Ludwig von Mises wrote this essay in 1940 from Geneva, where he lived after Nazis forced him out of Austria and his apartment was ransacked by German troops.
“Progressive” Attacks on Capitalism Were Key to Hitler’s Success
Published on Mises.org Date: February 7, 2019 – 2:00 PM
Author 1: Ludwig von Mises 
The following, written in 1940, is excerpted from Interventionism, An Economic Analysis, which was originally part of Nationaloekonomie , the German predecessor to Human Action.
Hitler, Stalin, and Mussolini constantly proclaim that they are chosen by destiny to bring salvation to this world. They claim they are the leaders of the creative youth who fight against their outlived elders. They bring from the East the new culture which is to replace the dying Western civilization. They want to give the coup de grace to liberalism and capitalism; they want to overcome immoral egoism by altruism; they plan to replace the anarchic democracy by order and organization, the society of “classes” by the total state, the market economy by socialism. Their war is not a war for territorial expansion, for loot and hegemony like the imperialistic wars of the past, but a holy crusade for a better world to live in. And they feel certain of their victory because they are convinced that they are borne by “the wave of the future.”
It is a law of nature, they say, that great historic changes cannot take place peacefully or without conflict. It would be petty and stupid, they contend, to overlook the creative quality of their work because of some unpleasantness which the great world revolution must necessarily bring with it. They maintain one should not overlook the glory of the new gospel because of ill-placed pity for Jews and Masons, Poles and Czechs, Finns and Greeks, the decadent English aristocracy and the corrupt French bourgeoisie. Such softness and such blindness for the new standards of morality prove only the decadence of the dying capitalistic pseudo-culture. The whining and crying of impotent old men, they say, is futile; it will not stop the victorious advance of youth. No one can stop the wheel of history, or turn back the clock of time.
Jeffrey Goldberg’s excellent piece in The Atlantic on Jews and their future in Europe. It’s not 1933, but it’s definitely not pretty.
For half a century, memories of the Holocaust limited anti-Semitism on the Continent. That period has ended—the recent fatal attacks in Paris and Copenhagen are merely the latest examples of rising violence against Jews. Renewed vitriol among right-wing fascists and new threats from radicalised Islamists have created a crisis, confronting Jews with an agonizing choice.
Is It Time for the Jews to Leave Europe?
“All comes from the Jew; all returns to the Jew.”
— Édouard Drumont (1844–1917), founder of the Anti-Semitic League of France
I. The Scourge of Our Time
The French philosopher Alain Finkielkraut, the son of Holocaust survivors, is an accomplished, even gifted, pessimist. To his disciples, he is a Jewish Zola, accusing France’s bien-pensant intellectual class of complicity in its own suicide. To his foes, he is a reactionary whose nostalgia for a fairy-tale French past is induced by an irrational fear of Muslims. Finkielkraut’s cast of mind is generally dark, but when we met in Paris in early January, two days after the Charlie Hebdo massacre, he was positively grim.
“My French identity is reinforced by the very large number of people who openly declare, often now with violence, their hostility to French values and culture,” he said. “I live in a strange place. There is so much guilt and so much worry.” We were seated at a table in his apartment, near the Luxembourg Gardens. I had come to discuss with him the precarious future of French Jewry, but, as the hunt for theCharlie Hebdo killers seemed to be reaching its conclusion, we had become fixated on the television.
Finkielkraut sees himself as an alienated man of the left. He says he loathes both radical Islamism and its most ferocious French critic, Marine Le Pen, the leader of France’s extreme right-wing—and once openly anti-Semitic—National Front party. But he has lately come to find radical Islamism to be a more immediate, even existential, threat to France than the National Front. “I don’t trust Le Pen. I think there is real violence in her,” he told me. “But she is so successful because there actually is a problem of Islam in France, and until now she has been the only one to dare say it.”
Suddenly, there was news: a kosher supermarket in Porte de Vincennes, in eastern Paris, had come under attack. “Of course,” Finkielkraut said. “The Jews.” Even before anti-Semitic riots broke out in France last summer, Finkielkraut had become preoccupied with the well-being of France’s Jews.
We knew nothing about this new attack—except that we already knew everything. “People don’t defend the Jews as we expected to be defended,” he said. “It would be easier for the left to defend the Jews if the attackers were white and rightists.”
I asked him a very old Jewish question: Do you have a bag packed?
“We should not leave,” he said, “but maybe for our children or grandchildren there will be no choice.”
Reports suggested that a number of people were dead at the market. I said goodbye, and took the Métro to Porte de Vincennes. Stations near the market were closed, so I walked through neighborhoods crowded with police. Sirens echoed through the streets. Teenagers gathered by the barricades, taking selfies. No one had much information. One young man, however, said of the victims, “It’s just the Feuj.” Feuj, an inversion of Juif—“Jew”—is often used as a slur.
I located an acquaintance, a man who volunteers with the Jewish Community Security Service, a national organization founded after a synagogue bombing in 1980, to protect Jewish institutions from anti-Semitic attack. “Supermarkets now,” he said bleakly. We made our way closer to the forward police line, and heard volleys of gunfire. The police had raided the market; the suspect, Amedy Coulibaly, we soon heard, was dead. So were four Jews he had murdered. They had been shopping for the Sabbath when he entered the market and started shooting.
France’s 475,000 Jews represent less than 1 percent of the country’s population. Yet last year, according to the French Interior Ministry, 51 percent of all racist attacks targeted Jews. The statistics in other countries, including Great Britain, are similarly dismal. In 2014, Jews in Europe were murdered, raped, beaten, stalked, chased, harassed, spat on, and insulted for being Jewish. Sale Juif—“dirty Jew”—rang in the streets, as did “Death to the Jews,” and “Jews to the gas.”
The epithet dirty Jew, Zola wrote in “J’Accuse …!,” was the “scourge of our time.” “J’Accuse …!” was published in 1898.
