Financial Meltdown Chapter Two

How is investing in the VIX (Volatility Index) any different than the Credit Default Swaps that got us into trouble so few months ago?

The last two weeks the market has been yo-yoing up and down like a… well…. yo-yo….. And listening to the financial news networks one hears a lot about how high the volatility index is, or how low, or what it’s going to do, or has done…. and I have to ask how, on a fundamental level, is this any different than betting against the mortgages you are selling your own customers.

There has been huge attention to the financial institutions that supposedly are responsible for the financial crisis we are coming out of.  And yet, I have to wonder.  We hear a lot about AIG and Goldman Sachs and other financials but look at the instability that volatility has caused and tell me that we are not in just as much danger of another financial meltdown as we were before the financial crisis.

But I hear NO ONE saying that tools that enable gambling on the direction of the market are dangerous. In fact I hear a lot of advice being rendered about ways to manage one’s risk…

Anyone ready to write chapter two of this meltdown story….. or start the countdown until it happens.