We had the greatest credit boom in the history of mankind.
All booms are followed by a bust.
So the greatest credit boom will lead to the greatest credit bust.
All that has been done is the debt has been papered over. It is still there but it has been hidden or transfered to government.
In an environment where you have the major economies being propped up by government you cannot get an accurate value of P/E so P/E is useless in this scenario.
The amount of bailouts and money printing by governments buying back their own bonds will eventually lead to hyperinflation.
Now you can have hyperinflation and recession/ depression at the same time.
What use is the stock market at say 20,000 when your loaf of bread will cost $100 or in extreme cases $1000.
Think it can't happen, think again carefully.
The best solution is to allow the failed institutions to go bankrupt.
A governments responsibility is not to bailout markets but to provide some sort of social safety net in times of great harsdhips.
Let the markets take care of themselves and let governments provide the necessary safety nets for people.