The resurgence of anti-Semitism in Europe is not—or should not be—a surprise. One of the least surprising phenomena in the history of civilization, in fact, is the persistence of anti-Semitism in Europe, which has been the wellspring of Judeophobia for 1,000 years. The Church itself functioned as the centrifuge of anti-Semitism from the time it rebelled against its mother religion until the middle of the 20th century. As Jonathan Sacks, the former chief rabbi of Great Britain, has observed, Europe has added to the global lexicon of bigotry such terms as Inquisition, blood libel, auto‑da‑fé, ghetto, pogrom, and Holocaust. Europe has blamed the Jews for an encyclopedia of sins. The Church blamed the Jews for killing Jesus; Voltaire blamed the Jews for inventing Christianity. In the febrile minds of anti-Semites, Jews were usurers and well-poisoners and spreaders of disease. Jews were the creators of both communism and capitalism; they were clannish but also cosmopolitan; cowardly and warmongering; self-righteous moralists and defilers of culture. Ideologues and demagogues of many permutations have understood the Jews to be a singularly malevolent force standing between the world and its perfection.
Despite this history of sorrow, Jews spent long periods living unmolested in Europe. And even amid the expulsions and persecutions and pogroms, Jewish culture prospered. Rabbis and sages produced texts and wrote liturgical poems that are still used today. Emancipation and enlightenment opened the broader culture to Jews, who came to prominence in politics, philosophy, the arts, and science—Chagall and Kafka, Einstein and Freud, Lévi-Strauss and Durkheim. An entire civilization flourished in Yiddish.
Hitler destroyed most everything. But the story Europeans tell themselves—or told themselves, until the proof became too obvious to ignore—is that Judenhass, the hatred of Jews, ended when Berlin fell 70 years ago.
Events of the past 15 years suggest otherwise.
We are witnessing today the denouement of an unusual epoch in European life, the age of the post-Holocaust Jewish dispensation.
When the survivors of the Shoah emerged from the camps, and from hiding places in cities and forests across Europe, they were met on occasion by pogroms. (In Poland, for instance, some Christians were unhappy to see their former Jewish neighbors return home, and so arranged their deaths.) But over time, Europe managed to absorb the small number of Jewish survivors who chose to remain. A Jewish community even grew in West Germany. At the same time, the countries of Western Europe embraced the cause of the young and besieged state of Israel.
The Shoah served for a while as a sort of inoculation against the return of overt Jew-hatred—but the effects of the inoculation, it is becoming clear, are wearing off. What was once impermissible is again imaginable. Memories of 6 million Jewish dead fade, and guilt becomes burdensome. (In The Eternal Anti-Semite, the writer Henryk Broder popularized the notion that “the Germans will never forgive the Jews for Auschwitz.”) Israel is coming to be understood not as a small country in a difficult spot whose leaders, especially lately, have (in my opinion) been making shortsighted and potentially disastrous decisions, but as a source of cosmological evil—the Jew of nations.
An argument made with increasing frequency—motivated, perhaps, by some perverse impulse toward psychological displacement—calls Israel the spiritual and political heir of the Third Reich, rendering the Jews as Nazis. (Some in Europe and the Middle East take this line of thought to an even more extreme conclusion: “Those who condemn Hitler day and night have surpassed Hitler in barbarism,” the president of Turkey, Recep Tayyip Erdoğan, said last year of Israel.)
The previously canonical strain of European anti-Semitism, the fascist variant, still flourishes in places. In Hungary, a leader of the right-wing Jobbik party called on the government—a government that has come under criticism for whitewashing the history of Hungary’s collaboration with the Nazis—to draw up a list of all the Jews in the country who might pose a “national-security risk.” In Greece, a recent survey found that 69 percent of adults hold anti-Semitic views, and the fascists of the country’s Golden Dawn party are open in their Jew-hatred.
But what makes this new era of anti-Semitic violence in Europe different from previous ones is that traditional Western patterns of anti-Semitic thought have now merged with a potent strain of Muslim Judeophobia. Violence against Jews in Western Europe today, according to those who track it, appears to come mainly from Muslims, who in France, the epicenter of Europe’s Jewish crisis, outnumber Jews 10 to 1.
That the chief propagators of contemporary European anti-Semitism may be found in the Continent’s large and disenfranchised Muslim immigrant communities—communities that are themselves harassed and assaulted by hooligans associated with Europe’s surging right—is flummoxing to, among others, Europe’s elites. Muslims in Europe are in many ways a powerless minority. The failure of Europe to integrate Muslim immigrants has contributed to their exploitation by anti-Semitic propagandists and by recruiters for such radical projects as the Islamic State, or ISIS.
Yet the new anti-Semitism flourishing in corners of the European Muslim community would be impoverished without the incorporation of European fascist tropes. Dieudonné M’bala M’bala, a comedian of French Cameroonian descent who specializes in Holocaust revisionism and gas-chamber humor, is the inventor of the quenelle, widely understood as an inverted Nazi salute. His followers have taken to photographing themselves making the quenelle in front of synagogues, Holocaust memorials, and sites of past anti-Jewish terrorist attacks. Dieudonné has built an ideological partnership with Alain Soral, the anti-Jewish conspiracy theorist and 9/11 “truther” who was for several years a member of the National Front’s central committee. Soral was photographed not long ago making the quenelle in front of Berlin’s Holocaust memorial.
The union of Middle Eastern and European forms of anti-Semitic expression has led to bizarre moments. Dave Rich, an official of the Community Security Trust, a Jewish organization that monitors anti-Semitism in the United Kingdom, wrote recently: “Those British Muslims who verbally abuse British Jews on the street are more likely to shout ‘Heil Hitler’ than ‘Allahu akbar’ when they do so. This is despite the fact that their parents and grandparents were probably chased through the very same streets by gangs of neo-Nazi skinheads shouting similar slogans.”
The marriage of anti-Semitic narratives was consummated in January of last year, during a so-called Day of Rage march in Paris that was organized to protest the leadership of the French president, François Hollande. The rally drew roughly 17,000 people, mostly far-rightists but also many French Muslims.
“On one side of this march, you had neonationalist and reactionary Catholics, who had strongly and violently opposed gay marriage, and on the other side young people from the banlieues [suburbs], supporters of Dieudonné, often from African and North African background, whose beliefs are based in opposition to the ‘system’ and on victimhood competition,” Simone Rodan-Benzaquen, the Paris director of the American Jewish Committee, told me. “What unites them is their hatred of Jews.” That day, on the streets of Paris, the anti-Hollande message was overtaken by another chanted slogan: “Juif, la France n’est pas à toi”—“Jew, France is not for you.”
Howard Jacobson, the Man Booker Prize–winning writer whose latest novel, J, is a study of a future genocide in an unnamed but very English-seeming country of an unnamed people who very much resemble the Jews, told me the book emerged from an inchoate but ever-present sense of anxiety. “I felt as if I was writing out of dread,” he said when we met recently near his home in London.
