Scapegoats

I overheard the following snippets of conversation over the past few days:

“Hillary Clinton’s campaign is using sexism as a scapegoat for a poorly run campaign.”

“Lehman Brothers used Erin Callan and Joseph Gregory as scapegoats—of course Fuld knew the deal, but he let those two take the fall to save his own hide!”

“As usual, Congress seeks to scapegoat speculators for any problem that arises in financial markets.”

That’s a lot of scapegoat-ing for one weekend, so I thought it was time to dive into the idea of it and the roots of the word. According to Merriam Webster, the word scapegoat is intended as translation of Hebrew and the modern interpretation is “one that bears the blame for others” or “one that is the object of irrational hostility.” You get the idea. Since I do not get paid to articulate my political views, I will leave the Hilary conversation aside. I am interested in the other two instances of “scapegoat-ing.”

The idea that the junior professional gets the ax instead of the boss is not a new one, but it seems more dramatic when everyone involved is at a high level. Lehman Brothers announced that Erin Callan has been shuffled aside from her role as CFO for some amorphous position "in a senior capacity." After John Mack’s firing of his star pupil Zoe Cruz at Morgan Stanley for more proof, it is a little strange to see another woman fall, considering there don’t seem to be many left in the executive suite at major Wall Street firms. First there was a dust-up at Fidelity where the boss’ daughter was passed over, then Sally Krawchek at Citi was demoted, then Zoe Cruz and now Erin Callan. My takeaway is that as soon as the New York Times or Wall Street Journal start writing about you, look out below! All of these women had major puff-pieces published within moments of their demotions/firings. I don’t actually think that sexism was the issue here, but few CEOs are willing to fall on their swords when the pressure cranks up.

When it comes to speculators, well, they are the easiest targets. Who likes the people who make money by inserting themselves between buyers and sellers? I DO! I was a speculator once—a young trader on the floor of the Commodities Exchange, skimming dimes and nickels out of the marketplace in a perfectly legal manner. The common wisdom holds that speculators are responsible for high gas prices, food increases and volatility -- lawmakers must have gotten tired of blaming the Chinese.

Here is my two cents: speculation may play a role, but so too does supply and demand. Without the liquidity provided by speculators, day traders and yes, hedge funds, these markets may not work as smoothly. Maybe some of the margin requirements should change, but I get nervous when one group or person becomes the target of such a large problem.

The issues surrounding dramatic events that occur in companies, financial markets and the economy are far too complex to blame on any single individual or group. Take the scapegoat-ing with a grain of salt, knowing that there are likely a variety of explanations for the situation at hand.