Now stand over here and look at the same place

It is remarkable how much something changes depending on where you look from.

Here's some excerpts from a Washington Post piece written by a columnist who recently bought a house on an interest only mortgage.

Was the Mortgage a Mistake?
Michael Rosenwald
Washington Post
Sunday Aug 20, 2007 edition

Two years ago, my wife and I sat at a long conference table in a mortgage-title office in Bethesda. Sitting next to us: our real estate agent, who drew up our bid on a townhouse in Germantown two days after showing it to us. We didn't get an inspection, and I don't recall going back for a second look. We had to act fast or someone else would get it.

They signed. We signed. Price tag: $459,275.

And then, as the saying sort of goes, the stuff hit the fan. The sizzling home market almost immediately began to cool off, which my wife and I sort of ignored. Interest rates started to creep up, and we sort of blew that off, too. We have time. This too shall pass. No worries. Life is good! We bought a flat-panel television, took a nice vacation, bought a dog, hired him a daily dog-walker, and then we got pregnant. We have time. This too shall pass.

But now, with our baby due in six weeks,... The contagion from the busted subprime sector has hit credit markets hard, and now Brian Williams and Charlie Gibson and Katie Couric are talking every night on the national news about how hard it will be to get credit, perhaps leading to more problems in the housing market.

I walked in the door one night last week, and Brian Williams was talking to my wife. I heard the word "subprime" from the TV. She looked at me and said, "Should we be worried?" I said, "We have plenty of time." But the truth is, I am getting nervous. And a few days later, when I told my wife I was indeed worried and writing about it for this newspaper, she said, "You're going to give me a panic attack." She paused and then added, "Did we really mess up?"

But that wasn't really on our minds two years ago. For us, and I suppose others who signed such deals, the lower payments afforded by an interest-only loan helped us buy a house ... where we wanted to live and eventually send our children to school. Our payments were significantly lower than what they would have been with a 30-year fixed-rate mortgage, meaning we could buy a nicer, larger home. Also, with the real estate market then booming, we planned to sell the house within five years anyway -- for a big profit, just like the previous owners got from us -- so why pay principal on what was essentially a starter home?

Our parents bought homes at our age. It may sound crass, but we deserved a nice home. We did what we had to do to get one.

Besides all that, our mortgage broker and real estate agent kept confirming what we wanted to believe: nothing to worry about.

This week, I did what I probably should have done before signing the loan. I called some financial planners.

ack then, he specialized in dealing with first-time home buyers; many of his clients financed 100 percent of their purchases if they could beat the dozens of other buyers bidding for the same home

This stampeding herd, like raging flood water, can be dangerous even at very surprisingly low depths.

The Congressional Democrats found that out last week when, pulling a 180 degree turn on their intent and promises, they stampeded to pass a wiretapping authorization stronger than the one asked for. The next morning they seem to have waked up with quite a hangover, and a sense of amazement at what they had done, and to boot, who's taking a shower in the bathroom right now? Or something akin to that.

(See Concern over Wider Spying Under New Law, New York Times, Aug 19, 2007, with this lead in on page 1: "In a frenetic scramble, Congress may have approved more surveillance powers than the Bush administration sought." )

So, again, point made. Neither wealth, nor power, nor education are protective against the subtle but enormous power of the herd on our ability to reason. Exactly the same brain, from the same great and expensive prep schools and Ivy League Colleges, placed in a cauldron of stampeding others, can betray us instantly without our even realizing it.

Everything "makes so much sense" then, and so little sense the morning after.

This is critical to realize about our brains. They lie to us, but so convincingly. They make things seem "obvious" that, in hindsight, are clearly wrong. They leave no traces or hint of bias for us to catch. This is the problem experienced that the mathematician Godel wrote a famous theorem about, that says, basically, that from inside you can't actually tell if what makes sense to you is really a twisted line measured with a twisted ruler.

