Ah, got it. I've been keeping an ear to the liquidity thing, but this situation makes some more sense to me. So there's a bunch of shitty low liquidity stocks making up ETFs that are going to get vaporized once the market moves in such a manner that the index funds require re-balancing and no one is looking to buy them. The same mindless mechanism that gave them life will kill them off.The problem in 2008 wasn't mortgages defaulting, it was the annihilation of the derivatives whose value was determined by those mortgages. The problem with ETFs won't be any hypothetical drop in the underlying value of the equities that make up the ETFs - the problem will be the mechanism by which those losses are translated into the ETFs because there's leverage and transformation between the values of the two.