How Not to Fix the Euro: More Leftism

Joseph E. Stiglitz - The Euro: How A Common Currency Threatens The Future of Europe

National Review, October 10, 2016

Imagining that a large number of very different economies could be squeezed into a single poorly constructed currency was one fatal conceit. Imagining that the story of what happened next could be squeezed into one rigid “narrative” was another — but that’s what economist Joseph Stiglitz has done in The Euro, a badly flawed book about a disastrous idea.

Stiglitz, a Nobel laureate and a Columbia professor, has been crusading for years now against the wickedness of “neoliberalism,” a term that, like “late capitalism,” says more about the person using it than about what it purports to describe. Check out the titles of some of his more recent books: “The Great Divide: Unequal Societies and What We Can Do about Them,” “The Price of Inequality,” “Freefall: America, Free Markets, and the Sinking of the World Economy.” The Euro is the latest installment in a long leftist tirade.

Stiglitz has valuable points to make on the EU’s dangerous monetary experiment, but it’s easy to lose sight of them amid all the pages devoted to his insistence that the devastation caused by the single currency is another example of the havoc that “market fundamentalism” has wrought.

Yet the euro was, at its core, an exercise in central planning. Stiglitz concedes that it was a “political project” to accelerate the process of European integration. But more than that, it was to be a challenge to the supremacy of the dollar and a permanent brake on the unruliness of foreign-exchange markets, ambitions far removed from market fundamentalism. Indeed, one of the earlier critics of the proposed new currency was Milton Friedman, not that Stiglitz finds the room — or the grace — to mention it.

Stiglitz questions the economic rationale behind the euro (arguing, intriguingly, that, contrary to the claims of its advocates, it was always likely to operate against convergence within the bloc) and the way that it was put together: The structures needed to make it work properly weren’t there. Yet his list of those responsible for the inevitable crisis is tellingly incomplete. To be sure, he acknowledges the important (and often overlooked) fact that individual governments could — even within the constraints of the euro zone — have done more to head off disaster than conventional wisdom now suggests, but, for the most part, he blames the Left’s preferred bogeymen, greedy bubble-blowing bankers and their accomplice, light-touch regulation.

But while there were undoubtedly areas in which regulation was too lax, the greater problem was that regulators were nudging financiers in wrong directions, whether it was toward real-estate-linked lending or into the belief that Greek sovereign risk was not that much greater than German. In the early years of the euro, Greece had to pay (on average) less than 0.3 percent more to borrow than Germany. That was nuts, but those steering the euro zone had persuaded themselves that the economies of the countries now locked into the currency union had truly converged. They hadn’t. And, crucially, the warning signals that would have been sent by the currency markets of old — a drachma crash, say — had been silenced. Ideology trumped reality, politics trumped markets, and the result was catastrophe. There’s a lesson in that, but Stiglitz doesn’t appear to see it.

Stiglitz is on safer ground criticizing the steps, from bullying the Irish government to assume private bank debt to the indiscriminate emphasis on “austerity,” taken by the euro zone’s leadership after the crisis erupted. The former is very hard to defend, and the latter was, in some cases at least, overdone, poorly timed, or both: There’s a limit to the extent to which a country can be expected to deflate its way to recovery. But to attribute — as Stiglitz does — the tough love shown by the “Troika” (the European Central Bank or ECB, the European Commission, and the International Monetary Fund) responsible for the euro zone’s bailouts to market fundamentalism is, to put it at its kindest, a misreading. What drove it was the complex internal politics of the currency union.

Stiglitz rightly highlights the difficulty of reconciling the management of the single currency and basic democratic principle. As he notes, voters in the euro zone’s laggards were offered no serious alternative to the harsh and sometimes questionable treatment prescribed for their countries. Beyond that essential but unremarkable insight, he touches on a broader, somewhat neglected issue: what it means when a democracy transfers the oversight of key areas of the economy from the legislature to technocrats and, specifically, to “independent” central banks such as the ECB, a practice Stiglitz attributes to the then (supposedly) prevailing “neoliberal ascendancy.”

