When the fallout from the Italian elections sent a shudder through the world's stock markets on Monday, one thing that was affected was the VIX, or what is commonly referred to as the fear index. This measure of the market's volatility had been under 15 every day this year until it popped up to 19 on Monday. The 34 percent increase was the largest one-day rise since August 2011, during the debt ceiling debates.
It wasn't so long ago that we had expected volatility like that as a matter of course. The VIX was over 20 as of a year ago. During those debt-ceiling debates, when Standard & Poor's downgraded the nation's creditworthiness, in the late summer of 2011, it was above 40.
But everything is back under control now. The VIX has given back 88 percent of Monday's one-day spike, and dropped safely under 15 again. The shock waves were apparently a one-day phenomenon.
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