Chatter overheard at the gym: House flipping

It's baaaaack!

It's been a while, but the house flipping chatter is back. I overheard several people at the gym yesterday talking about how they've been buying and flipping condos here in NYC or, looking to get into the flipping game.

I don't know if this is a top in the real estate market, but it sure is starting to look like 2006 again in some places.

China hard landing?

Inquiring minds are reading an excellent report China Real Estate Unravels by Patrick Chovanec, a professor at Tsinghua University's School of Economics and Management in Beijing, China.

Read it at Mish's Global Economic Trend Analysis
Real Estate Crash in China Underway: Foreign Funding Down 80%, Land Sales Down 57%, Starts Down 27%; Expect Chinese GDP to Plunge

by Michael "Mish" Shedlock

Dr. Housing Bubble — Get ready for the next stage of the bailouts

The Federal Reserve recently came out with an unprecedented analysis directed to the Committee on Financial Services regarding various methods to improving the housing market.  The paper is striking because it magnifies how little was learned from this banking and housing debacle.  One of the big recommendations centers on creating a “REO to rental” program by facilitating bulk sales to large investors.  Ironically the Federal Reserve by bailing out select banks has allowed home values to remain inflated thus causing this backup in inventory to emerge in the first place.  Setting that obvious point aside, let us examine the merits of an REO to rental program.

Read it at Dr. Housing Bubble
REO-to-rentals another Fed subsidy for big investors and select banks. Federal Reserve looking to engineer yet another bailout for key banking allies. Fed acknowledges 12,000,000 homes with negative equity.
by Dr. Housing Bubble

Krugman on 2012 — Will China Break?

Now the bubble is visibly bursting. How much damage will it do to the Chinese economy — and the world?

Some commentators say not to worry, that China has strong, smart leaders who will do whatever is necessary to cope with a downturn. Implied though not often stated is the thought that China can do what it takes because it doesn’t have to worry about democratic niceties.

To me, however, these sound like famous last words. After all, I remember very well getting similar assurances about Japan in the 1980s, where the brilliant bureaucrats at the Ministry of Finance supposedly had everything under control. And later, there were assurances that America would never, ever, repeat the mistakes that led to Japan’s lost decade — when we are, in reality, doing even worse than Japan did.

Read it at The New York Times

Will China Break?

by Paul Krugman

Could Krugman be right that we've seen this before?

I hope that I’m being needlessly alarmist here. But it’s impossible not to be worried: China’s story just sounds too much like the crack-ups we’ve already seen elsewhere. And a world economy already suffering from the mess in Europe really, really doesn’t need a new epicenter of crisis.

See also Michael Pettis on capital misallocation in China (Dec. 3) if you missed it.

Read it at China Financial Markets
How do we know that China is overinvesting?
by Michael Pettis

UPDATE: Don't overlook Dr. Doom on this either.

Read it at Project Syndicate
China’s Bad Growth Bet
by Nouriel Roubini

However, Roubini doesn't see a hard landing hitting until 2013.

Roubini tweets: "Paul Krugman asking 'Will China Break?' Consistent with what RGE/I have been writing for a year on hard landing risks."