"Too Many Bullish Arguments Suffer from a Lack of Imagination"

From Tony Jackson's column in yesterday's Financial Times, "Too many bullish arguments suffer from lack of imagination":

There seems to be growing support for the notion that equities have reached fair value. This raises two questions: how far it is true, and how far it is useful.

As to the latter, I described a month ago how the UK consultant Andrew Smithers, drawing on work by the US academic Robert Shiller, concluded the US market was fairly valued with the S & P 500 at 880 - roughly its level today. But as Mr Smithers also found, previous serious market collapses did not end until they were, on average, at only half fair value.

This is unsurprising. If markets never undershot, they would never overshoot either.

Later in his column, Jackson questions the conclusion of Morgan Stanley economist Joachim Fels's recent essay, "Neither Japan nor The Great Depression" (which was the subject of an eponymous post here last week):

Morgan Stanley has just produced a piece declaring that the present downturn is "neither the Great Depression or Japan". The argument boils down to saying that all previous policy mistakes have been avoided this time.

But that, of course, carries a hidden premise: that all possible mistakes were contained in those two episodes. That is, none of today's policy actions will turn out later to have been blunders.

Any takers on that one?