10/31/2007

Japanese Home Loan Broker Flees America

This article here discusses how Nomura Holdings is pulling out of the US home loan business and focusing more on Asian Markets. This move comes after they wrote off $621 million in bad debt with US mortgage losses of $1.2 billion since January 2007. They will also lay off 400 of their New York employees.

This move is indicative of other investors in the home loan industry when the market goes sour. Investors are constantly scanning the environment for the best place to invest their funds for the greatest return. When our housing market was booming, this was a great place to invest, and know it is the opposite.

From an economic standpoint, when the market fluctuates like this, it shifts the supply and demand curves back and forth. This article is an indicator that the demand curve has shifted back for home loans, so the supply curve (mortgage lender) is now shifting back as well to compensate.

7 comments:

Hayden said...

It is apparent that the demand for homes in the United States is decreasing and less loans are being transacted. It is sad to see so many people lose their jobs because of the housing slump. I didn't realize how many businesses rely on housing markets until this slump. As bad as it sounds, maybe it is time to go through a recession, so we can get the housing market back to a sustainable rate. Adam Smith's invisible hand theory seems to be occuring right now. The housing market is correcting itself. During difficult times in the market, many of the companies that survive are able gain a competitive advantage since they were prepared for the bad times. The true character of a person and/or a company will show itself in difficult circumstances.

Dr. Tufte said...

-1 on Logan for poor sentence structure.

Logan's economics is weak here: demand shifts don't cause supply shifts. But, I'm not sure what you were driving at, so I can't add more on that point.

Do note though, that this pulling back is something that I mentioned in Timothy's post a while back. (see http://econtufte.blogspot.com/2007/10/staying-high-and-dry-in-recession.html)

Sophie said...

Can you really blame them for wanting to get out of this housing situation in the United States right now? I do not think so. It is an ugly circumstance for all of the parties involved. I simply hope that it is something that will pass quickly, but it does not seem like the government is doing all that it could to assist with this effort. Therefore, I do not think anyone knows how long this situation will last.

Chus said...

This is what I think: Japan's Nomura Holdings

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Deno said...

Hi everyone
Its rediculous to fight with Indian to Australian.Australian people is not a men because all Australian is corrupted. Like Ricky Ponting.
------------
Narendra(deno)
------------
SEO--SEO