That’s a debatable proposition to start with and it has next to nothing to do with the independence of the ECB, which echoes (as Stiglitz recognizes) the traditions of the Bundesbank (Buba), Germany’s legendary central bank. Far from being the product of late-20th-century neoliberalism, Buba’s independence — and its inflation-fighting mandate — date back to its origins in a ruined country that believed it knew where debauching a currency could lead.

Without Germany, there would have been no euro. But, proud of their Deutschmark, German voters didn’t want to switch to a new currency. Sadly, they were never given the chance to reject it, but assurances from their government that the ECB would, for all practical purposes, be a Buba 2.0 were part of a package of promises (no bailouts was another) designed to soothe their unease. Stiglitz discusses the fact that Germany shaped the ECB but fails to give enough weight to the democratic concerns that help explain why.

In any event, those promises were broken, and not just by a series of bailouts. Whether by effectively permitting local central banks to “print” new euros, or by allowing unpaid balances to mount up in its clearing system, or, belatedly (Stiglitz would argue), by a series of increasingly elaborate market operations culminating in the European version of “quantitative easing,” the ECB has turned out to be far less stingy a central bank than German voters had been led to believe it would be.

Stiglitz does not seem too bothered by this: Some democratic failures are evidently more equal than others. He is (legitimately) angry about the way that the Troika forced out the socialist Greek premier George Papandreou (his “long-term friend”), but he has nothing to say about the not-dissimilar putsch that replaced a less ideologically sympathetic figure, Italian prime minister Silvio Berlusconi, with an unelected, obedient proconsul.

Then again, this is the Stiglitz who claims that the objectives of European integration included “strengthening democracy” — a revealing interpretation of a project born of the notion that Europe’s voters could not be trusted to keep the peace. The idea behind what became the EU was that power should be transferred away from democratic nation-states to a supranational authority staffed by largely unaccountable technocrats. And over the decades, it was, often by the sleight of hand made necessary by European electorates’ stubborn suspicion of Brussels’ relentless drive toward ever closer union.

But a new currency was not something that could be introduced on the sly. People would notice. To a greater or lesser degree, the inhabitants of the future euro zone would have to consent to such a change, and to a greater or lesser degree they did. But they were not prepared to surrender enough sovereignty to give the euro a better chance of success. As much as Stiglitz might wish otherwise, that hasn’t changed. If there is to be any realistic prospect of keeping the current euro zone intact while restoring prosperity to its weaker brethren, it will, one way or another, involve a pooling of resources, but the richer countries won’t agree to that on terms that the poorer could accept. This impasse owes nothing to market fundamentalism and a great deal to the absence of a shared identity: Germans are Germans, Greeks are Greeks; neither are Eurozonian. They lack the needed sense of mutual obligation.

Stiglitz maintains that if the euro zone’s members won’t agree to a more comprehensive monetary union, big trouble lies ahead, threatening not only the euro but, maybe, the broader European project. I’m not convinced: “Muddling through” with what Stiglitz labels a blend of “temporary palliatives” as well as some “justly celebrated” deeper reforms has kept the currency going so far, albeit at a terrible cost. It could continue to do so for quite a while yet. And, despite the best efforts of the rebellious Brits, the EU seems set to endure too.

It’s worth adding that Stiglitz’s definition of that more comprehensive monetary union begins, understandably enough, with a credible “banking union,” debt mutualization, and the like, but then spills over into a vision of a command-and-control euro zone that — if that is what is really required to make the currency union work well — is another good argument for putting a stake through it once and for all.

