Dealing with collateral damage: Never has something so ordinary caused so much chaos. It's why the mortgage is our Mover and Shaker of the Year.

• Author: Gearino, G.D.
• Position: FEATURE

Anyone with even the barest grasp of chaos theory understands that in 2010 North Carolina was the place--not uniquely but certainly prominently--where its effects played out in dramatic fashion. Chaos theory, of course, holds that small deviations from the original intent or purpose of something can cause wildly varying results. Or to put it more simply, small adjustments or mistakes can produce huge changes, often catastrophic: Rounding off a decimal point when plotting a ship's course, for instance, can mean missing the port of destination by 100 miles. (If you want to complete that picture to its full chaotic glory, make it an oil tanker--then throw in a tropical storm and a hull-chewing reef for good measure.) Every businessperson sees chaos theory at work first hand, even on a daily basis. Parents, too, considering that child-rearing is one long exercise in chaos theory.

But rare is the instance when a small adjustment in a common, everyday process can wreak profound economic, social and political changes, as happened in North Carolina this year. That common, everyday thing is the mortgage, our Mover and Shaker of the Year. The small adjustment was the bundling of mortgages into securities, the effect of which was compounded by the resulting loosening of lending standards to feed the demand for those securities. Never has so much chaos been wrought by something so ordinary.

We'll begin with three stipulations. Yes, we know that much of what follows here has a 2008 feel to it. But what we experienced then were the initial shock waves of the mortgage meltdown. What we felt last year are the aftershocks, which have cascaded in unanticipated directions and created significant change as a result. Also, this is the first time BUSINESS NORTH CAROLINA has assigned the Mover and Shaker designation to a nonhuman. But after thinking about it for a while, we realized no living soul had as much impact on the state's life in 2010 as did this ordinary financial transaction. Finally, we're not seers: We can't predict exactly how the aftershocks we describe below will unfold in the long term. Instead, we're a little like the earthquake survivor who stands amid the rubble of his ruined village and says, "Well, this certainly changes everything."

Enough with the disclaimers, though. Let's list the ways North Carolina was, and continues to be, moved and shaken by mortgages, starting with the obvious and descending toward the speculative.

If the housing market were a mental patient (and most real-estate agents likely are nowadays), the term "basket case" would apply.

A recent afternoon spent on Trulia, a real-estate website, revealed that the state's housing market is almost perfectly bipolar: When three indicators (average list...