FTSE at 13.7x earnings is pricing-in the kind of growth seen in normal times. We neither have normality nor growth - and neither are likely for several years.
If I buy a share at 13.7x earnings I expect to see good growth - and I mean profit and dividend growth; not illusionary capital growth which can disappear quickly.
What valuation do you consider "fair" for a company that isn't growing much and isn't likely to see much growth, on balance, for several years?
With such serial-bubble hangover (dotcom, housing, consumer debt, government debt) why shouldn't we be facing something akin to Japan's "lost decades" on the downside, or the 1970's "stagflation" on the upside?