The VIX has just hit the lowest level since July of 2007 as Sentiment Trader reports that "speculation in the options market has spiked to its highest levels since the spring of 2000." The government's endorsed moral hazard policy has now lead to the worst of both the dot.com and the housing bubbles. There is nothing that can ever again default or lose money: Uncle Sam is there with your money to guarantee it. Ben Bernanke sees no bubble anywhere.
At the same time, as VIX plummets, MOVE, or the Treasury volatility index, has surged to multi month highs.Once again, the market realizes that the next big shake up will not be in equities, whose worth is only there for so long as the government can keep issuing its pieces of paper, but in the Treasury market. And even as the Dow 36,000 is now guaranteed, a 4 Year at 5.5% is seeing as increasingly likely.
Presenting the ratio of the VIX to MOVE