How to Make a Million Dollars an Hour , livre ebook

Contents
Introduction
Step 1: Reach for the Stars-and Beyond
Celebrities
CEOs
Lawyers
Doctors et al.?
And What about Hedge-Fund Managers?
What s a Hedge Fund?
How Much Is Too Much?
Step 2: Take, Don t Make
Do Hedge Funds Increase Economy-Wide Productivity by Fostering Innovation?
Do Hedge Funds Bring Liquidity to Markets?
Do Hedge Funds Make Market Prices More Accurate and Efficient?
Do Hedge Funds Absorb and Reduce Financial Risk?
Step 3: Rip Off Entire Countries Because That s Where the Money Is
Step 4: Use Other People s Money
Productivity Growth and Wage Gains Break Apart
So What, Exactly, Happened to the Trillions of Dollars in Real Output Each Year That Stopped Going to Working People?
Borrowed Money
The Shifting Balance between Democracy and Finance
Step 5: Create Something You Can Pretend Is Low Risk and High Return
Introducing My Cousin Norman
Fantasy Finance 101: How to Create a Housing Bubble and Bust
A Pact with the Devil?
Step 6: Rig Your Bets
Fantasy Finance 101: How to Cheat the Markets
The Amazing Abacus Deal
Step 7: Don t Say Anything Remotely Truthful
Step 8: Have the Right People Whispering in Your Ear
Is Rumormongering Good for the Economy?
Step 9: Bet on the Race after You Know Who Wins
Step 10: Milk Millions in Special Tax Breaks
Step 11: Claim That Limits on Speculation Will Kill Jobs
Step 12: Distract the Dissenters
1. If Someone Writes Your Name and the Word Crime in the Same Article, Sue Them!
2. Divert the National Conversation from Wall Street to Government Debt
3. Un-Occupy Wall Street
4. Encourage Progressive Silos
5. Foment Financial Amnesia
Conclusion
Acknowledgments
References
Index

Copyright 2013 by Les Leopold. All rights reserved
Jacket Design: Wendy Mount
Jacket Photograph: John Kuczala/Getty Images
Published by John Wiley Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
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Library of Congress Cataloging-in-Publication Data
Leopold, Les.
How to make a million dollars an hour : why hedge funds get away with siphoning off America s wealth / Les Leopold.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-118-23924-7 (cloth); ISBN 978-1-118-43814-5 (ebk);
ISBN 978-1-118-43811-4 (ebk); ISBN 978-1-118-43812-1 (ebk)
1. Hedge funds. 2. Investment advisors. 3. Wealth. 4. Income distribution.
I. Title.
HG4530.L423 2013
332.64 524-dc23
2012025744
With love to Frank ,
Alvina, and Darlene Szymanski
Introduction
So, you want to make a million dollars an hour? Who wouldn t? Just think of what you could do. Work ten minutes and buy yourself a Ferrari. Work another half hour and retire. Or tough it out for just one day and make as much as the average family makes in 179 years!
You re about to learn the secrets that enabled America s top hedge-fund managers to pull down astounding sums in the space of minutes.
Maybe you re a little hesitant, though. You have a few questions you need answered first. Like, what would you have to do, exactly? What is a hedge fund, anyway? How does it make so much money? And do you have to be Einstein to get that rich?
If you re a do-gooder, you might also want to know whether running a hedge fund does any harm. Does it suck blood from the poor around the world? Does it rob widows and orphans? Does it profit from arms smuggling or global warming?
If you re really righteous, you won t worry just about the damage done. You will also ask whether hedge funds do any good for anyone other than those hauling in a million an hour. You might even worry about whether, as a newly minted hedge-fund billionaire, you might be undermining democracy itself. That s a heavy load-so heavy, in fact, that it might keep you from concentrating fully on making a million an hour. We understand. No one wants to be accused of wrecking society.
Well, don t fret. We ve got you covered on all fronts. As you ll soon see, I m obsessed with these questions. I m especially worried about whether the million-an-hour crowd produces anything positive at all for our society and economy.
It s a perverse question, I know. Most people (and economists) assume that if hedge funds make piles of money, they must be creating value. The more they make, the more value they produce by definition. Who cares what value hedge funds actually produce or whether the activity is socially useful. Those guys are rich, and we wanna be, too!
A lot of people, including most people who write books about hedge funds, just can t stop gushing about these financial elites. They re the best of the best of the best, and they deserve every billion they get. So what if a couple of the big guys get busted (think Bernie Madoff, Raj Rajaratnam, and Allen Stanford)? So what if a couple of the big hedge funds were primary instigators of the greatest financial crash since the Great Depression.
If you want to know what hedge funds really do, however, you ll soon discover that a straight answer is hard to come by. Mostly, these guys (and yes, they are nearly all guys) keep their efforts well hidden from view. Trade secrets and mystical lore shroud their every move. Neither regulators nor the public have any idea how so much money is minted.
So, who is our ideal target audience for this book? You. I m thinking about average workers who haven t seen a real raise for years, who don t know whether their jobs will be there next week, who watch health-care deductibles rise higher and higher while coverage shrinks, and who see their retirement funds going nowhere. I m also thinking of teachers, firemen, police officers, and other public servants who serve as pi atas for self-promoting politicians and pundits, only because they still have decent jobs with reasonable benefits. Meanwhile, because of the Wall Street crash, those jobs and benefits are being cut, cut, cut. And, of course, I m thinking about their kids, who are struggling to pay for college, who get saddled with enormous debts, and who then search for jobs that don t exist.
What about professionals? Don t worry, I m thinking about you as well. When the top money managers make twenty thousand times more per year than the average pediatrician, you ve got to wonder what s up. You work hundred-hour weeks tending to sick children, while some snot-nosed kid in a hedge fund makes more in one hour than you ll earn in ten years .
So, all you production workers, nurses, school teachers, cops, students, and professionals, welcome aboard. You must be damn curious about how these hedge-fund honchos are making so much, doing God knows what. You may even wonder if you can get there, too. After all, this is America! At the very least, I m sure you want to know whether their hedge-fund wealth comes from picking your pockets.
We can find the answers, but it requires that you join us in a walk on the wild side of fantasy finance. Please follow our twelve-step guide to accumulating vast riches. This book is all you ll ever need to peer into the million-an-hour club and maybe, just maybe, become a member, or, at the very least, a fierce opponent.
Step 1
Reach for the Stars-and Beyond
If you live in America, chances are, you want to be rich. Winning big is our national religion, and the competition to the top sure is tough these days. A recent study of the twelve richest countries shows that nine of them have more upward mobility than we do ( A Family Affair, 2010). So, it isn t going to be easy to break through.
I m going to assume you re middle class, so let s anchor ourselves in what it means to be middle class in the United States today. The median American family-at the halfway point in income distribution-earned $45,800 in 2010. Sadly, that s 7.7 percent below what it was in 2007. We ll refer to this median household as the average family (Bricker 2012, 1-5).
The good news for the rich, though, is that they re getting richer. We now have the most skewed income distribution