The Buddha noted three obstacles to seeing reality more clearly: delusion, greed, and hatred (or sometimes translated ignorance, desire, and aversion). These forces bias our perception and the distorted experience does not map onto reality. The results of pursuing such biased perceptions is usual destructive. Take the recent collapse in the financial system. Greed led to the pursuit of financial instruments that were not only risky, they were virtually imaginary. The build-up to the financial crisis of 2008 was born of both greed and delusion. Some individuals could see the handwriting on the wall and knew that the bonds backing the subprime loans were vulnerable. They bet against them and made a fortune selling short during the collapse. While still motivated by greed these individuals were able to cut through the delusion to see reality clearly. These individuals are the subject of the bestselling new book by Michael Lewis: The Big Short: Inside the Doomsday Machine. One of the characters in this book, Michael Barry convinced investment banks to create products that would allow him to bet against mortgage backed securities (the notorious credit-defalut-swaps we’ve heard about). He did this with Goldman Sachs. Meanwhile Goldman Sachs is doing the same thing with AIG. This is the beginning of the financial crisis.
The interesting feature of this story relative to delusion, greed, and aversion is that the characters who profited off the crisis tried to warn the system that something was wrong. Two of them, Charlie Ledley and Jaime Mai, went to the FCC, “They go to the New York Times and the Wall Street Journal. They start screaming at the top of their lungs that, my God, there’s fraud in the system. But they make their bet, and they turn $15 million into $120 million with their bet.” Clear perception (cutting through the exuberant delusion affecting everyone else) allowed these individuals to make huge profits by betting against not only subprime loans but the financial institutions involved, such as Bear Stearns. As just mentioned while they are making these huge profits they are also trying to warn the system. Michael Lewis explains during his interview on Fresh Air: “They were all extremely noisy. They had various ways of being noisy. But Jamie Mai and Charlie Ledley went to the SEC and tried to get the SEC to investigate the ratings agencies and the Wall Street firms that were creating subprime mortgage bonds and so on and so forth, and the SEC didnt want to have anything to do with them. Michael Berry was writing very persuasive letters that were widely circulated in the investment community about the madness of subprime mortgage lending well before he started shorting subprime mortgage bonds. Steve Eisman, the third main character in the book, ran around Wall Street being rude to as many people as possible who were involved in the business, telling them that they were going to blow up their firms and nobody would listen to him. So they ended up being ineffective messengers but they tried.”
So how do we escape the perils of delusion an greed? If we think about mindfulness as the ability to pay attention to what is happening in the moment, then mindfulness can help us to cut through the poisons. Delusion, greed, and aversion are sustained by desires born of stories. The subprime mortgage scandal had a compelling narrative that affected perception, even in the face of warnings to the contrary. This demonstrates the power of denial and its destructive potential as a psychological defense mechanism. The story was more compelling than reality and the aftermath of the financial crisis has rocked the world. When we practice paying attention to what is so in the midst of meditation practice it can help us to cultivate the habit of paying this quality of attention during the challenges of daily life. Being able to know the difference between a story (that is, the representation of reality) and reality (things as they actually are) is the antidote to delusion. This takes practice, of course. What might have happened if executives at AIG, Goldman Sachs, and Bear Stearns had been practicing mindfulness. Would the financial crisis have happened? It’s easy to predict the future in such retrospective fashion, but I think the world would be a different place if people in positions of power could appreciate this simple distinction between story and reality.