By Mark Ayers
President
Building and Construction Trades Department

October is that time of year when most of us begin to feel the sharp chill in the air that says that winter is just around the corner. For some folks, October represents the beginning of the end…the threshold to the end of another year.

And as October 2008 begins, I can certainly agree with that sentiment. Because we - and by "we" I mean America in general, and America's Building Trades Unions in particular - are on the cusp of truly experiencing the beginning of an end.

For our beloved country, we are fast approaching what many of us believe is the most important and historic presidential election in our lifetimes. Not in the sense that we may very well elect an African American as president, which is, indeed, historic in and of itself.

Perhaps more importantly, this election is so important and historic because I truly believe that the results of this election will demonstrate a seismic political shift away from a political majority and its accompanying governing philosophy that has thrown our nation wildly off-course over the last eight years, and has put the lives of American working families in complete disarray and imbalance.

On March 16, 2008, the U.S. Federal Reserve, by nature a prudent and cautious institution, rewrote its own rule-book by rescuing Bear Stearns, the country's fifth-largest investment bank, and agreeing to lend directly to other brokers. A couple of days later the Fed cut short-term interest rates-again-to 2.25%, marking the fastest loosening of monetary policy in a generation.

It was a Herculean effort, and it staved off the outright catastrophe of a bank failure that had threatened to split Wall Street asunder. At that time, I applauded the actions of the Fed andconcluded in my own mind that we were close to reaching the peak of the crisis.

Boy, was I wrong!

In mid-September, the federal government had to step in and provide immediate infusions of cash and credit to stave off the collapse of Freddie Mac and Fannie Mae. And hot on the heels of that action came the news that Wall Street banking conglomerates Lehman Brothers and Merrill Lynch, along with the world's largest insurance company - American International Group (AIG) - was also on the verge of bankruptcy.
Like most Americans, I digested this news with a healthy dose of wonder, asking myself, "What the Hell is going on…how did we get to this point…and who was asleep at the switch?"

Well, many would say (and I would agree) that it all began in the 1980s with an historic and sustained bull market in stocks and bonds, propelled by falling interest rates, new information technology corporate restructuring, and a new conservative government led by Ronald Reagan's siren call to eliminate any and all forms of government regulation and get government out of the way of capitalism.

When this historic boom ran out, shortly after 2000, the finance houses that had grown rich on the back of it set about in search for new profits. Thanks to cheap money, and the aforementioned obliteration of government securities regulation, they could take on more debt-which makes investments more profitable and more risky. And thanks to new information technology, they could design an endless myriad of complex derivatives, some of them linked to suspect mortgages. By combining debt and derivatives, the banks created a new money-making machine that could originate and distribute prodigious quantities of risk to a baffling array of counterparties.

And while all this was going on, there was no oversight from any government regulatory body to ensure against any potential catastrophe.

Over the past decade this entangled system fed on itself. And the financial system, or a big part of it, began to lose touch with its primary purpose; which was, and is, to write, manage and trade claims on future cash-flows for the rest of the economy. Instead, Wall Street increasingly got caught up in a game built upon fees and speculation.

And its favorite pastime was to "beat the regulator." And in this game, billions of dollars were diverted off of balance sheets and into more dubious, and incomprehensible, schemes. All the while, thanks to what, in hindsight, has proven to be disastrously lax regulation, banks did not have to lay aside sufficient capital in case something went wrong.

And boy, did it go wrong. The game is now up. You can think of lots of ways to describe the pain-debt is unwinding, investors are writing down assets, liquidity is short. But the harshest pain has been reserved for middle American families - like the men and women who comprise our skilled trades - whose very lives and careers are dependent upon companies and businesses and developers having access to capital in order to expand and grow their businesses, and in the process provide the jobs and the income stability that fuels the American economic engine.

It is a sad and compelling tragedy. But it is not devoid of meaning, because something important happened on Wall Street this year. Not only have financiers discovered that they had created a series of monumental risks that the market could not cope with, and which will never, ever be allowed to prosper again; but the American people are finally waking up to the fact that a conservative governing philosophy predicated on a completely unregulated free market is not in our nation's best interests.

The debacle continues to unfold on Wall Street today is not a reason to condemn our entire democratic/capitalistic system…for in its true form it remains the best approach, and the greatest hope, for ensuring equal opportunity and sustained economic prosperity for all Americans.

On the other hand, the lessons that we, as a nation, have learned through this painful ordeal will be incredibly useful as we work to replace a flawed, conservative political and governing system with a more tempered and sensible approach that is rooted in the basic premise that government ought to function in the interests of the greater good…and not the privileged few.

So, in that vein, the events of this year on Wall Street are a sign that the rules need changing. And change they will.

But, first, we have to stop the rot.

And that begins on Election Day 2008.