“It will never go away, this hatred of Jews … and the proof of this is that barely 50 years after the Holocaust, the desire for Jewish bloodletting isn’t over,” he said. “Couldn’t they have given us a bit longer? Give us 100 years and we’ll return to it.”
“I know this is a dangerous thing to say … but the Holocaust didn’t satisfy.”
I’ve spent much of the past year traveling across Europe, in search of an answer to a simple, but pressing, question: Is it time for the Jews to leave? Europe is a Jewish museum and a Jewish graveyard, but after the war it became, remarkably—and despite Hitler’s best efforts—home once again to living, breathing Jewish communities. Is it still a place for Jews who want to live uncamouflaged Jewish lives?
II. “Don’t Go to the Jew”
On the morning of March 19, 2012, a man named Mohamed Merah, a French citizen of Algerian descent, parked his motorbike in front of the entrance of a Jewish school in Toulouse called Ozar Hatorah, which is in a placid residential neighborhood not far from the city center. Merah, who had been radicalized in a French prison and trained in an al-Qaeda camp in Pakistan, dismounted and almost immediately began firing a 9 mm pistol at students and the parents who were dropping them off. He killed a 30-year-old rabbi and his two sons, who were 3 and 6 years old. Merah then walked into the schoolyard, shooting at students. He chased down an 8-year-old girl named Myriam Monsonego, catching her by the hair. Merah held her down and placed his 9 mm to her head, but the weapon jammed. He switched to another handgun, pressed it against her head, and fired. The sound of shooting had brought the school’s principal to the school yard. Yaacov Monsonego arrived to see Merah execute his daughter.
Merah escaped on his motorbike. He was later shot and killed by police. French authorities said he was also responsible for the earlier killings of three French soldiers of Muslim background. In the theology of radical French Islamism, Muslims who cooperate with the state are as much an enemy as Jewish children.
Ozar Hatorah, which is today known as Ohr Hatorah, is surrounded by a high wall, topped in places by barbed wire. I visited the school in October with Nicole Yardéni, the Toulouse representative of the national Jewish council. Yardéni wanted me to meet a physician named Charles Bensemhoun, who would explain, she said, the collapsing relationship between Toulouse’s 18,000 or so Jews and its much larger Muslim population.
Bensemhoun, who is in his mid-50s, is Sephardic, born in Morocco. Three-quarters of France’s Jews are Sephardim, chased from Algeria, Morocco, and Tunisia in the 1950s and ’60s.
Many of Bensemhoun’s patients are North African Muslims. “These are people like me, who were born there,” he told me outside the school’s synagogue. “We speak the same language, literally”—he says he and his patients move easily between Arabic and French—“and we understand each other in very deep ways. They’re very comfortable with me as their doctor.” He went on, “But it’s changed in recent years. Now their children are telling them, ‘Don’t go to the Jew,’ ‘You can’t trust the Jew.’ They’ve become radicalized. It’s upsetting. The new generation is anti-Semitic in a way that we haven’t experienced.”
Are these patients listening to their children? “Yes,” he said. “In some cases, yes.”
I asked him whether he thought he had a future in Toulouse. He smiled. “Does any Jew have a future in Toulouse?” The Jewish community is shrinking, Yardéni said. Some families are moving to Paris. Others are moving to Israel.
The Merah attack was the gravest in the modern Jewish history of Toulouse (the slaughter of the city’s Jews by Crusaders in 1320 is presumed to have been bloodier). But the list of less tragic, though still damaging, attacks is long. Last July, Molotov cocktails were thrown at a Jewish cultural center; street harassment of Jews walking to and from school and synagogue is common. Early last year, Yardéni and other Jews were banned from a left-wing demonstration called to protest homophobia and—of all things—anti-Semitism, because they were ruled to be Zionists. The local police record dozens of anti-Jewish hate crimes each year. “There is a point where it becomes difficult to stay,” Bensemhoun said.
Monsonego, the school principal who saw his daughter murdered, came out of the synagogue. He is a small, slight man with a graying beard and a hesitant gait. We spoke privately for a couple of minutes. I found him in some ways unfathomable. I don’t understand how a father maintains his sanity after witnessing what he witnessed—but his daughter’s murder has not caused him to lose faith in God or in his work.
Later, I asked Yardéni why the Monsonego family has remained in Toulouse. She herself is one of the city’s most visible Jewish leaders, and receives many veiled death threats. “If the leaders of the community run away, what will happen to the rest of the people?” she said.
III. “Je Suis Juif”
Like many of the banlieues that ring Paris, Montreuil bears no socioeconomic or aesthetic resemblance to the Paris of popular imagination. The architecture is rude, the parks are unkempt, and the people, many of them immigrants from North Africa, are estranged from la belle France. On the way to Montreuil, in the Métro, I passed defaced posters of the musician Lou Reed. Stars of David had been drawn on his nose. Other graffiti was less ambiguous: Nique les Juifs—“Fuck the Jews.”
I was visiting a vocational high school, the Daniel Mayer School. The school is associated with ORT, which is a Russian acronym for the Society for Trades and Agricultural Labor. ORT was founded in 1880 to educate the destitute Jews of the Pale of Settlement, the vast ghetto created by czarist Russia for its Jewish subjects. In France, ORT schools educated a generation of Polish and Russian survivors of the Holocaust; today, they primarily educate the children of North African Jews.
The Mayer School is housed in a seven-story building in Montreuil, near the Robespierre Métro station. The principal, Isaac Touitou, gathered a group of students—mainly ages 17 and 18—and teachers in the library to talk with me. These were mostly the children of striving working-class parents; the school, which has a reputation for rigor, is a ladder to the middle class. Its students graduate as opticians, dental technicians, accountants, computer programmers. The school also functions as a haven for young Jews living in a dangerous environment.
“Once we get here we’re safe,” one of the students told me. “Getting here from home is the hard part.” Many of the students live in distant and equally perilous suburbs, including Sarcelles, the site of anti-Jewish riots this past summer; and Créteil, where Jews have suffered beatings and rapes by anti-Semitic gangs.
Each of the 10 students had a story to tell about brutality. “I was in a public school in Créteil but I had to leave. People would yell at me in the halls: ‘Dirty Jew.’ ‘Fucking Jew.’ ‘I want to kill all of you,’ ” a student named Paola said. “Two years ago they attacked my brother. They would always scream, ‘Go back to your country.’ They meant Israel.”
