Groucho,
I'm wondering myself why stocks were growing despite all these issues and imbalances. In fact, nothing has changed since my first post. You write that the growth in earnings from U.S. companies is largely from overseas earnings. But this is an optical illusion. Well, I cannot deny that there was a growth, especially from emerging markets, but if to take into consideration US$ devaluation, the rate of this growth will be considerably less promising. Companies are using quite low PO exchange rate. Say, in Europe, Middle East and Africa where last years sales are made mainly in Euro, in 2006 PO rate was 1.20-1.22 and in 2007 it's 1.25-1.27. Thus, today, when the rate is 1.36-1.38, even if a company does not increase sales in natural units, it will report 7-10 % in earnings. However, it may inspire hopes for blinded investors only.
Difficult to find an explanation of growing stocks, whether it's due to real inflation and US$ devaluation, investors' hopes or mania, but it resembles more and more to a contruction of a piramid where a cart is driven by bicycle. And once it stops ...