THE ICARUS RECOVERY

"Icarus was the son of the inventor Daedalus and a slave named Naucrate. King Minos of Crete imprisoned Daedalus and Icarus in the Labyrinth to punish Daedalus for helping the hero Theseus to kill the monster called the Minotaur and to escape with Minos' daughter, Ariadne. Daedalus knew that Minos controlled any escape routes by land or sea, but Minos could not prevent an escape by flight. So Daedalus used his skills to build wings for himself and Icarus. He used wax and string to fasten feathers to reeds of varying lengths to imitate the curves of birds' wings.

When their wings were ready, Daedalus warned Icarus to fly at medium altitude. If he flew too high, the sun could melt the wax of his wings, and the sea could dampen the feathers if he flew too low.

Once they had escaped Crete, Icarus became exhilarated by flight. Ignoring his father's warning, he flew higher and higher. The sun melted the wax holding his wings together, and the boy fell into the water and drowned."

Source: Encyclopedia Mythica

I have been reading various blog posts and articles written of late concerning the so called economic recovery. One quickly realizes that the experts and so called experts are stretched to explain how the recent data supports the renewed exuberance of the equity markets. For every neutral news byte (e.g., economic contraction has slowed, unemployment has slowed, flattened earnings are beating negative expectations) there is literally a string of continuous bad news. You can argue all you want about where precisely we currently stand in this mother of all business cycles and whether there is a glimmer of light of the end of the tunnel. What seems abundantly clear, however, is that the stock market bubble has been re-inflated with "boatloads" of liquidity created by the Federal bailout. The money has not been disbursed as loans to businesses and consumers. Consumers are saving not borrowing. How long will this market fly before it once again soars too close to the sun? The S&P p/e ratio is apparently sailing around 750. You be the judge.

As for all of the punditry and official prognostications, there are currently three camps: First there are the well meaning but wishful thinking technicians and politicians who are sincerely hoping that we are not flying over an O'Bubble with wax wings. Then there are the experts, those who fully understand the financial laws of aerodynamics have once again been breached and are quite certain that we are using the same over leveraged wax wings that were used to soar in the real estate bubble. Finally, there is Wall Street, they are in the business of selling wax wings for a commission. Say the wax wing handlers, these wax wings are new and improved. So take your safety money and buy them while you can!