The ORT school had itself been the target of harassment. Touitou described a recent incident in which about 20 or so students from a neighboring public school had gathered in front of the building and made the quenelle.
The students I talked with in the library generally agreed that their future lay outside of France. “A lot of the Muslims hate us here,” a student named Alexandre said. His parents had already moved to Israel. They were two of the roughly 7,000 French Jews who left for Israel in 2014. Alexandre would be joining them after graduation.
Zionism, which at its essence is a critique of Europe—Theodor Herzl, its founder, interpreted the Dreyfus affair in France and the pogroms in Russia as invitations to seek an alternative Jewish future outside of Europe—is perpetually resuscitated by anti-Semitism. Paola said, “Those kids told me to go to Israel, so that’s what I’m doing.” Others were contemplating the possibility of life in Quebec, and some dreamt of America.
The students talked about ways in which Jews concealed their identity. I’d heard that it had already become fairly common practice in some of the apartment blocks in the banlieues for Jews to remove the mezuzot from their doors. A mezuzah is a piece of parchment that contains Bible verses and that is placed in a case and then affixed to a doorpost. In some suburbs, mezuzot had become pointers for those in search of Jews to harm.
But the students told me something new. “Jewish people are telling other Jews to take down their mezuzot,” one of the students said. “People are being pressured to hide that they are Jewish. The pressure can be very intense.” The impetus for this new campaign seems to have been an incident that occurred in early December, in which a group of robbers broke into an apartment in Créteil. They told the occupants that they knew they were Jewish, and therefore wealthy, and then they raped a 19-year-old woman in the apartment.
“Everyone is saying ‘Je suis Charlie’ today,” Wendy, another of the students, said, in reference to the popular slogan of support for the slain Charlie Hebdocartoonists. “But this has been happening to the Jews for years and no one cares.”
“It would be nice if someone would say ‘Je suis Juif,’ ” Sandy, another student, said.
Everyone agreed that more attacks were inevitable. “Next week or next month, no one knows,” David Attias, a teacher at the school, said. “But it’s coming. Everyone knows it.”
The next attack came that afternoon. I met with the students on the morning of January 9. Several hours later came the massacre at the kosher supermarket, about a mile away. One of the dead was a graduate of another ORT school.
IV. Fear in Sweden
The most persecuted Jew in Europe is almost certainly Shneur Kesselman, the rabbi of Malmö, a city in southern Sweden. He was dispatched there by the Brooklyn-based Chabad Hasidic movement.
Malmö, which sits across the Øresund from Copenhagen, has a population of roughly 300,000. This includes a large number, perhaps 50,000 or so, of Muslim immigrants. The Jewish community is much smaller—by some estimates, there are fewer than 1,000 Jews; the population has dropped by half in recent years. Malmö’s leadership has at times been at odds with Malmö’s Jews. A former mayor said that the city accepts “neither Zionism nor anti-Semitism”—a statement that was taken as hostile by Jewish Swedes supportive of Israel’s existence.
Acts of anti-Jewish harassment and vandalism are common in Malmö, and Kesselman is a main target, because he is the only Jew there who still dresses in an identifiably Jewish manner—kippah, black hat, black coat, and long beard. Jewish teenagers in Malmö told me that wearing a Star of David necklace can incite a beating. Kesselman estimates that he has been the target of roughly 150 anti-Semitic attacks in his 10 years in the city, mainly verbal, but also physical. “There is a lot of cursing at me, and people sometimes throw bottles at me from their cars. Someone backed up their car in order to hit me,” he said when I met with him. Occasionally, he said, people spit on him.
Donors recently provided him a car of his own, so he would not have to walk from his apartment to Malmö’s sole synagogue, except on the Sabbath, when Jewish law forbids driving. I attended services at the synagogue with Kesselman one Friday night in January. The synagogue is a large, ornate, Moorish-style building that was constructed in 1903. Seventeen others attended the service, most of them men in their 60s. There was no police presence around the synagogue—Scandinavian governments have been far more lackadaisical about Jewish security than France’s—but the Jewish community has its own security guards. Before I was allowed to enter, a security officer, a Swedish Jew—playing a role similar to that of Dan Uzan, the Danish Jew killed in a mid-February attack on a synagogue in Copenhagen—quizzed me at length about my identity, asking me a series of idiosyncratic questions designed to test whether I was, in fact, Jewish. (“What is the address of Chabad headquarters in Brooklyn?” he said. Luckily, I had trained my whole life for this moment.)
After services, I walked with Kesselman and a group of other worshippers through the dark city center. They set an extraordinarily fast pace. I fell in step with a young woman who was born and raised in Malmö but now lives in Israel. She was visiting her father, trying to convince him to leave. “He’s stubborn,” she said. “I worry about him here.” I noted that Israel is not pristinely safe. “It’s different. We protect ourselves there.”
Kesselman and his wife, the parents of four young children, avoid venturing out in public as a couple, for fear of being targeted together. Earlier, I had asked Kesselman why he has stayed in Malmö. Because Malmö’s remaining Jews would have no rabbi if he were to go, he said. Also, many Chabad rabbis resist the urge to leave even dangerous areas, in order to honor the sacrifice of their brethren: in 2008, a Chabad representative and his wife, along with four other Jews, were murdered (after reportedly being tortured) by Pakistani jihadists during the lengthy siege of Mumbai. I asked Kesselman whether he was scared to stay in Malmö. “Yes, of course I’m scared,” he said.
“Moving from France to escape the attacks of Arabs to a country that will not be Jewish does not make a lot of sense.”
I spent one afternoon interviewing people in the main shopping mall of the Rosengård district, which is predominantly home to immigrants. Several of the Muslims I interviewed expressed benign feelings toward Jews. They knew of Malmö’s reputation for anti-Semitism, and regretted it. A couple of others expressed objections to Israel’s existence, but absolved “the Jews” of collective responsibility. But more common was conflation, and exaggeration. I asked several people to tell me where they find information about Jews and Israel. Television stations such as Al Jazeera and the Hezbollah station, Al‑Manar, were cited, as was the preaching of Scandinavian imams. One Danish imam, Abu Bilal Ismail, became famous last year for urging worshippers in a Berlin mosque to kill Jews: “Count them and kill them to the very last one. Don’t spare a single one of them.” He later explained to a Copenhagen newspaper that he “never meant all Jews.”
