AN ATTEMPT TO REWRITE HISTORY

S &P earnings especially 2009 estimates ($90 !!!???)

great read every month! http://www.contraryinvestor.com/mo.htm

and where we ended the 2003 Bear Mkt ($40 SPX earnings and a PE of 35 !!! DIV yield of 2%) and add in chart of where TOTAL credit mkt debt as % of GDP (now 350% !!!) a BELL rang in my head and gives me the clearest picture I can hope to have as to what 2009 could be and what the stock market might reflect.

If we are indeed in a PROLONGED period of CREDIT CONTRACTION as one might expect we are indeed in, to my understanding you just don't STOP this and TURN ON A DIME. If case even remotely similar to 1930's correction back to the mean.......I don't need to spell that out....a generational shift?

Is there an ESCAPE from Kondratief WInter? Is near DOUBLING of existing fiat currency (if even just held by the treasury as deposits and not loaned out) in a matter of just a few months going to turn this deflation train around and again FORSTALL DAY OF RECKONING? and the eventual TRIP BACK TO THE MEAN?

With hit to Consumer Discretionary Spending, collpase of Energy Company and FInancial company profits coming to the 2009 SPX 500 profits, what are the chances this "pull out all the stops" efforts will avert what history says must repeat?

Is current situation more damaging than previous Bear correction? 2000 Profits were around $35 for SPX per CI chart, a collapse in stock prices and the effect of monetary policy saw the trough at $35 SPX earnings, PE ratio 35 and in 2006 saw SPX reach near $90 earnings and PE contracted to near 15.......we got their by GOOSING on STEROIDS bank and Real Estate related profits as we built historic bubble. EN MASSE Americans pulled maybe $Trillions out of their home equity and SPENT, UPGRADED, IMPROVED, CONSUMED our way to the height of 2007 prosperity.

WILL proposed historic GOV spending stimulus plan revive the economy? If so by next year it would again PUT OFF NEEDED recovery from historic malinvestments.

If doubling the monetary base and all the stim is ineffective, what then?

WED the BDI ended at lowest level for this move extending its IMPLOSION, off over 95% from highs at start of 2008, the BDI does not show a coming recovery of any kind and it should start here, the shipping of the raw materials to make things.

BEAR MKTS have ended with single digit PE ratios and DIV yields OVER 6%........where are we now? OVER 17 !!

Regardless, it is the abandonment of dividends for capital gains to finance our retirements that has resulted in a bubble. And even in using the dividend yield (dividends divided by price), the picture painted is much worse. Stocks, even with the crash in the past two weeks are still overvalued based on the only thing that matters; dividends. We're still not even close to the historical average dividend yield of 5%. Ergo, why buy stocks now? http://captaincapitalism.blogspot.com/2008/10/s-500-dividend-yield.html