The markets have become a carnival, as volatility hits an all-time high. Here's a summary of the damage.

[Note: Due to an editorial error, a version of this blog was published that included incorrect YTD performance numbers for a variety of ETFs. The correct version removing that section follows below.] 

As the panic sets in, a carnival-like atmosphere emerged on Wall Street, as former Lehman CEO Richard S. Fuld Jr. showed no sorrow and accepted no blame for the Lehman Brothers collapse. He did take "full responsibility" while effectively taking no responsibility. And it emerged on CNBC that shortly after the collapse, someone at Fuld's gym punched him in the face.

Meanwhile, VIX, the CBOE volatility index, broke 50, the highest level it has reached in its 18-year history.

As the market dropped off a cliff, down into the netherworlds of the low 9000s, and then soared back up over 10,000 again, you got the sick feeling that we're on a roller coaster of volatility that is mainly trending downward, to levels not seen since George W. Bush's first term. It's like watching a train wreck in slow motion ... it's really hard to take your eyes off of it.

And it's clear that no one is trusting anyone on credit, and THAT is a very serious issue that is still mucking up the gears. 

In the midst of it all, as I mentioned yesterday, the dollar is soaring. The (fairly well-supported) theory is that international investors are flooding the market with dollar purchase orders to pay back loans originally made in (formerly safe, low-interest) dollars. In doing so, the flows are pushing the U.S. dollar and Japanese yen up and just about everything else down, in the unwinding of what is effectively an enormous carry trade. Interesting stuff, and intimately tied to the credit crisis. To see the WSJ take on that, click here (paid subscription required).

Where does it all lead? I honestly wouldn't be surprised to see the Dow Jones Industrial Average trade down to 7,500, and the way things are gummed up around money flow right now, it feels to me like we may not be out of this for another five years. I hope I'm wrong. But I've never seen anything like this before where the money is just not moving. Treasuries are down to zero interest, overnight loans in dollars are going out at crazy rates of over 5%, etc. It does not look good.

Just for fun, let's not forget there is an election on. And you can bet on the Obama index or the McCain index if you so choose. I always put my faith where the money in the markets is, not what the polls says, though right now they both seem to be more or less agreeing. Intrade, where you can buy election futures, has Obama with 353 delegates, McCain with 185.

The equivalent polling map from http://www.realclearpolitics.com/ shows Obama has a great current electoral map that aggregates all the various polls. Remember that Bush won with 271 electoral votes in 2000 (270 needed to win). This shows Obama/Biden near that threshold even without any of the toss-ups (which Intrade includes).

Just interesting. So you can hedge your tax exposure, the dollar or whatever by taking out futures on one or the other. Technology today.