asx heading for 3500 worst case 2600

The pe ratios of asx 200 are around 15, this is too high for a recession. Australia is very close to a recession, this has been created by a threat of a carbon tax.

In a recession PE ratios reduce to 8 to 12 at best, this means the asx will fall a futher 20% to 40%.

There is only one thing that would save the asx from falling to that level. Gillard would have to call an election almost tomorrow.