"If you grew up in Danvers, and you remember it as the spooky place on the hill, it might not be the right place to live."

-- William McLaughlin, an executive with AvalonBay Communities, which is converting boarded-up Massachusetts mental institution Danvers State Hospital into a 497-unit complex of high-end apartments and condos. That sound you hear? Not the ghosts of mental patients, but loud hissing from the wildly inflated housing bubble, which tops our list this year with seven priceless moments of real estate insanity. First up: the nuthouse-to-yuppie-house trend currently sweeping North America, with such conversions also planned in Detroit, New York, Vancouver, and Columbia, S.C., where the centerpiece of the development is an original brick building with the word "asylum" chiseled into the facade.

BROWSE MOMENTS 1 - 101 MOMENTS 1 - 10 MOMENTS 11 - 20 MOMENTS 21 - 30 MOMENTS 31 - 40 MOMENTS 41 - 50 MOMENTS 51 - 60 MOMENTS 61 - 70 MOMENTS 71 - 80 MOMENTS 81 - 90 MOMENTS 91 - 101 Dumbest moments in... 2006 Smart List And the winners are...

The judge in billionaire Ronald Perelman's lawsuit against Morgan Stanley, exasperated by the latter's delays in handing over documents, instructs jurors to assume that the firm committed fraud. The bank insists it isn't stonewalling, just running into technology glitches. The jury awards Perelman -- who had sued Morgan over its role in his sale of Coleman to Sunbeam for stock that became worthless after an accounting scandal led to bankruptcy -- $1.45 billion in damages. Perelman had reportedly offered to settle for $20 million.

In May the FDA says it's received 40 reports of sudden blindness in men taking the impotence drugs Cialis, Levitra, and Viagra. Within six months, combined sales of the drugs plunge more than 10 percent from the previous year's levels.

Amid a rising tide of child obesity, General Mills launches a campaign that touts the health benefits of not skipping breakfast -- and opting for such famously healthy foods as Cocoa Puffs and Count Chocula. The company even enlists the Lucky Charms leprechaun, who normally sells "frosted oats and colored marshmallows," as part of a new "fitness squad" to explain how breakfast builds muscles and attention spans.

A study by the University of London's Institute of Psychiatry, commissioned by Hewlett-Packard, finds that "an average worker's functioning IQ falls 10 points when distracted by ringing telephones and incoming e-mails ... more than double the four-point drop seen following studies on the impact of smoking marijuana."

Radio station WQHT Hot 97 in New York City runs afoul of New York attorney general Eliot Spitzer with its "Smackfest" promotion, in which young female listeners are pitted against each other in a violent face-slapping contest to win concert tickets and cash prizes. Station owner Emmis Communications agrees to a settlement of $240,000, with $60,000 of the amount going to a local group promoting awareness of domestic violence.

Quick Vote What's the dumbest moment in business this year?   Converting a notorious former mental institution into high-end condos.   Ad exec saying there aren't more female creative directors "because they’re crap."   Selling personal data to an identity-theft ring.   Executive ringing up $241,000 in charges at a New York strip club.   Bank sending a form letter to an Arab-American man addressed to "Palestinian Bomber." or View results

"The message conveyed how proud we are of this new coffee, but did not address our deep sadness and concern for the tremendous loss of life and devastation in the recent natural disaster in Southeast Asia."

-- From an e-mail sent to Starbucks customers in January, apologizing for a previous e-mail that touted its new Black Apron Exclusives Aged Sumatra Lot 523 coffee, released days after a tsunami killed tens of thousands on the Indonesian island.

In January a new installment of Anheuser-Busch's "Real Men of Genius" ad campaign celebrates "Mr. Discount-Airline-Pilot Guy" for putting "the fly in fly-by-night." When the ad comes to the attention of executives at low-fare carrier AirTran Airways, director of marketing Tad Hutcheson calls the brewer to complain and is put on hold -- where he hears not Muzak but a loop containing the offending ad. AirTran threatens to yank Budweiser from the airline's galleys.

Facing charges alleging that he looted his company of tens of millions of dollars, disgraced ex-CEO Conrad Black returns to Hollinger headquarters in Toronto and makes off with several cartons of files from his former office. A security camera captures the escapade on tape. Faced with a contempt-of-court charge, Black returns the files to Hollinger.

Unable to buy office space in a community where the average home price recently headed north of $4 million, the Aspen Board of Realtors heads north too -- to Basalt, Colo., a town of 3,000 residents 20 miles away.