One man, an Iraqi refugee, told me, “The Jews have too much power everywhere.” Another man, of Sudanese background, explained that the Koran itself warns Muslims to fear double-crossing by Jews. “They killed the prophets and tried to poison the Prophet Muhammad,” he said. I did not hear critiques of Israel’s occupation policies. I heard, instead, complaints about the Jews’ baleful influence on the world.
V. The Persecution of Anne Frank
Many institutions are devoted to memorializing the Shoah, but very few are as iconic as the Anne Frank House, in Amsterdam. Each year, more than 1 million visitors—many of them Dutch students—make their way up narrow flights of stairs to the perfectly preserved “secret annex” where Anne Frank and her family hid until they were betrayed.
The Anne Frank House, which is now encased inside a multimedia museum, is a significant operation, employing 112 people. I went one morning to talk with its head of education, Norbert Hinterleitner, about how the Jewish crisis in Europe is shaping the house’s pedagogical mission. There has always been tension in the public portrayal of Anne Frank. The specifically Jewish qualities of her life have often been marginalized in literature, onstage, and in film, replaced with a more universal and, to some, accessible message.
I began the interview with a faux pas. A very large number of curators, guides, and directors in European Jewish museums, in my experience, are not Jewish. This is due in part to the general lack of Jews, and to the very large number of museums—Europe is a vast archipelago of Jewish museums. And yet somehow I made the assumption that Hinterleitner was Jewish.
“I’m Austrian, actually.” He didn’t know how many employees at the museum were Jewish, but, he said, “there are some people who have Jewish lineage.” He then added, in what I took to be an effort to explain my initial confusion, “Some people here think I’m Jewish, because I’m dark and I have a big nose.”
The Anne Frank House has never had a Jewish director (though Hinterleitner pointed out that at least two members of the board must have a “Jewish background”), and I would learn later that it is widely understood in Amsterdam’s Jewish community that Jews should not bother applying for the job. Hinterleitner said that the museum addresses anti-Semitism in the context of larger societal ills, but also that it recently issued a strong press statement condemning anti-Semitic acts in the Netherlands and elsewhere. He said the museum has made an intensive study of anti-Semitism in the Netherlands, and has learned that most verbal expressions of anti-Semitism in secondary schools come from boys and are related to soccer.
The Anne Frank House is merely a simulacrum of a Jewish institution in part because, as its head of communications told me, Anne’s father said that her diary “wasn’t about being Jewish,” but also, Hinterleitner suggested, because a museum devoted too obsessively to the details of a particular genocide might not draw visitors in sufficient numbers. “We want people to be interested in this issue, people from all walks of life. So we talk about the universal components of Anne Frank’s story as well. Our work is about tolerance and understanding.”
When I left, two policemen were patrolling the narrow street outside the museum. A temporary surveillance post had been erected just across from the entrance. I asked one of the officers whether this level of security was normal. He said the government had increased security around the museum last spring, shortly after a massacre at another Jewish site: On May 24, four people were murdered at the Jewish Museum of Belgium, in Brussels, allegedly by a French Muslim of jihadist bent named Mehdi Nemmouche. Two Israeli tourists, a French volunteer, and a Belgian employee of Muslim and Jewish descent were killed. Nemmouche had recently returned to Europe after a term with ISIS in Syria, where, according to a former French hostage of ISIS, his specialty was torturing prisoners.
“If you have an anti-Semitic attack on Anne Frank’s house, it won’t be the first,” I said to one of the police officers. We have never had an attack, he said.
Not on his watch. But it is fair to count the August 4, 1944, Gestapo raid on the house, which resulted in the arrest of the Frank family, as an anti-Semitic act. Anne died of typhus at the Bergen-Belsen concentration camp, roughly one month before it was liberated by British forces.
Anne Frank has become an obsession of modern anti-Semites. Her story—universally known, and deeply affecting—is a threat to the mission of the Holocaust-denial movement, and her youth and innocence challenge those who argue that Jews are innately perfidious. In Rome last summer, the slogan “Anne Frank is a liar” was spray-painted on walls in the former Jewish ghetto. In Lebanon, Hezbollah, the radical Shia group, has fought to keep her diary out of schools. In 2006, the Arab European League posted on its Web site a cartoon—this occurred during an earlier round of Europe’s endless, debilitating blasphemy wars—that featured a shirtless, postcoital Hitler in bed with a frightened dark-haired girl. “Write this one in your diary, Anne,” Hitler says.
The police outside the Anne Frank House are not protecting it because it is an international symbol of tolerance and understanding. There are many international symbols of understanding scattered across Europe that are not first-tier targets of jihadist extremists. The police are guarding the Anne Frank House because it is, in fact, associated with Jews, and Jews are under sustained attack in Europe.
VI. Hitler Is Dead
In January, at a ceremony marking the 70th anniversary of the liberation of the Auschwitz death camp, the American businessman Ronald Lauder, who serves as the president of the World Jewish Congress, said acidly of Europe, “It looks more like 1933 than 2015.” He mentioned Jewish children afraid to wear a kippah on the streets of Paris, Budapest, and London; the sacking of Jewish stores; and attacks on synagogues; and he suggested that a slow-motion exodus from Europe was already under way.
Things have gone terribly wrong for the Jews of Europe lately, but comparing 2015 to 1933, the year Hitler came to power, is irresponsible. As serious as matters have become for European Jews today, conditions are different from 80 years ago, in at least two profound ways.
The first is that Israel exists, and has as its reason for being the ingathering of dispersed Jews. A tragedy of Zionism, the political movement to create a state for the Jews in their ancestral homeland, is that it succeeded too late. If Israel had come into being in 1938, rather than in 1948, an untold but presumably very large number of European Jews who were denied refuge by the civilized nations, including the United States, would have been saved from slaughter. Today, of course, the Jews of Toulouse and Malmö understand that Israel will take them without question, and many thousands of European Jews—mainly, though not exclusively, French—have moved to Israel in recent years.
