A thought experiment I like to do is mull what S&P 500 earnings would have been today if we hadn’t had a decade or more of cheap credit. Earnings have grown, on average, 9% a year for years in the U.S., but that has been goosed to an unknown degree by credit.

What would the world look like otherwise? Well, one way to back into an (admittedly simplistic) answer is pick a date in the past, and then project forward from there at some more reasonable economy-wide earnings growth rate.

Fair enough. But what would that be? Well, corporate earnings can’t grow forever faster than GDP or their share of GDP rapidly becomes crazy-large, like all of GDP in a few decades from the current starting point of 7% of GDP. The upshot: The trend growth in U.S. GDP is a reasonable floor, so let’s call it 3.4%. With that in mind, somewhere between 3.4% and 9% earnings growth is a reasonable place to start in projecting forward to what an ex-leverage S&P 500 earnings number might look like today.

Using the preceding, and having picked 1987 as the starting date for the exercise (which isn’t completely ad hoc), here is what I end up with under various growth and earnings multiple scenarios S&P 500. The upper table is 1987 S&P 500 earnings projected forward to 2008-2010 under various conditions; the lower table is an array of resulting S&P 500 targets.

In short, depending on when you start, what ex-leverage growth rate you pick, and what trough multiple you apply, you can get to S&P 500 targets in 2009 from 268 (!) to 1135 (!!). To narrow things down, say you pick something mid-range for ex-leverage growth, and apply a 12x earnings multiple on the S&P, which seems fairly conservative, you get to a 612-754 target.

Of course, the preceding assumes at least two other important things. First, it assumes that markets don’t overshoot, which they almost always do. Second, it assumes that global trade stays close enough to trend that such comparisons are meaningful, an assumption that I think highly unlikely given the rapidity which worldwide trade is now tumbling.

Is this scientific? Of course not. It is, however, a way for you to at least capture the relevant earnings/growth/multiple dimensions in a way that shows you some possible implications for the overall market.