A different way to go could, reckons Stiglitz, be the creation of a system under which euro-zone countries (or groups of countries) adopt “flexible euros” that trade against each other within a (much) more tightly managed version of Europe’s earlier exchange-rate regimes. He also puts forward yet another solution, some form of “amicable divorce”: Either Germany (alone or in conjunction with other northern European countries) should quit the euro zone, or the currency should be divided into new euros — northern and southern, a division that has, in my view, long been the right way to go. What unites these alternatives is the welcome recognition that one size does not fit all: A currency must reflect the realities of its home economy. Tragically, there’s no sign that the central planners in Paris, Brussels, Frankfurt, Paris, and Berlin agree. After all, they tell us, the euro-zone crisis is over.

We’ll see

Not Too Tricky To Be Ike's Veep

Irwin F. Gellman: The President and the Apprentice - Eisenhower and Nixon, 1952-1961

Standpoint, March 1, 2016

The thing about “archive rats”, to borrow Stalin’s useful insult, is that they unearth facts that unsettle the authorised version of history. It’s a label that Nixon scholar Irwin Gellman can wear with pride. He has been burrowing in the archives for decades in obvious places (the National Archive, the Nixon Library), overlooked places (the Cabot Lodge papers), and in places (he none too subtly implies) that other historians could not be bothered to inspect — every one of the approximately 845 boxes of the “largest part of the Nixon manuscripts, called the 320 series”. 

The result is The President and the Apprentice, a somewhat obsessive, intriguingly contrarian retelling of the story of Nixon and the Eisenhower presidency. Traditionally, Eisenhower’s time in office has been regarded as a wasted opportunity, only partly redeemed by the supposed disdain he felt for his vice-president, Richard Nixon. More recently, academics have been re-rating Ike (it probably helped that doing so made his Republican successors look bad) but that re-rating has yet to percolate through to a popular consensus still shaped by dim memories of high-school history lessons and, more vividly, media depictions of Eisenhower’s America as a land that progress forgot.

Nixon has also benefited, to a degree, both from the attention of revisionist historians and the passing of the decades since his disgrace. His funeral was attended by President Clinton and all his surviving predecessors (Clinton was representing, he declared, “a grateful nation”). For all that, to most Americans Tricky Dick remains a President Evil, snarling while he plots dark deeds and incriminating tapes whir. He has never been forgiven by liberal opinion-formers for his role in exposing the traitor Alger Hiss (“vindicated” again, I note, in a book published last autumn).  Nor have they forgiven him for his style — or styles, all those “new Nixons” — for his abrasiveness, his awkwardness, his embarrassingly obvious striving and, worst of all, for a series of election victories that announced that America was more like him than them.

Even those historians willing to look beyond the standard caricatures of this complicated man’s complicated career have struggled to put Nixon’s relationship with Eisenhower in a positive light, something that Mr Gellman, previously the author of The Contender, an account of Nixon’s Congressional career, sets out to correct. This is no hagiography; it is a scholarly work, but a combative one too. Reinforced by what he has mined from all those archives, Gellman debunks myths, he challenges the comfortably liberal narrative, and when people have lied he says so. Nixon was brought down by his lies, but to no small extent his reputation has been trashed by the lies of others. To take just one: No, Mr Truman, he didn’t call you a traitor.

While The President and the Apprentice leaves a generally favourable impression of the Eisenhower administration, it is not a broad rethink of this already rethought presidency. It is too narrowly focused on the Nixon vice-presidency for that. But Gellman does attempt to address what has become a central criticism of those years: that Eisenhower did too little too slowly to come to the help of African-Americans, at the wrong end of institutionalised racism across the country and, in the South, victims of something very much worse. Nixon, whatever his private thoughts on racial matters (the much later White House tapes do not make pretty listening in this respect), had no time for Jim Crow, segregation, or the petty (and not so petty) viciousness of the racial discrimination of the era. And nor, despite some attitudes that might dismay in 2016 (as a father, he would not have been too happy to discover who was coming to dinner) did Eisenhower, a man, it must be remembered, brought up in turn of the 20th century Kansas. That said, even allowing for a difficult political environment, the duo’s reluctance to make more use of the bully pulpit in support of civil rights must count against them. And their hopes that changing attitudes and improved African-American access to the voting booth would be enough to do the trick were at best wishful thinking.

