfeld

. Couldn't read past that, I am afraid, as it is very hard to take people seriously when they spell your name wrong...

Another theory about why the markets ignored the

Clinton

sideshow: As much as the press would hate to admit it, Americans are much more serious about their money than they are about their politics. The Americans I know can't believe what a bunch of gasbags the politicians are and would relish a chance to have these congresspeople work for them in their companies so they could force the pols to put in an honest day's effort or two. People just can't take these posturing, preening suits seriously. Set up a tribunal of

Jack Welch

,

John Chambers

and

Andy Grove

, let

Michael Dell

argue one side and

Steve Ballmer

the other and let the tribunal decide whether Clinton stays and the people would be riveted. But don't ask us to watch these jokers. We have work to do and families to be with...

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com.

At the time of publication, his firm was long EMC and IBM, though positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to

TheStreet.com

at

letters@thestreet.com.