“The four most dangerous words in investing are 'This time it's different.'” —Sir John Templeton

Every decade or so since 1900, there has been a run of prosperity that detaches people’s common sense from financial realities. This generates widespread faith in a “new era” of ever-escalating wealth. If we’ll be richer next year, why not borrow now?

Leverage increases, home equity is cashed out for consumption, and credit cards reach their limits. Then the entire economy acquires too much debt secured by overpriced assets. Painful reality ultimately intrudes. This quite naturally ends with overvaluation followed by a harsh slump such as that which we now face.

The May 18th issue of The New Yorker featured a fifteen-page article by Nick Paumgarten, “Annals of Finance: Notes from a Meltdown.” Paumgarten recounted the institutions and culture that precipitated our current plight. Essentially, they fostered the illusion that “this time, it’s different,” that, this time, we can thrive on ever-increasing debt.

Paumgarten explains why the myth of prosperity was so attractive: just as the illusive perpetual motion machine keeps spinning, our financial system was supposed to keep lending and creating more wealth.

This time is not different and nonsense has been exposed. Claims defying common sense proved invalid and synthetic wealth evaporated. Now, it’s obvious that serious people should have known better. Even the prudent suffer from systemic problems.

There are many political analogues to the financial deception founded on the claim, “This time it’s different.” Consider the Obama Administration’s repeated assertions that our State Department posts will be based on professionalism and training, not political favors and funding calculations. As The New York Times writes, “[Obama has] made grand promises to bring change to a [state department] where power and position are greased by money.” In a recent press conference, Obama promised to reward career diplomats with ambassadorial posts "whenever possible."

But despite such rhetoric, this time is no different. Decisions in the political arena, as in others, depend primarily on incentives. The incentives, strong indeed, are to reward big campaign contributors, or bundlers, with prestigious posts.

Years ago, I had a friend whose father and uncle were substantial contributors—and Olympic sailors. Not surprisingly, they were rewarded with a diplomatic post in a small Caribbean nation. The sailing there was supreme and the duties light, primarily entertaining. The political cronyism that resulted in their appointments still exists today. If anything has changed, it is the global importance of countries where the posts are given.

John Roos, Obama’s chief Silicon Valley fundraiser and a lawyer with no diplomatic experience, was just appointed Ambassador to Japan. Louis Susman, a “vacuum cleaner” for campaign funds, was announced as Ambassador to Britain.

According to Craig Holman of Public Citizen, a nonpartisan watchdog group, “We’re not only insulting nations [to whom] we’re appointing these bundlers, we’re risking diplomatic efforts in these key countries.” The Center for Responsive Politics reports that 60 percent of the 55 ambassadorial appointments have gone to people outside Foreign Service ranks. Such troubling and inconsistent appointments include auto magnate Don Beyer, our new ambassador to Switzerland. Perhaps negotiating car loans has provided valuable expertise in international diplomacy.

Is there truth in Obama’s promise of change? What seems different is that rewards of ambassadorial appointments now go to major, not minor, countries. Citizens maintaining high expectations based on naïve hopes and Obama’s campaign promises are surprised. But when the incentives to appoint campaign funders remain constant, can we expect different outcomes?

As the government controls and manipulates an ever-larger share of the economy, political favoritism naturally increases. We’ll see mischief, political pay-offs, and corruption in energy, employment, health, labor, and trade policies. Government of the few and for the favored is the Constancy we can believe in. As government’s influence grows, independent of promises, this is the consistency to expect.