Les Leopold’s latest masterpiece, “How to Make a Million Dollars an Hour: Why Hedge Funds Get Away With Siphoning Off America’s Wealth,” is necessary, alarming and really funny. His talent for deconstructing complex financial terms and topics constitutes a public service. What he reveals in “How to Make,” in a sardonic and appropriately irreverent tone, is something more ominous. We exist in a political-economic system that allows people who manufacture nothing and bet on everything to control the financial destinies of the rest of the population with impunity, and make stupendous amounts of money doing it. Because, as Leopold writes, “Making a million an hour means never having to say you’re sorry.”

That inanity is what makes Leopold’s book so important, especially now, when the powers-that-be are pretending we’re back to our pre-2008-financial-crisis status—and that’s a good thing. Hey, the stock market hit all-time highs—that’s never happened ahead of a major catastrophe before! 

His “handbook” approach to a pretty arcane topic is hilarious and horrifying. His lively chapters are divided so that they read like a twelve-step Capitalists Anonymous program on how to achieve wealth nirvana.

There’s Step 2, “Take, Don’t Make,” which asks how can these hedge fund managers who create absolutely nothing tangible be rewarded so outrageously for it? There’s Step 7, “Don’t Say Anything Remotely Truthful”—well, that speaks for itself. And Step 9, “Bet on the Race After You Know Who Wins,” gets to the heart of how these managers, who inspire a plethora of reverential business magazine profiles and books, aren’t doing anything particularly daring or even smart. Hell, it’s not hard to find the bodies if you’re the one burying them.

Leopold opens with comparisons of wealthy categories of humans from top entertainers to sports legends to CEOs (including bank CEOs). Only then does he reveal the ones who warrant the book’s title—the top 1 percent of the top 1 percent elite hedge fund managers who bag billions of dollars per year, and millions of dollars per hour, making 100 times more than the top bank and insurance CEOs. Some even approach $2 million an hour such as David Tepper did in 2009, or John Paulson did in 2010 (well, $2.4 million an hour).

Rhetorically Leopold asks, “What on earth do hedge fund managers do to justify making all that money?” To answer, he carefully debunks all sorts of reasons that hedge fund managers and their followers give to explain how valuable they are. Some of these non-reasons include their contribution to financial innovation and fixing price deficiencies in the market. To which, Leopold responds, “So what?” (Thank you, Les!)

In fact, because of the mega amounts of leveraged capital these funds have at their disposal—courtesy of the banks that help fund them—they are much more likely to jump ahead of trades and force the market to move as they want, then massage it into some kind of free-market-philosophy-inspired equilibrium. 

The truth is that hedge funds are risk breeders and carriers, not diffusers. They operate in a relatively unconstrained manner, hiding their positions and strategies to remain “competitive.” Leopold does an excellent job of exposing the ways they manipulate our economy behind that curtain, where the only doctrine they follow is the one that makes them the most money.

Take the irony of Tepper’s Appaloosa hedge fund that bet against free-market ideology and for government bailouts, by betting that after the 2008 financial crisis began the government would not let the big banks fail. He was right. In 2009, he made $4 billion. He profited from us bailing him out. As Leopold writes, “The bailout saved the entire hedge fund industry from utter collapse.” And these guys didn’t even hold FDIC-insured deposits or insurance polices. Think about that.

In Step 3, “Rip Off Entire Countries Because That’s Where the Money Is,” Leopold recalls George Soros’ epic hedge fund bet against the British pound when the European Exchange Rate Mechanism was coming into being. He made $1 billion, while British citizens got economically hosed. More recently, MF Global (which operated like a hedge fund) made similar bets, only it used more complicated derivatives to do so. And there’s a host of hedge fund and other forms of speculation slamming various European countries again. This is in addition to the harm that the big banks with hedge fund support did when they collaborated to disperse toxic assets to smaller banks across Europe. Those banks either went bust (along with the assets) or got European Central Bank bailouts depending on their political connections. The results are economic havoc and austerity measures across Europe.

