Long USD vs. short GBP and EUR

The current crisis is quite interesting- both academically as well as personally, although I suspect most people would change the order of my adjectives.
First of all, the trades

I have been long the dollar for a while against the EUR and GBP and I continue to like the trade- Euroland will face its first recession and two things will weigh upon it: first, the survival of Euroland as an entity is doubtful, the second the extent of the problem is not being realized fully and Trichet and co. always lag the US in monetary policy. While the first reason doesn't apply to GBP, the second does. British banks will have a pretty rough time in the coming few months in my view.

I think USDJPY doesn't move too much from here. I would say it remains rangebound between 101- 109 over the next month. Obvioulsy you can buy leveraged Double Knockout etc. Or you can range trade with spot- say USDJPY goes to 108, then go short and if USDJPY goes to 102, go long.

S&P has broken 1100 levels and it is interesting that this is AFTER the bailout package was passed! VIX- the measure of 1m implied volatility for the S&P (roughly speaking) has been at 45 levels for a week. Normally, VIX is used as a gauge of fear over the next month. I think the correct way to look at VIX is fear + expectation of movement. ( In acacdemic jargon, the expected realized volatility + volatility risk premium). The reason VIX is at 45 -levels rarely seen and ones close to Aug 1998 crash is because now, like then, we are uncertain about the direction of indices as well as afraid.... Believe it or not it is possible for
VIX to remain at 45 levels for a while.
I think VIX at these levels shows that investors are afraid of what will happen and there is doubt about the Fed's ability to control the outcome at this point and that is what makes us afraid. If the biggest Central Bank cannot control this, then we are screwed... buy GOLD and hide money in your mattresses scenario comes to mind.
I don't think that we should be so pessimistic but the Fed IS doing some strange things so it is hard to blame the market. The market just reflects what the people participating in the market believe.

Good Luck!