Today the market broke many key levels (including the "devil's number") and is "officially" in the correction mode, at least according to CNBC. Every journalist is saying the reason to be the trouble with Euro - which not so long ago was touted as the new reserve currency of the world. And once in a while, you would hear the mention of the cute acronym PIIGS. But is it really just about the ClubMed countries ? How about ...
1. UK and US having similar debt burdens ?
2. A very real possibility that China may crash ? How many empty cities can you build to pump up the economy ? The commodity prices (see copper and oil for example) have gone down - and it's not because of Europe, but concerns about China.
3. Most states in US are effectively bankrupt, and personal debt levels still very high.
4. The entire multi-trillion dollar web of interlinked derivatives still needs a lot of unwinding.
All this points to deflation and almost no growth prospects, which means P/E ratios for US equities are still very high. That's the reason IMHO for the on-going crash. Of course you will not hear this on CNBC - which can only tell you to buy on the dip so that their real masters can make you the bagholders.
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