True to form, Gellman does not let the Democrats off the hook, highlighting what was once in plain sight, but is now often consigned to the memory hole. Democrats did much to obstruct and (in LBJ’s case, for a characteristically calculated blend of reasons) dilute the 1957 Civil Rights Act, the first legislation of its kind since 1875. This was a reflection of the priorities of their southern redoubt, as was the unwillingness of many Democrats (including, Gellman points out, both JFK and LBJ) to offer public support for Eisenhower’s decision to send in the army to enforce the integration of Little Rock Central High School, Arkansas.

To be sure, President Truman ordered the desegregation of the military (although it was the Eisenhower administration that essentially implemented it), but, after reading this book it’s hard to deny that Truman, later an opponent of the sit-ins at segregated lunch counters (organised by “Communists”, apparently), and no stranger to the N-word, has been credited too much, and Eisenhower too little, for what they each did to push the US further down the long march to racial equality, an imbalance that, of course, fits all too neatly into the historical perspective of the American Left.

To FDR’s first Veep, “Cactus Jack” Garner, the vice-presidency was “not worth a bucket of warm piss”, but Gellman makes a strong case that Nixon made far more of this unloved position than might have been expected. He was not any sort of co-executive; the Dick Cheney vice-presidency lay far in the future. But he was valued for his contribution to, and coolly objective analysis of, the frequently rough political scene at home (a melée that the grand old general preferred to be seen to soar above, but understood enough about to know — usually — what he didn’t know) and, as the years passed, also for his thoughts on abroad. Nixon was, so to speak, a youthful understudy whom Ike (conscious of how ill-prepared Truman had been when he took over from FDR) felt a patriotic obligation to train, but he was also a real force within the White House, given real jobs to do.

Not unreasonably, Gellman sees this as proof of the faith that, particularly in the second term, Ike put in Nixon: “The president gave assignments to those he trusted, and he trusted Nixon.” That’s true, but, in the case of Eisenhower, cold behind that five-star beam, that word “trust” should be read as conveying a faith in Nixon’s competence rather than anything with more emotional resonance. Gellman backs up his more upbeat take on the relationship between president and vice-president with a series of letters and obiter dicta from Eisenhower signalling the respect and affection the president had for Nixon. Maybe, but they can also be interpreted as pats on the head for a promising young subordinate by a man who knew how to motivate those under him. And Gellman cannot avoid the reality that Eisenhower let Nixon twist in the wind, not once, but twice. 

The first time was when, during the 1952 election, a scandal blew up over a fund that had been raised by some Californian businessmen to help the far-from-wealthy Nixon with his senatorial expenses, an arrangement that did not deserve to be labelled as corrupt. A larger, possibly more questionable fund that benefited Adlai Stevenson, the liberal icon running against Eisenhower for the presidency, received rather less coverage: how odd! Eisenhower made clear Nixon was on his own, but even when Nixon had vindicated himself with the brilliantly manipulative “Checkers” speech, still hesitated to stand by his man. The second occasion, four years later, was when Eisenhower effectively made Nixon beg for his slot on the re-election ticket, a position that he had clearly earned, a cruel spectacle that the normally indefatigable Gellman finds “baffling”.
And then, four years after that, there was the moment during a press conference when Eisenhower was asked to cite a major contribution that then presidential candidate Nixon had made to his administration. Ike replied that, given a week, he “might think of one”.

Gellman fillets these incidents with his customary diligence, handily demolishing some of the mythology that surrounds them and adding some detail  often omitted from the historical record (for example, Eisenhower promptly apologised for that remark). But, despite Gellman’s best efforts, the sense that something was awry between the two men lingers.