Leopold provides a compelling history of risk deterrents and risk enablers. After World War II, politicians and bankers wanted a more stable financial framework, which they believed would also benefit them. Before that, the Great Depression brought about the Glass-Steagall Act that curtailed Wall Street’s ability to take risk, or its leaders to get overly compensated for creating it. From the 1940s to the 1970s, the world was calmer. Then, 1970s and 1980s deregulation and tax havens for the über-wealthy ushered in dozens of financial crises.

y, the repeal of Glass-Steagall in 1999 led to the behaviors that caused the most recent crises. Leopold presents an often-overlooked aspect: how big banks teamed up with hedge fund managers generally. Banks created Collateralized Debt Obligations, and hedge fund managers “managed” them, buying equity in them to entice more investors, countries and pension funds into the game. The timing was special. The junk creation and dispersion machine accelerated after home prices fell and loans faltered in 2006. That’s when the most connected hedge fund managers bet against the CDOs for which they were selecting deteriorating assets. AAA rated slices of CDOs became junk and the whole house of cards collapsed.

In Step 6, “Rig Your Bets,” Leopold asks, “Why gamble unless you’re the house?” He explains how hedge funds like Magnetar fleeced the markets. The deals they managed racked up $40 billion in losses for investors while their managers made billions. They worked with nine banks including Merrill, Citigroup, UBS and JPMorgan. It so happens that JPMorgan—whose chairman and CEO, Jamie Dimon, is often lauded for being a risk management god—did one of Magnetar’s riskiest deals in May 2007, a year after housing prices started to decline. The bank didn’t disclose to CDO investors its special role: selecting pools of 2005 and 2006 mortgages destined to fail. (Because, Department of Justice, in case you don’t get to read the whole book, they were already failing. Insider Information. Look it up.)

The same thing happened with Goldman Sachs and hedge fund billionaire John Paulson. Goldman dumped its most risky assets into its last Abacus 2007 deal, the only deal of the series, Leopold notes, for which a client selected the assets. That client was Paulson. He and Goldman then shorted those assets (devised ways to sell them, forcing the prices lower, which led to profit when they fell). The manager of the deal, ACA Management, thought Paulson would go long (buy) the assets and so bought a big chunk of the deal. In the end, investors lost $1 billion, Paulson made $1 billion. Today, those Abacus securities are worthless.

Leopold also covers such topics as Bernie Madoff and the Galleon hedge fund implosion, for which Raj Rajaratnam, once worshipped as “a great American hero,” got an 11-year prison sentence. All he was doing, though, was old-school insider trading on Goldman Sachs stock and other sundries. But these men didn’t use the system to their advantage as well as the likes of Paulson. And despite their disgrace, the financial world remains unchanged.

As Leopold laments, “The economic collapse of 2008 should have been a silo-busting event.” Only it wasn’t. That fall, progressives voted for Barack Obama, who turned out to so not be FDR, and whose election was partly sponsored by Wall Street.

Toward the end of the book, Leopold offers tips on how to stop this siphoning, rigging and the resulting wealth dislocation and global economic instability. But I can’t help wondering whether things are just too far gone. So, I asked Leopold: Do we need a greater depression followed by World War III to rattle the framework? Are these people simply sociopaths—operating in an enabling environment run by sociopath apologists—so disconnected from the rest of humanity that, like the mean little king in “Game of Thrones,” they believe in their own magnificence and their right to destroy anything in the name of financial “efficiency”?

“Good question,” Leopold responded. “I think the way forward is to start taking their toys away. One major route is to build more public state banks. Right now a trillion dollars of our state and local tax dollars are floating through Wall Street banks in every state except for North Dakota, which has a public bank. Building statewide, not-for-profit banks in state after state would begin to construct an alternative financial path that would directly challenge the money game as played on Wall Street.

“Second, we have to fight hard for a financial transaction tax that 11 other countries in Europe are putting into effect,” he continued. “A small sales tax on financial trades of all kinds would put a major dent in the hedge fund game. It would wipe out the high frequency traders by turning their hidden, privatized tax into public revenues.

“And finally we’ve got to destroy the carried interest loophole which give the swindlers a tax break for being swindlers,” Leopold noted. “I don’t think we need to wait for Armageddon to make progress. I’m counting on one simple fact—Americans really are pissed at Wall Street. The more they find out the angrier they become. We need to keep getting the word out about how high finance actually works.

“In fact, I’m sure if we had a few more Truthdiggers at work, we could give them a real run for their money,” he concluded. At that I blushed and commended Les Leopold once more for making this stuff so clear for everyone.