A Moveable Glut – Paul Krugman, The New York Times

Paul Krugman makes articulate arguments for more stimulus spending in the US and Europe.

“But these aren’t just a series of unrelated accidents. Instead, what we’re seeing is what happens when too much money is chasing too few investment opportunities.

More than a decade ago, Ben Bernanke famously argued that a ballooning U.S. trade deficit was the result, not of domestic factors, but of a “global saving glut”: a huge excess of savings over investment in China and other developing nations, driven in part by policy reactions to the Asian crisis of the 1990s, which was flowing to the United States in search of returns. He worried a bit about the fact that the inflow of capital was being channeled, not into business investment, but into housing; obviously he should have worried much more. (Some of us did.) But his suggestion that the U.S. housing boom was in part caused by weakness in foreign economies still looks valid.”

via A Moveable Glut – The New York Times.

Relative to long-term corporate earnings, stocks remain more expensive than at any point from the late 1940s through the early 1990s. nytimes.com|By David Leonhardt

If the Price Earnings Ratio is still above 24, it is still high, and stocks are still expensive. A PE of 15 to 20 is probably average historically.
Price/Earnings = PE. A $20 stock that pays a $1.00 dividend annually, has a PE of 20/1 which equals 20.

Relative to long-term corporate earnings, stocks remain more expensive than at any point from the late 1940s through the early 1990s.
nytimes.com|By David Leonhardt