Interesting reading here P/E Ratios, The other elephant in the room
This guy, Markets plummet deeply around the world, does seem a bit odd, but his economics knowledge seems solid. He explains why the US dollar maintains value, even given the sad US economy, very saliently. His argument is that the market has much farther to fall as the P/E ratios revert to their historical mean. I think he’s partially right, but I don’t think they’ll drop that far. Since the mid 90′s the markets have entered a new phase, driven largely by the fast flow of information, automated trading and large institutional investors. The “new rules” of the markets aren’t clear yet but old trends don’t necessarily apply.