If I had to make a guess (and when it comes to the enigmatic Ike, one can only guess) the key to Eisenhower’s behaviour was partly the sense, not unusual among the great, that no one could be good enough to succeed him. But there was something else at play, and Gellman points to it with his argument that Ike’s leadership style was in peace as it was in war: “he led a team of subordinates, who were expected to go where Ike sent them, be his eyes and ears, provide intelligent and informed advice, deliver his messages, and occasionally become casualties.” They were, therefore, in the end, disposable.

But Nixon hung on. 

Money Manager

Ben Bernanke: The Courage to Act  - A Memoir of a Crisis and Its Aftermath

The Weekly Standard, February 5, 2016

Georgetown, Washington DC, November 2008 © Andrew Stuttaford

In The Courage to Act, former Federal Reserve chairman Ben Bernanke reveals, a little unexpectedly, that he can tell a taut tale well, and in a manner accessible to someone who wouldn’t know a CDO from an Alt-A mortgage. After a likable autobiographical beginning, the book is centered on the Fed's response to the financial crisis that started to unfold just over a year after Bernanke took office in 2006. Bernanke was right to see that catastrophe threatened to engulf more than Wall Street, and he was right to see that, in the much-mocked phrase, something had to be done.

It's easy to criticize the technical aspects of bailouts based on Depression-era powers usable in "unusual and exigent circumstances" and put together with "chewing gum and baling wire." But that misses the point. Financial panics feed on themselves. What mattered about the rescue packages was not their structure but what they symbolized: Money, a lot of money, was available, and the mechanisms were in place to dole it out. With confidence gone and liquidity evaporating, that was what markets needed to know.

Neither left nor right nor center rejoiced in what was widely characterized as a helping hand for the rich, but there were more explicitly ideological objections to the bailouts, too, most notably from congressional Republicans. They ranged from the nutty—TARP as "Bolshevism," a label that would have surprised Lenin—to a more intellectually coherent insistence on greater respect for the disciplines of laissez faire.

But to argue against the interventionism of 2008-09 on the grounds that markets are best left to sort themselves out was (as the ebbing Bush administration also appreciated) to succumb to a form of fundamentalism with no connection to political reality. From Greece to Spain to France to Italy, economic stagnation, or worse, has shaken the European Union's political order to a degree largely unimaginable a decade or so ago. And not in a way that bodes well for free enterprise.

Over here, the maelstrom on Wall Street did its bit to propel Barack Obama into the White House. The feebleness of the economic recovery that followed has played its part in the rise of Donald Trump and Bernie Sanders. To maintain that America's political center would have held in the event of a collapse in the banking system—empty ATMs and all the rest—is absurd.

As it was, the mayhem triggered by the implosion of Lehman Brothers offered a taste of a larger calamity dodged. Bernanke would have preferred to help out Lehman, too—both the Fed and an essentially helpless Treasury understood that its failure would be an "epic disaster." But the law, he writes, stood in the way: Lehman Brothers was in such bad shape that it wasn't eligible for the emergency financing deployed elsewhere. It's been suggested that this was merely a convenient excuse. Bernanke himself admits that the Fed was reaching the limits of the politically and financially feasible. Market conditions were such that any assessment of Lehman's underlying strength (and eligibility for aid) was more art than science, leaving some wiggle room had the Fed been prepared to take it.

Nevertheless, I'm inclined to believe Bernanke's insistence—his version of events, unsurprisingly, is more or less in line with what Tim Geithner and Hank Paulson have to say in their memoirs—that the law counted. In an age of technocratic excess, that's cause for mild patriotic celebration. In marked contrast to the lawlessness that scarred the defense of the eurozone, the Americans stuck by the rules.

But any celebration is tempered by the knowledge that the Fed's emergency powers have been rewritten in the wake of the Dodd-Frank Act to exclude lending to specific institutions ("broad-based" lending is still permitted), a right Bernanke claims to have been "happy to lose." This change was cheered on by the likes of Elizabeth Warren; the Republican chairman of the House Financial Services Committee, fretting about moral hazard, thought that it did not go far enough. As it is, this restriction will almost certainly make it impossible for the Fed to give the sort of support it gave to smooth J. P. Morgan's takeover of Bear Stearns, let alone to AIG. And that'll be fine—until it's not.