The second way—and this is a historical astonishment—is that in 1933, the new leader of Germany announced himself as the foremost enemy of Jewish existence; today, Germany’s leader is among the world’s chief defenders of Jews. Chancellor Angela Merkel has made the defense of Jews a principle of the nation: “Germany’s support for Israel’s security is part of our national ethos, our raison d’être,” she said in 2013. At a rally against anti-Semitism held last September at the Brandenberg Gate, in Berlin, Merkel said: “Anyone who hits someone wearing a skullcap is hitting us all. Anyone who damages a Jewish gravestone is disgracing our culture. Anyone who attacks a synagogue is attacking the foundations of our free society.”
In France, Manuel Valls, the Socialist prime minister, is, if anything, an even more ardent defender of Europe’s Jews. He argues that the French idea itself depends on the crushing of anti-Semitism.
“The choice was made by the French Revolution in 1789 to recognize Jews as full citizens,” he told me when I met him late last year in Paris. “To understand what the idea of the republic is about, you have to understand the central role played by the emancipation of the Jews. It is a founding principle.”
In 1980, shortly after the bombing of the Rue Copernic synagogue, in Paris, which took the lives of four people, Raymond Barre, who was then the French prime minister, described the attack as one “that sought to target Jews who were in this synagogue and that struck innocent Frenchmen who were crossing Rue Copernic.”
France’s Jews were wounded by Barre’s statement. To be excluded from the community of “innocent Frenchmen” by a prime minister is not something readily forgotten. Roger Cukierman, the head of France’s national Jewish council, told me that French Jews are grateful that Valls has been so willing to speak in their defense.
Valls, whose father is Spanish, framed the threat of a Jewish exodus this way: “If 100,000 French people of Spanish origin were to leave, I would never say that France is not France anymore. But if 100,000 Jews leave, France will no longer be France. The French Republic will be judged a failure.”
Valls is deliberate and—unusual for a French politician of the left—blunt in identifying the main culprits in the proliferation of anti-Jewish violence and harassment: Islamist ideologues whose anti-Semitic and anti-Western calumnies have penetrated the banlieues. But he goes further: France’s “new anti-Semitism” is also the product of what he understands to be a malicious sleight of hand on the part of Israel’s enemies to repackage anti-Semitism as anti-Zionism.
“It is legitimate to criticize the policies of Israel,” Valls said. “This criticism exists in Israel itself. But this is not what we are talking about in France. This is radical criticism of the very existence of Israel, which is anti-Semitic. There is an incontestable link between anti-Zionism and anti-Semitism. Behind anti-Zionism is anti-Semitism.”
Frequently, Valls said, anti-Zionists let the mask slip. It is impossible, he said, to ascribe the attacks on synagogues—at least eight were targeted in France last summer—to anger over Israel’s Gaza policy. The demonstrators who chanted “Hamas, Hamas, Jews to the gas” at rallies in Germany last year clearly have more on their minds than Israel’s West Bank settlement policy—but evidently not everyone in authority believes that attacks on synagogues are axiomatically anti-Semitic: in early February, a German court ruled that the firebombing of a synagogue in the city of Wuppertal last year was motivated not by anti-Semitism but by a desire to bring “attention to the Gaza conflict.”
Valls and Merkel think more clearly about the implications of Jewish persecution than many others in Europe. So too does David Cameron, the prime minister of the United Kingdom. When I met with Cameron in January, on his most recent visit to Washington, D.C., he expressed, with something close to Valls’s passion, a fear for the future of Britain’s Jewish minority. “The Jewish community in Britain has been there for centuries and has made an extraordinary contribution to our country,” he said. “I would be heartbroken if I ever thought that people in the Jewish community thought that Britain was no longer a safe place for them.”
According to the Community Security Trust, 2014 saw the highest number of anti-Semitic incidents in the United Kingdom, which is home to 300,000 Jews, since the organization began its monitoring efforts, in 1984: it recorded 1,168 anti-Semitic incidents. This is more than double the number of incidents in 2013, and exceeds the previous record, from 2009, of 931 incidents. In a recent survey conducted on behalf of the Campaign Against Anti-Semitism, a quarter of British Jews said they had considered leaving the country; more than half of those surveyed said they fear that Jews have no future in Great Britain.
Cameron condemned demonstrators who took out their frustrations with Israel on Europe’s Jews. I asked him whether there existed in his mind a bright line that separates anti-Zionism from anti-Semitism. He answered: “I think it is unfair and wrong to lay at the door of Jewish communities of Europe policies pursued by the government of Israel that people might not agree with—just completely wrong.”
He went on to say: “As well as the new threat of extremist Islamism, there has been an insidious, creeping attempt to delegitimize the state of Israel, which spills over often into anti-Semitism. We have to be very clear about the fact that there is a dangerous line that people keep crossing over. This is a state, a democracy that is recognized by the UN, and I don’t think we should be tolerant of this effort at delegitimization. The people who are trying to make the line fuzzy are the delegitimizers.”
The fight against anti-Semitism led by Merkel, Valls, and Cameron appears to be heartfelt. The question is, will it work? After the January massacres in Paris, the French government deployed several thousand soldiers to protect Jewish institutions, but it cannot assign soldiers to protect every Jew walking to and from the Métro. The governments of Europe are having a terrible time in their struggle against the manifestations of radical Islamist ideology. And the general publics of these countries do not seem nearly as engaged in the issue as their leaders. The Berlin rally last fall against anti-Semitism that featured Angela Merkel drew a paltry 5,000 people, most of whom were Jews. It is a historical truism that, as Manuel Valls told me, “what begins with Jews doesn’t end with Jews.” But this notion has not penetrated public opinion.
Nevertheless, comparisons to 1933 remain overripe.
“It’s not 1933 all over again, because it’s not generally acceptable to try to mobilize political power by making explicitly anti-Semitic arguments,” David Nirenberg, a scholar of anti-Semitism at the University of Chicago, told me. “We’re not at a moment when you can make a mass democratic argument about Jews as aliens. The danger here, and the reason French Jews, for instance, fear not having Manuel Valls in office forever, is that if political power isn’t willing to protect European Jews against minority movements that legitimate themselves through anti-Zionist discourse, no one is going to protect them.”
VII. The Coffin or the Suitcase
It is not 1933. But could it be 1929? Could Europe’s economic stagnation combine with its inability to assimilate and enfranchise growing populations of increasingly angry Muslims in such a way as to clear a path for volatile right-wing populism?
A few weeks after the January massacres, I met with a group of aggrieved Jews in a café near the main synagogue in Sarcelles, the suburb that was the center of last summer’s anti-Jewish riots. French troops in combat gear patrolled the street. The synagogue is now also used as a base of operations for the more than 40 soldiers who have been assigned to protect the town’s Jewish institutions.
