A Master of Disaster: James Crosby and the Failure of HBOS Bank

At the Library of Law and Liberty, Dalrymple writes on yet another recent instance of crony capitalism, that nasty nexus of big business and big government that is not capitalism at all:

In fact, a general decline in probity and belief in the possibility of real economic enterprise has led to rent-seeking behavior of a similar nature in both the private and public sectors, with the tax-payer and the shareholder having their funds appropriated by people in a position to do so. At the same time, and not coincidentally, the mutual dependence of the public and private sector has led to a blurring of honest and dishonest conduct. Equivocation is now the norm.

He explains why the government allowed HBOS to lend incontinently when it rarely demonstrates any reluctance to regulate anything else:

It suited its electoral purposes: for the illusory prosperity created by cheap credit and asset inflation was for it better than the veridical economic stagnation that would have been evident without it.

The tax revenue on illusory economic activity funded by debt permitted the government to increase its expenditure and thus its powers of control and patronage without appearing unduly to increase the national debt or its budgetary deficit.

Read the entire piece here

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