Again, the only solution to this is to have a very wide, globe-spanning set of advisers, from different cultures, who panic and stampede at different things and times. That way, by consulting, at least one hand will go up saying "Whoa, Nellie!"

Everyone, like Dr. Faust, thinks that he or she is "smart" enough to outwit the devil himself, but the problem is that "smart" only operates IN the world, and this kind of herd-distortion of the rubber-sheet metric we're written on operates ON the world. It is 100% invisible.

General Relativity (Einstein's) talks a lot about problems with metrics that are "not flat" and questions of how such distortions result in "fictional forces" like gravity, that move us despite our best efforts to remain still.

Again, I'll quote my favorite Snoopy meditation:

Did you ever notice
that when you think about a problem at 2 AM
and then again at noon the next day
you get two different answers?

This raises a question, which in General Relativity is a search for a "proper, unaccelerated reference frame", or in Theology may be a search for "a state of grace" --

How do we spend more time in reliable metrics and less time in distorted ones that cause us to sin, or at least cause us to do really stupid things, in hindsight?

And, is there any way to tell, at any given decision point, whether our current metric and sense of "obvious" is broken or working?

For that matter, are these issues just of insubstantial stuff such as the mind is made of, or is flesh (as well as dumb matter such as planets) also subject to such distortion?

If so, do decisions that cellular machinery make, when in a distorted metric, result in cancer and other diseases and pathologies?

Scientists mock religions for belief in concepts such as "sin" and "temptation" and "demon possession", and yet, interestingly, are slowly coming back to very similar observations under different names -- people caught up in some kind of psychological whirlwind that twists them around and makes them subject to making errors in judgment and action, that leaves them the next day wondering how on earth THAT just happened.

And, who IS that in the shower? This can't be good.

If we pretend humans are rational computing machines, such behavior is unexpected and so we do not prepare to detect or mitigate it. That, in foresight, is a stupid strategy since we know damn well people are irrational and, as the stories in the last few posts illustrate, people are immensely subject to being dragged along, unknowingly, with the herd.

As I noted myself, as an amateur stage magician, people who see what you've done end up "unseeing it" if no one around them sees it. They don't even realized they've done this.

Consultation and wide diversity -- along with strong moral standards of conduct, are some protection. Computers, technology, high IQ, education, and wealth are zero protection against this kind of error -- by which I mean herd-effects, not the housing credit crunch.

If Scientists want to ditch Religion's explanation for such human behavior that's their call, but ditching Religion's collected observations documenting such behavior is tantamount to academic misconduct.

Some really strange things go on when people make decisions, things we don't see computers do.This totally unexpected data-point cannot be simply deleted because it is inconvenient and doesn't fit the rational model of humans.

In fact, this data point alerts us that the whole mental model is wrong. Like "just one" block out of place in a Rubik's cube puzzle, the implication is that the whole thing is wrong.

We are not "independent" little computers, connected sometimes like Tinkertoys through "message paths." We are interconnected on a much deeper level, somehow and that is important to know, because it changes everything.

For example, our entire concept of criminal justice, blame, ethics, morality, performance evaluation, merit raises, promotions, hiring, firing, etc. all are based on the "cause" of "behavior" being "inside the box" as it were. Our concept of medicine is based on our "health" being "inside the box" of our skin. While there are "influences" - like the tinkertoy sticks connecting our selves, "we" should be able to "manage" them if we are strong.

But, if we're all much more deeply interconnected under the covers than that, then our concept of "I" or "me" is way too small, and way too static. Reality is much more dynamic, apparently.

This has enormous implications for how we design interventions to "change" a "person" or "his" behavior or "his" health status. Everything we're doing now is based on the wrong model.
Measuring the "performance" of "individual physicians" is somewhat different if the actual shape of a human is more diffuse than "one body and an associated mind."

Interestingly, the Institute of Medicine has now come out saying that interventions should be targeted at small teams, not at "individuals."

These are "systems thoughts." More on this tomorrow.