“We’re very glad for the soldiers,” one of the men, who asked me to identify him only as Chaim, said. “But soldiers in the synagogues means that there is no life here, only danger. This is why I’m leaving.” It is, he said, using an expression common during the Algerian civil war, a choice between le cercueil ou la valise—“the coffin or the suitcase.”
But another man, who asked to be called Marcel, responded that it would be cowardly to flee for Israel at the first appearance of Molotov cocktails. “Running, running, running,” he said. “That’s the Jewish way.” He said his parents had arrived in Sarcelles from Tunisia in 1967, driven out by anti-Jewish rioters who were putatively distressed by Israel’s victory in the Six-Day War. “We ran from Tunisia. We’re not running from here.”
“But no one wants us here,” Chaim said. “They’ll attack us again as soon as the soldiers go.”
I said that I didn’t think Manuel Valls was going to remove the soldiers anytime soon.
Marcel laughed. “I don’t count on the Socialists. I would count on the National Front before I count on the Socialists.”
It is disquieting, but no longer unusual, to hear Jews of North African descent express affinity for the National Front. The popularity of the party’s leader, Marine Le Pen, across non-Jewish (and non-Muslim) France is well documented; according to a recent poll, she is the leading presidential candidate for 2017.
The January massacres created a moment for the anti-immigrant Le Pen; the refusal by the French government to invite her to participate in the giant unity march following the attacks only inspired more sympathy for her message, which is a simple one: the rise of Islamism in France poses an existential threat to the republican idea, and to the bedrock principle of laïcité, or secularism—the notion that sectarian identities must be subsumed to the concept of Frenchness.
Le Pen, who inherited the National Front from her father, Jean-Marie, has worked diligently to bring her party closer to the French mainstream: no more thugs in leather jackets; no more public expressions of longing for Vichy; certainly no more Holocaust obsessiveness. (In 1987, Jean-Marie Le Pen famously said, “I ask myself several questions. I’m not saying the gas chambers didn’t exist. I haven’t seen them myself … But I believe it’s just a detail in the history of World War II.”)
Marine Le Pen is positioning herself as something of a philo-Semite. She is not under the illusion that she will sway large numbers of Jews to her side; in any case, the Jewish vote in France is minuscule. But people who follow her rise say she understands that one pathway to mainstream acceptance runs through the Jews: if she could neutralize the perception that the National Front is a fascist party by winning some measure of Jewish acceptance, she could help smooth her way to the presidency.
I met with Le Pen in February at her office in Nanterre, a Paris suburb. Outside the three-story National Front headquarters is a statue of Joan of Arc; inside, posters of Le Pen’s father hang on the walls. Le Pen has a brisk manner and a well-honed skill of deflecting journalists’ questions.
I told her I was shocked to find Jews in the banlieues who would look to the National Front for political salvation. She professed not to be shocked at all.
“The reality is that there exist in France associations that are supposedly representative of French Jews, which have stuck with a software that came out of the Second World War,” she said, meaning that members of the Jewish leadership are still preoccupied with the threat of Nazi-like fascism. “For decades they have continued to fight against an anti-Semitism that no longer exists in France, for reasons of—how should I say this?—intellectual laziness. And by a form of submission to the politically correct. And while they were doing this, while they were fighting against an enemy that no longer existed, an anti-Semitism was gaining force in France stemming notably from the development of fundamentalist Islamist thought.”
She went on, “But indisputably today, many Jewish French feel unsafe in France, assaulted because they’re Jewish.” She offered a partial defense of the allegation—popularized by, among others, Fox News—that some neighborhoods are too dangerous for non-Muslims to enter. “I challenge anyone to walk through one of these neighborhoods with a French flag at 7 o’clock at night and come out physically intact. And I didn’t even say an Israeli flag,” she said, laughing. “Because then … one wouldn’t have anything to wonder about.”
I asked her whether she agreed with Prime Minister Valls’s notion that the departure of 100,000 French Jews would be tragic for the country. I brought up Valls’s name on purpose: he and Le Pen may very well face each other in a future presidential contest, and Valls’s tough public statements about the threat of radical Islam seem motivated partly by a need to blunt Le Pen’s advantages with voters worried about terrorism.
“I don’t see Jews as a community,” she said. “I see fellow countrymen who are of Jewish faith but who are fellow countrymen, and I think that all French have the right to see themselves protected from the threats that weigh on them.”
She went on to disparage France’s current leaders for what she judged to be their ineffectiveness in countering Islamism. “Mr. Valls gave a grand and lovely speech,” she said, referring to his remarks after the January massacres, and then mocked his government’s plan to build a Web site called Stop Jihadism. “In my view,” she said sardonically, “this is going to terrorize the fundamentalists.”
Le Pen’s plan is more dramatic than anything offered so far by France’s two main parties: she would immediately strip “jihadists” of their citizenship, end immigration, and reinforce laïcité by limiting the public expression of religion. One manifestation of France’s debate about secularism is the frequent arguments over the acceptance of Muslim dress in the public square, so I asked whether a France ruled by the National Front would also prohibit Jews from wearing a kippah in public.
“I think the meaning is not the same,” she said. “To not acknowledge that is not to see reality. The meaning of the proliferation of the veil in France is not to be placed on the same plane as the wearing of the kippah. We know very well that the proliferation of the wearing of the veil—and in certain neighborhoods, the burka—is a political act. A female Muslim philosopher said, quite rightly, a little while ago, ‘A veiled woman is a walking morality lesson.’ ”
Her message is clear, though for obvious reasons it has been skeptically received: her father may have been an enemy of the Jewish community, but she is a friend.
“Jews,” she told me, “have nothing to fear from the National Front.”
VIII. The Promised Land
One evening this past September, Vice President Joe Biden and his wife, Jill, hosted a gathering in Washington to celebrate Rosh Hashanah, the Jewish new year. The guests—political supporters, leaders of Jewish organizations, members of Congress, Jewish officials of the Obama administration, and the stray journalist or two—gathered by the pool of the vice president’s house, on the grounds of the U.S. Naval Observatory.
Biden was characteristically prolix. He talked about the Shoah, and about the many contributions Jews have made to American life, and he mentioned, as he invariably does in such settings, his first encounter with a legendary Israeli prime minister.