When it comes to moral hazard, Bernanke notes that "no firm would willingly seek Bear's fate." It wasn't insouciance over risk that brought so much ruin, but the failure to understand it.

Drawing the correct line between the necessary independence of the Fed and necessary democratic accountability is (as Bernanke clearly appreciated) not straightforward, particularly during a financial rescue operation when the maintenance of market confidence—and thus, often, secrecy—is of the essence. A couple of years after the bailouts, it emerged that the emergency financing extended to Wall Street's finest was much larger than realized. Congress would not have taken the news well had it known this at the time.

Given the seriousness of the situation—and the fact that the Federal Reserve had to do most of the heavy lifting—Bernanke likely found an acceptable balance between the needs of finance and the demands of Capitol Hill. But occasionally some of his comments ("even the risk of a once-in-a-century economic and financial catastrophe wasn't enough for many members of Congress to rise above ideology and short-run political concerns") betray the impatience of the technocrat with democracy's rougher edges.

There are hints, too, of technocratic bias in Bernanke's analysis of the causes of the crisis. He's unwilling to let interest rate policy take much of the blame and, to be fair, he makes a decent case why it shouldn't. He does admit that the Fed was slow to notice the problems that were developing and slow to fully grasp their significance. He acknowledges that a ludicrously fragmented regulatory system had failed to keep up with rapidly evolving capital markets. But in the end, private sector culprits—including subprime lunacy, the bewilderingly intricate interconnectedness of the modern financial system, and good old-fashioned panic—dominate his perp walk.

Hyman Minsky, the economist who, decades ago, warned that a prolonged period of financial stability could lead to dangerous investor complacency, gets the shout-out he deserves. But did the widespread perception—boosted by heavy, if misdirected, regulation—that markets were well regulated reinforce that overconfidence? There is also the inconvenient fact that capital adequacy rules strongly encouraged banks to favor mortgage lending and, critically, the purchase of mortgage-backed securities—so long as the latter were rated Triple A by the rating agencies that were, themselves, given a privileged position by regulators.

Triple A! What could go wrong?

Bernanke also has little to say on the way that postcrisis regulation has hit the willingness of banks to lend. That's ironic, given his belief that shrunken credit flows made the Great Depression worse; doubly so, as reining in the banks has probably canceled out no small part of the boost that the ultra-low interest rates generated by quantitative easing (QE) were meant to bring.

Bernanke recalls that after QE1 and QE2, he had concluded that the Fed's securities purchases had been "effective" but "not enough, on their own, to achieve an adequate pace of economic growth and job creation." QE3 came next. That began to taper off toward the end of his tenure, by which time Bernanke believed that the economy was in considerably healthier shape.

It was impossible, he concedes, to know how much of the recovery was due to the Fed's work, but Bernanke is convinced that "unconventional monetary policies" promoted growth and reduced the risk of deflation. That could be true. But there may eventually be a harsh price to pay for choosing to put the laws of economics to one side for so long. Years in which interest rates—the cost of money—have been so disconnected from market forces have left a trail of mispriced investment and unwise borrowing that is likely to end up in a nasty bust. What will an already overstretched Fed be able to do then?

Bernanke was not given the benefit of the doubt that Alan Greenspan—the "Maestro"—enjoyed. Tough times will do that. His immediate response to the crisis infuriated many. The measures he took in the years that followed were greeted with another round of jeers by many and crossed fingers by more. Even those who profited from the stock market recovery built on his cheap money seemed suspicious of their friend at the Fed.

Only a few brave contrarians have called Ben Bernanke a maestro. His historical reputation will probably be all the better for that. By detailing what he did and why he did it, this book won't hurt it, either. In the end, the consequences of his grand gamble will count for more. And we still don't really know what those will be.

