The convulsion in global financial markets the past few weeks has sent me back to rereading Reinhart and Rogoff’s This Time is Different , the impressive analysis of “Eight Centuries of Financial Folly (read banking, currency and sovereign debt crisis). The authors suggest that the four words that an investor does not want to hear in reference to any market trend or cycle are “this time is different”, because simply, it is not!

Once again, we are facing financial market distress. The trigger this time is political infighting by Congress and the Obama Administration over raising the debt ceiling to accommodate the level of spending that they have already voted on and approved. Cloaked in their new found fiscal conservatism, Congress has decided to make a stand against their own excessive spending by choosing not to increase the federal debt ceiling that will be reached on August 2nd. Few would disagree with the need to limit spending and reduce the long term deficit path we currently find ourselves on, but is holding the debt ceiling hostage the most effective mechanism? I doubt it.