This isn't 2008 again. Or is it?

July 28, 2011: 2:00 PM ET
Few experts think the debt ceiling crisis will lead to a near meltdown like the bankruptcy of Lehman Brothers did in September 2008. But there are some scary similarities.

Few experts think the debt ceiling crisis will lead to a near meltdown like the bankruptcy of Lehman Brothers did in September 2008. But there are some scary similarities.

NEW YORK (CNNMoney) -- Call it stubbornness, willful ignorance or what have you. But many market experts still don't think that the current debt ceiling crisis is anything remotely as scary as the summer and fall of 2008.

So far, the markets have been relatively calm. Sure, stocks took a sharp hit Wednesday. And the VIX (VIX) has spiked up lately. But at 21 and change, Wall Street's so-called "fear gauge" is still relatively low.

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Three years ago, the market shot first and asked questions later. Bank stocks plummeted on the mere whiff of a negative rumor. The worst was always assumed to be true.

That is not a problem right now. That all speaks to the notion that this is a manageable crisis that could be easily solved if politicians saw fit to do so.

"In 2008, there was wild short selling," said Milton Ezrati, senior economist and market strategist at Lord Abbett, a money manager based in Jersey City. "I'm not going to say things are great. But to use a contradictory term, this seems to be a certain uncertainty."

Then there's the bond market. The yield on the 10-Year Treasury remains below 3%. That's not a sign of nervous fixed income investors worrying about what a credit downgrade would do to U.S. bonds.

In some respects, it's almost as if the bond market has already assumed a downgrade by one or more of the three rating agencies is inevitable -- even if the debt ceiling is raised by August 2 and the government doesn't default. Perhaps AA is the new AAA.

"Nobody doubts that the U.S. has the ability to make payments if it's allowed to go out and borrow the capital. The bond market is telling you that," said John Traynor, chief investment officer People's United Bank In Bridgeport, Conn.

"The situation in 2008 was much more frightening. There was a real financial crisis. This is a political crisis," he added.

House bill means debt ceiling replay

That is a very important distinction.

Mercifully, nobody is obsessing about the latest gyrations in LIBOR.

While several CEOs of major financial institutions did write a letter to President Obama and members of Congress urging them to get a deal done, there still does not seem to be a sense that failure to raise the debt ceiling will cause the credit markets to seize up like three years ago.

Tom Villalta, manager of the Jones Villalta Opportunity Fund (JVOFX) in Austin, said another key difference between now and 2008 is that many companies have already made painful cuts. As a result, earnings have been fairly strong. And that could help big companies weather turbulent times ahead.

"A lot of the last crisis had to do with froth. I don't see that now," he said. "Companies already brought down expenses. And the stock market has yet to return to pre-recession highs because consumer demand isn't completely back."

Still, there are some similarities to 2008 that are troubling. Villalta pointed out that oil prices are once again fairly high -- although not as high as three years ago. Oil peaked above $140 a barrel in July 2008.

But the combination of strong energy demand from emerging markets and low interest rates (which could foster inflation) may lead to even higher prices for crude and gasoline. That is the last thing consumers or companies need -- regardless of what happens in Washington.

"I am most worried about energy prices. So far, the trajectory has been for gradual upward movement but it's a serious issue that's not a short-term problem," he said. "If oil gets back above $120 or $130, that would hurt."

Another eerie parallel to 2008 is perhaps the most obvious. Politicians really have the chance to screw up the economy by not acting in a timely fashion.

People keep talking about the possibility of a TARP moment -- the day in September 2008 when the Dow plunged nearly 800 points after Congress voted against the bank bailout for the first time.

"Lawmakers are acting in a vacuum and putting politics ahead of anything else," said Oliver Pursche, co-manager of the GMG Defensive Beta Fund (MPDAX) in Suffern, N.Y. "Listening to Obama and Boehner, I have flashbacks to Bush and Pelosi speaking in 2008 before TARP. It was all rhetoric and no substance."

More on America's debt crisis

Another potential cause for concern is that, despite the many differences between now and 2008, time is running out for anyone in Washington to be able to make a difference.

Say what you want about the Federal Reserve's bond buying and myriad other controversial programs to inject liquidity into the financial markets from 2008 through the present day. The Fed at least tried something.

But the central bank may now have nothing left it can do. A third round of quantitative easing would be wildly unpopular and may not even work.

"Sure the Fed could do QE3 or QE-Whatever. But those policies haven't helped the economy yet," said Sharon Snow, CEO of Metropolitan Capital Strategies, an investment advisory firm in Manassas, Virginia.

"A credit downgrade would mean higher interest payments for everybody and that has ripple effects for the whole economy," Snow added.

Finally, I'll leave you with this doozy to ponder. While many strategists and investors firmly believe this isn't 2008 because this crisis is more political than financial and has been telegraphed for months, what if they're wrong?

It wasn't obvious at first in the summer of 2008 that problems in the subprime mortgage market would eventually lead to Fannie Mae and Freddie Mac being put into conservatorship by the government, Lehman Brothers filing for bankruptcy, AIG (AIG, Fortune 500) nearly collapsing and Washington Mutual failing.

"In 2008, a lot of people thought the crisis would be contained. But we didn't know about all the leverage and credit default swaps," said Art Nunes, chief investment officer with Northwest Asset Management in Mercer Island, Wa.

"Sovereign debt issues are a well-known problem now like subprime was then. But what is there that we still don't know? That's what concerns me," he added.

It concerns us all -- even if the financial markets aren't expressing it just yet.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks. To top of page

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