Putting technicals and P.E’s aside, I think some people here are...

Putting technicals and P.E’s aside, I think some people here are underestimating the severity of the crisis in the US currently. In this fully leveraged society the repricing of risk and debt will cause financial ruin IMO. Just in this early stage of repricing we have 100s of billions of dollars in LBO's requiring to be financed by the banks and no one wants to buy the debt that they on sell on the corporate debt market. Only 3 of the 40 largest pending LBOs have an escape clause meaning the banks will be left holding the bag. Bonds with a rating of anything less than AAA are seriously tanking and the corporate debt market has become illiquid. The contagion effect from subprime is proving to be severe. Marc Faber estimates losses of $250B from subprime CDOs, which would compare with US commercial banks capital of $875B. One can only imagine the consequences of this. But this ranks a 9.9 on the seriousness rictor scale. Banks collapse? US banking system derailed? US government deep depression?

A few economists are already saying the US is have trouble servicing debt. How are they going to auction Treasury Bonds with the dollar worth nothing? Ultimately, unlike Japan the USA haven’t learnt from history. Materialism is engrained in their DNA and given easy credit they will relentlessly borrow without any thought of negative consequences. It’s evident that many people have borrowed to the extent that asset prices have to appreciate for them to be able to afford the asset. One has to think about what happens when asset prices start to depreciate. For some reason I don’t think Pes matter. The current financial system has been built on the assumption that asset prices will continue to rise with no thought of the consequences if they fall. Spells diaster in my books.

Also look at history, every credit bubble has ended in a crash. George Soros theory of Reflexivity plays true here I feel… market prices move market prices.

It will be a miracle if central banks and the PPT can engineer a soft landing from here.