A Distant Funhouse Mirror

Christopher Buckley: The Relic Master

National Review, January 25, 2016

By the late Middle Ages, scraps of Mary Magdalene were strewn all over Europe. Not only was her body (or most of it) on display in the town of Saint-Maximin in Provence (it’s still there, if you want to take a look), but, as Charles Freeman notes in his Holy Bones, Holy Dust: How Relics Shaped the History of Medieval Europe (2011), “there were three more of her bodies” to see, one near Ancona, one in Rome, and one in Constantinople. Lucky Abbéville had a head; Cologne had embraced two of her arms, and “five more were known” elsewhere. Relics were part of the sea of faith, to borrow a phrase, in which most Christians swam, but they were also a handily profitable device to prop up temporal and spiritual power. As such, they were an excellent business opportunity.

Enter Dismas, the Swiss hero of The Relic Master, Christopher Buckley’s beguiling, funny, and slyly erudite new book. Dismas (named, not inappropriately, after the penitent thief crucified alongside Christ), a former mercenary — a Reisläufer — and former monk (“couldn’t get used to the hours”), has become a dealer in relics, one of the best, a man not without a certain degree of integrity. Disdainful of the sloppier and more disgraceful frauds, he deals in nothing he knows to be false. He stands by that leaf he sold from the Burning Bush.

Dismas is in Basel for the 1517 relic fair, a fair that never existed but is located by Buckley in a city that plays host nowadays to an annual fair showcasing contemporary art. The kneecap of Saint Afra then, a spot painting by Damien Hirst now, objects of desire and of worship, objects that magically bestow much-coveted properties on their owners, some sort of holiness in the first case, some sort of sophistication in the second, as well as the status that comes with buying anything — kneecap or spot — that is outrageously expensive enough.

Such relics often fetched tidy sums, not least because of the revenues brought by the pilgrims who came to venerate them, thereby possibly improving their prospects in the afterlife — for a price: “Donate such and such sum,” writes Buckley, “to venerate such and such relic, and so many years would be deducted from your term in Purgatory.” They could be useful, indulgences: get-out-of-purgatory-sooner cards, never short of takers. After Basel, Dismas delivers a haul of relics to one of his two main clients, an archbishop of great splendor and greater cynicism. After careful episcopal evaluation, it is determined that the 296 relics “would provide an aggregate indulgence value of 52,206 years off time in Purgatory. And provide his grace with a tidy return on his investment.” It was madness, but, like many manias, not without its internal logic.

Buckley’s tone is amused and amusing, but choosing to write such a book now, after the Internet bubble, after the 2008 bust (how were collateralized mortgage obligations, uh, valued, anyway?), and at a time when billion-dollar “unicorns” gallop through private-equity portfolios, undercuts any suggestion of condescension. Thus Dismas and many, many others discover that their cash has been looted by a crooked financier, Master Bernhardt. The locals contemplate what might be an appropriately grotesque punishment — burning, death by bear, something even nastier involving fishhooks? In the end, he gets off with a “well-attended” beheading. Absent the beheading, an echo of Madoff there, I thought; Bernie, Bernard, ah.

The year 1517 is an interesting one — a year at the cusp — for Buckley to pick. Within weeks of Dismas’s expedition to the relics fair, he is in Wittenberg, visiting his other key client, the Elector Frederick of Saxony. And Dismas is with Frederick when the elector is told that Martin Luther has been busy at the Castle Church: “‘Ninety-five [theses],’ Frederick smiled, ‘is our church door sufficiently commodious?’”

Dismas is soon wondering what Luther’s less than indulgent treatment of indulgences might mean for his trade: “Many indulgences were earned by venerating relics. If indulgences were abolished, who would come to venerate the holy bones?” He was right to worry: Frederick gave up collecting relics within a year or two. And then there was grim John Calvin. His Treatise on Relics (1543) is a work far rougher on those souvenirs of sanctity than anything you’ll find in Buckley. So much of the Virgin Mary’s milk was on display, jeered Calvin, that “had the Virgin been a wet-nurse her whole life, or a dairy, she could not have produced more than is shown as hers in various parts.” A dairy.

