Financial Porno

See what lurks in the underbelly of the Rich List.

The latest Rich List is out – the epitome of what author Les Leopold calls, “financial pornography.” As he illustrates in his latest article on AlterNet, “While nearly 15 million Americans still can’t find jobs due to the 2008 Wall Street-created crash, the top hedge manager, David Tepper, earned $1,057,692 an hour in 2012 – that’s as much as the average American family makes in 21 years!”

1 Wall Street hour = 21 years of hard work for the rest of us.

This perverse equation is what Leopold calls “America’s new math.” The 10 hedge fund managers combined went home with $10.1 billion in 2012, which is more than enough to hire 250,000 teachers or 196,000 registered nurses.

The craziest part is not how filthy rich these financial overlords are, nor how corrupt their means of obtaining wealth is, but that we – the public – do not even know what it is that hedge fund managers do.

Leopold’s latest book, How to Make a Million Dollars an Hour: Why Hedge Funds are Siphoning away America’s Wealth explains how hedge fund managers make 50 to 100 times more than top athletes, movie stars, CEOs, lawyers, doctors and celebrities, but their activities are treated like top priority FBI secrets.

A hedge fund, just in case you were still wondering, is a “special” investment for the mega-rich – as Leopold explains, “they are investments for ‘sophisticated’ investors and institutions who have the resources to gamble for ultra-high returns.” But many, pressing questions remain, like “How is it possible for hedge funds, most with fewer than 100 employees, to make more money than corporations with tens of thousands of employees?” Leopold asks, “Is there any evidence to suggest that hedge funds succeed in large part because they have found ingenious ways to cheat? If so, how widespread is the cheating?” He continues:

We also are told that these guys (and yes, they are all guys) make big bucks because they’re terrific gamblers, the very best poker players in the financial world. But that’s a misleading analogy. Evidence suggest that many are more like card sharks. They don’t really want to gamble. Instead they always seeking to bet on a sure thing. Better yet, they would prefer to create a rigged bet.

Here’s a list of known ways that hedge fund managers play card shark…

  1. Insider trading
  2. Designing financial products that fail so they can collect the insurance
  3. Manipulating the media – rumor mongering
  4. High frequency trading
  5. Tax breaks for Hedge funds

But don’t despair yet! Leopold offers three straightforward solutions as to how we can halt this runaway corruption.

  1. Get rid of the carried interest loophole.
  2. Endorse the Robin Hood Tax.
  3. Support full disclosure on exactly how Hedge Funds make their money.

Read more about the risky business of these financial porn stars, and how we can stop them, here.