I imagine some of you saw this article from the New York Times yesterday. It's about how our Congress allowed 2010 to start without any inheritance tax in place. Simply stated, anyone who dies this year gets a free ride, including the multil-billionaire pictured below, whose children and grandchildren won't pay a cent in estate taxes. If he had died just a few months earlier, his estate would have paid billions to the Feds.

Whatever your view on the estate tax is, at least know this: the amount of money every reader of this blog will pay in their entire lifetimes, cumulatively, will not approach what this one man's estate would have paid to the same government if Congress had their act together. I imagine they'll try to make a show of it and get a tax to apply retroactively, but as the article states, that'll probably fail too. Nice goin', fellas.

I have been following with great "interest" (heh. heh-heh.) the developing legislation to tax so-called carried interest at a higher tax rate. There's a good article on the passage of this bill in the house on Friday.

Let me start by saying that the political swing from the left to the right, which began in 2007, will go on for another 10-15 years. There are many changes we'll see, but there are a couple of changes you can, as my mama used to say, put in the Bible – – (1) higher and higher taxes for everything under the sun as governments stave off death by starvation; (2) an increasingly anti-rich, anti-business, pro-union environment. Bank on it.

One might think that I, as a former small businessman and a hedge fund manager myself now, would be very much against the change in carried interest taxation, but I'm not. For one thing, the whole notion of "carried interest" is a complete obfuscation. The tax is relevant to many industries, including venture capital, real estate, and hedge fund managers, but my main beef is with hedge fund managers.

The idea that the richest of the rich get a special Rich Man's Tax Rate of 15% is plutocracy at its worst. Let us once again consider the utterly ignorant average American. Let's stop him in the street for a moment.

SOH: "Excuse me, sir, may I ask you a couple of questions?"

Man On The Street: "You……you're from Slope of Hope!?! Of course!"

SOH: "Do you know what a hedge fund manager is?"

MOTS: "I guess so. They manage money for rich people."

SOH: "Yes, that's right. Do you know how much the most successful hedge fund managers made last year, during the Great Recession?"

MOTS: "I dunno. Millions, I guess."

SOH: "Oh, lots more. The top five all made way more than a billion dollars for themselves, just in that one year, each. The top guy made $4 billion personally in 2009 alone. Amazing, huh?"

MOTS: "Damn! Yeah, that's incredible!"

SOH: "Of course, these guys have to pay taxes. And you know what? Because of what they do, they have to pay a special tax rate!"

MOTS: "That's good. The country could really use the money. I'm just a regular working guy, and I pay almost 40%. These guys must really have an incredible rate."

SOH: "They sure do! 15%"

MOTS: "{multiple expletives redacted}"

I do believe that those, for instance, in the world of venture capital are entitled to special capital gains treatment, but it sounds like the very broad brush of higher taxation is going to paint both deserving and undeserving alike.

But all the bleating I'm hearing from the world of private investment about how this will kill jobs is complete rubbish. People who run hedge funds don't create jobs, except for a handful of administrative positions. They run money. Period. They're professional gamblers, and those that are good at it are richly rewarded. There's no reason under the sun that the income they draw from their efforts should be taxed any more beneficially than the income other people draw from their efforts. It's the same damned thing.

Let's hope the Senate doesn't succumb to the pressures of the treacly lobbyists from private equity-land and water things down any more than they are already. Hedge fund managers avoided billions upon billions of dollars of taxes they should have paid during the past decade. If there were any justice, they actually would have a special 70% tax for the next ten years, but let's at least pretend to be a little fair and have them join the rest of the working world. God knows Big Jim Simons can spare the cash.

On May 7th, a day after the Fat Finger Crash, I did a post that stated the NASDAQ Composite would push higher to about 2450 and then – – possibly – – fall utterly to pieces. So far, that is precisely the kind of rise that has taken place, and I have been aggressively adding to my short positions. Below is the minute bar chart for the past several months:

As you can see, I've highlighted what, I assume, is on every technician's mind, and that is this: is the topping formation we've recently witnessed going to simply be a replay of the topping pattern we saw in January? That is, a tumble, followed by a rise…..followed by a relentless continuation of that rise into yet another high price?

I don't think so. The main reason is this: I tend to be a "bottoms-up" kind of technician. These days, I'm looking at over a thousand charts every single day, and I try to smoke out as many individual opportunities as I can. Currently, I'm seeing just about nothing I like on the long side. There are rare exceptions here and there – – symbols MF and, to a lesser degree, CROX, spring to mind – – but for every mildly interesting long chart there are literally about one-hundred drool-inducing short opportunities. So it doesn't seem to be a market set up for a widespread lift higher.

In addition, what happened after January was quite different than what we're seeing now. In January, we saw a relatively steady fall lower spanning a series of weeks, followed by a multi-month push higher. This time, we instead saw an almost unrestrained collapse followed by a vicious rally higher over a mere few days. That rally seems to have run out of steam, as today's action illustrated.

There is virtually no doubt in my mind that the next several years are going to be absolutely calamitous for the financial markets and, subsequently, the political system and social fabric. I've never doubted that. What I have had doubts about is the timing of such an unraveling. But the stars are starting to line up these days, particularly as the government is, step by step, taking a more activist role in re-examining the kidnapping of America by the investment banks during the past decade.

I spent many of my adult years with a fiercely pro-business, laissez-faire mindset. The cliche is that if you're young and conservative, you have no heart, but if you're old and liberal, you have no head. Well, I guess that description must have been made for me. I am glad to see the federal government, clumsy as it may be, finally taking to steps to examine the laughably criminal conspiracy between the "ratings' agencies (ha!) and the international bankers. I am highly confident that, if we're seeing this kind of activism while the market is still sky-high, we're going to see an almost unrecognizable political configuration thousands of Dow points from now.

In the shorter-term, I remain entirely short, with approximately a 115% commitment of my portfolio to short positions. I actually had another 58 positions I wanted to enter before today's close (and you've never seen anyone work a spreadsheet so fast…..) but I simply ran out of time. Once the retail figures come out Friday morning, I'll see how many of those positions I'd still like to execute.

The dance we've been doing near the 1170 line on the /ES has been nerve-wracking, but I found today's late-day plunge to be heartening. A meaningful down-day on Friday would begin to place control of the market even more firmly in bearish hands.