Opinion The decade’s worst ideas

But now,thanks to the BlackBerry (and the iPhone,and the Treo,and all the other hand-held e-mail devices),we are always connected. The modern BlackBerry,which dates to 2002 (a two-way pager by the same name came to the market in 1999),has evolved into something sleek and handy and almost discreet. Using it is like taking an electronic cigarette break. The problem is,we’re all e-mail chain-smokers now. Anytime a moment opens up,we fill it with e-mail.

The BlackBerry starts by infiltrating your morning. Then e-mailing replaces reading on your commute. Next you have it under the table at meetings; surely no one notices your thumbs clicking. Finally,it winds up at your bedside.

Enabled by an umbilical attachment to the hand-held,the average office worker sent and received 100 e-mails a day in 2009 — almost as many telegrams as a high-output operator sent in Western Union’s heyday. But those operators simply passed messages along. We’re supposed to think and respond and sort as well. How are we doing? Not very well,considering how many of us spend our mornings and nights and weekends replying to e-mails to get to the bottom of our inbox.

The problem is,the more e-mails we send,the more we receive. So the empty inbox is a phantom,an impossibility — and the attempt to achieve it the ultimate Sisyphean task.

How many of the e-mails are essential? How many could be replaced by a simple phone call? We’ll never know: As of February,50 million BlackBerrys had been sold. Pretty soon,these devices will be as common as car keys,and as they expand to include e-reader technology,they will also become our virtual bookshelves,our day planners,our newspapers,our maps and our shopping malls.

Barring a full-fledged revolt,our electronic fidget is here to stay. It almost makes one nostalgic for a long,awkward elevator ride.

The Washington Post

Housing prices always rise

Countless delusions and mistakes brought on our financial crisis,but none did as much damage as the belief that home prices never go down. People have long seen real estate as a safe investment. The notion is intuitive — the supply of land is limited,and the population is always growing — and until 2007,national home prices had not fallen significantly since the Great Depression.

Yet at the start of this decade,this belief became the lynchpin of an entire investment philosophy,as survivors of the dot-com bubble sought a refuge for their money. When Robert Shiller,a Yale economist,surveyed homebuyers in 2003,he found that 10 times as many said the stock market collapse had encouraged them to buy a home as said it had discouraged them. At first,home values seemed reasonable when compared with a family’s income or with rental prices. But the more people behaved as if home prices could not go down,the more they drove prices beyond reasonable levels. Between the end of 1999 and early 2007,prices soared 70 per cent.

The belief was even more consequential for lenders than buyers. Why turn down a mortgage applicant with a bad credit history or no documented income? After all,if prices only went up,a delinquent borrower’s home could always be sold to repay the loan. Declines in certain regions could not be ruled out,so investors bought securities backed by a pool of mortgages from around the country for safety. A 2009 study by Federal Reserve staff members found that banks knew from 2004 to 2006 that a big nationwide fall in home prices would trigger catastrophic defaults; they simply thought such a fall impossible.

And most experts agreed. Alan Greenspan had famously warned of irrational exuberance in stocks in the 1990s. But a decade later,the Fed chairman argued that houses were not susceptible to such excess: They were difficult to trade,expensive to build and not very homogenous. “A national severe price distortion seems most unlikely,” he said in 2004. Less than a year later,Greenspan,too,became nervous,diagnosing housing “froth” in some regions. But he predicted that even if prices declined,the economy wouldn’t suffer much,thanks in part to mortgage securitisation.

With hindsight,what should Greenspan have done differently? Raising interest rates just to cap home prices would have invited recession. However,the Fed could have used its regulatory powers to press for tighter loan underwriting standards. Of course,that would have made it harder to buy a home,so a political backlash would have followed. But it might have mitigated the damage when prices eventually fell.

Real estate’s appeal in America has waned,but it’s alive and well in the red-hot Asian housing markets. Regulators there are trying to learn from America’s lessons by insisting on tougher criteria to get a mortgage. If property prices implode,they hope their banks won’t follow. We’ll see.

The Washington Post