Hints of the shift in thinking beginning to percolate through Europe at this time are scattered through The Relic Master. Dismas is a traditionalist, but he struggles to answer some of the increasingly awkward questions that his friends are beginning to ask. Surely the “indulgence business” was in the Gospels “somewhere.”

I’ll pause now to reassure anyone worried that he or she has stumbled into a discussion of a learned volume on 16th-century religious controversies rather than a review of the latest book by Christopher Buckley, a famously enjoyable writer related, so to speak, to this magazine. Fear not: The Relic Master covers some serious historical ground and boasts an impressive list of sources at the end, including Freeman’s book and an account of a marriage in 16th-century Nuremberg that I, for one, will be hurrying to read — one day. But it also features killings, torture, hand-to-hand fighting, attempted crucifixions, a beautiful girl, bizarre superstitions, three loutish arquebus-slingers, trout nibbling at a severed arm, power politics, a lecherous Medici, herbal Viagra that works, black humor (“Frederick’s not a burner”), good jokes, and some splendidly wry writing: “Tetzel was a supple theologian. He’d pioneered a new form of indulgence whereby you could buy full indulgence for sins you had not yet committed. Even Jesus hadn’t thought of that.” Supple.

It’s never easy to know how to handle the distant past in fiction. Hollywood’s classic couldn’t-care-less generated some terrific lines (“War, war! That’s all you ever think about, Dick Plantagenet! You burner, you pillager!”) but failed to convince, while more respectable attempts at the old ye olde were neither authentic nor readable: Sir Walter Scott, I’m looking at you. Others have mined history to make fun of the present, or to make fun of the past; some — Robert Harris, for example, in his Cicero trilogy — have treated it seriously, both as a window into a vanished civilization and as a device to reexamine more modern times. Others still (such as, in his own way, Umberto Eco in The Name of the Rose) have tried to understand a way of thinking that can seem impossibly alien today.

There are glimpses of that lost sensibility in The Relic Master. Buckley’s characters are not Enlightenment folk centuries out of time, or even Bob Hopes cracking wise on the road to Chambéry — but their 16th-century attitudes are presented lightly and never weigh down what is essentially a romp, a caper, written with a wink (“A German pope? Judgment Day will come first”) in breezily contemporary prose (not a “prithee” in sight). Buckley is often described as a satirist, but in this book he comes across more as someone enormously entertained by man’s perennial absurdity, an absurdity he relishes pushing just that bit further, teasing then — and now.

So far as the plot is concerned, the MacGuffin involves the faking of one Jesus burial shroud and then the taking of another (it’s complicated). Dismas’s dream of a prosperous retirement in safe, neutral Switzerland (Harry Lime might sneer, but the Swiss have long been a sensible people) has been trashed by the banker who looted his savings. That compels him to go on one last, atypically dodgy “mission” — that’s where the shroud(s) come in — to earn back that retirement in the mountains. And as we all know, one last missions have a way of turning tricky. Dismas’s farewell tour is no exception. I won’t be a spoiler, but I will say that, once again, fishhooks have an unpleasant role to play, that a ridiculously narcissistic Dürer (yes, that Dürer) is an accomplice, that the girl shoots a mean crossbow, that an imperial posse is thwarted, that disguises are deployed, that a performance of the Last Supper is sabotaged, and that the arquebus-slingers — Unks, Cunrat, and Nutker, three goons with strong Three Stooges characteristics — turn out not to be so bad in the end.

It’s a story that — as capers should — rolls merrily along. It was clearly fun to write, and it is certainly fun to read, but the very best of this book comes in moments such as this, included in the description of Dismas’s arrival in Wittenberg:

“Did you bring wonderful things?”

“One or two. Saint Barbara. A toe.”