McGraw Hill Market Cap Decline

Efficient market theorists should take note that MHP's market cap has fallen by $3B in the last two days on news that the Federal government is suing the company.  For reference BP's settlement with the Justice Department was $4B. Given that McGraw Hill was arguably complicit but not the direct cause of structured credit blowups, it's difficult to see how any settlement could reach multi-billion dollar territory.

How Good is the VIX at Forecasting Future Volatility?

UPDATE: There was an error in the way I annualized the VIX in the original post leading to a different conclusion.  The error should have been corrected below.

According to those who believe in efficient markets, market based prices should be reliable indicators of future events.  If the efficient market hypothesis holds true, then the VIX should be a reliable predictor of future stock market volatility.  Is it?

The VIX is supposed to forecast the 30 day future volatility of the S&P 500.  Below is a chart of the VIX against a chart of the actual realized volatility 30 days from the time of measurement of the VIX.  On average, the VIX has expected a slightly more volatile environment than has been realized over the last 8 years.  The average difference between the VIX and actual volatility in this period was about 3.25%.