“I had the great pleasure of knowing every prime minister since Golda Meir, when I was a young man in the Senate, and I’ll never forget talking to her in her office with her assistant—a guy named Rabin—about the Six-Day War,” he said. “The end of the meeting, we get up and walk out, the doors are open, and … the press is taking photos … She looked straight ahead and said, ‘Senator, don’t look so sad … Don’t worry. We Jews have a secret weapon.’ ”
He said he asked her what that secret weapon was.
“I thought she was going to tell me something about a nuclear program,” Biden continued. “She looked straight ahead and she said, ‘We have no place else to go.’ ” He paused, and repeated: “ ‘We have no place else to go.’ ”
“Folks,” he continued, “there is no place else to go, and you understand that in your bones. You understand in your bones that no matter how hospitable, no matter how consequential, no matter how engaged, no matter how deeply involved you are in the United States … there’s only one guarantee. There is really only one absolute guarantee, and that’s the state of Israel. And so I just want to assure you, for all the talk, and I know sometimes my guy”—President Obama—“gets beat up a little bit, but I guarantee you: he shares the exact same commitment to the security of Israel.”
There was applause, and then photos, and then kosher canapés. I will admit to being confused by Biden’s understanding of the relationship between America and its Jewish citizens. The vice president, it seemed to me, was trafficking in antiquated notions about Jewish anxiety.
Nearly 30 years ago, I moved to Israel, in part because I wanted to participate in the drama of Jewish national self-determination, but also because I believed that life in the Diaspora, including the American Diaspora, wasn’t particularly safe for Jews, or Judaism. Several years in Israel, and some sober thinking about the American Jewish condition, cured me of that particular belief.
I suspect that quite a few American Jews believe, as Biden does, that Jews can find greater safety in Israel than in America—but I imagine that they are mainly of Biden’s generation, or older.
A large majority of American Jews feels affection for Israel, and is concerned for its safety, and understands the role it plays as a home of last resort for endangered brethren around the world. But very few American Jews, in my experience, believe they will ever need to make use of the Israeli lifeboat. The American Jewish community faces enormous challenges, but these mainly have to do with assimilation, and with maintaining cultural identity and religious commitment. To be sure, anti-Semitism exists in the United States—and in my experience, some European Jewish leaders are quite ready to furnish examples to anyone suggesting that European Jews might be better off in America. According to the latest FBI statistics, from 2013, Jews are by far the most-frequent victims of religiously motivated hate crimes in America. But this is still anti-Semitism on the margins. A recent Pew poll found that Jews are also the most warmly regarded religious group in America.
For millennia, Jews have been asking this question: Where, exactly, is it safe? Maimonides, the 12th-century philosopher, wrestled with this question continually, asking himself whether it was better for Jews to live in the lands of Esau—Christendom—or in the lands of Ishmael.
“The thing about this question is that it is always about a decision made at a specific point in time,” David Nirenberg, the University of Chicago scholar, told me. “If you looked around the world in 1890, you might have said Germany and England were the best places. If you’re looking around the world in 1930, you could have made a good argument that the United States was not a great place for Jews.”
Today, the world’s 14 million or so Jews are found mainly in two places: Israel and the United States. Israel has the largest Jewish population, slightly more than 6 million. The U.S. has about 5.7 million. Europe, including Russia, has a Jewish population of roughly 1.4 million. There are about 1 million Jews scattered across the rest of the world, including significant communities in Argentina, Brazil, Mexico, South Africa, Australia, and Canada.
It is not uncommon to hear European Jews argue today that their departure from the Continent would grant Hitler a posthumous victory. The desire of so many Jews in Europe to remain in Europe, and remain European, is admirable. All across Europe—from Great Britain, where the situation does not feel so dire, to Sweden, where it does—I met Jews leading full Jewish lives.
In Stockholm, I spent a day at a small Jewish institute called Paideia, which focuses in good part on classical text study. Its students are mainly young European Jews who have expressed a commitment to remaining in their home countries. “These are not naive people, and they are not suicidal,” the institute’s founding director, Barbara Spectre, said. “They grew up with a full understanding of the Holocaust and its implications. The fact that they are staying in Europe testifies to something that we must respect: there is going to be Jewish life in Europe. There is a certain nobility about the decision to stay in Europe.”
On the other hand, there is this: a 2013 survey conducted by the European Union Agency for Fundamental Rights found that 60 percent of Sweden’s Jews fear being publicly identified as Jewish.
Critics of the Jews have often called us stiff-necked, but sometimes this insult can be understood as a compliment. And yet, stubbornness for the sake of stubbornness has a half-life.
One night, I had dinner in Brussels with Ariella Woitchik, a senior official in the European Jewish Congress, and her husband, Gregory, a lawyer. The congress lobbies the European Union on matters related to the well-being of Jews. Woitchik’s job demands that she be publicly committed to the perpetuation of European Jewish life, but she seems to come by this feeling honestly. “On a moral and philosophical level, the question is, why should we leave?,” Woitchik said. “Belgium is our country.”
The Federal Reserve Bank of New York may ask foreign lenders for more detailed daily reports on liquidity as the U.S. steps up monitoring of risks from Europe‘s sovereign debt crisis, according to two people with knowledge of the matter.
Regulators held informal talks with some of the largest European lenders about producing a “fourth-generation daily liquidity” or 4G report, according to the people, who asked for anonymity because communications with central bankers are confidential. The reports may cover potential liabilities such as foreign-exchange swaps and credit-default swaps, said one person. The U.S. has already increased the number of examiners embedded in these banks, the person said.
Concern is growing that European lenders may falter as Greece teeters on the brink of default. U.S. Treasury Secretary Timothy F. Geithnerhas warned that failure to bolster European backstops would threaten “cascading default, bank runs and catastrophic risk” for the global economy.
“The Fed is trying to understand what the pressure points are in terms of liquidity and potential risks that are imposed by foreign banks to domestic institutions in our financial system,” said Kevin Petrasic, an attorney at the Washington- based law firm of Paul, Hastings, Janofsky & Walker LLC. “There is a little bit more sense of urgency as a result of what’s going on in Europe.” Liquidity Risk
U.S.-based money funds, which buy short-term commercial paper, have been shunning securities issued by some banks based on the continent, and European Central Bank Governing Council member Yves Mersch said Sept. 28 that liquidity shortages pose the main risks to the region’s banking system.
Jack Gutt, a spokesman for the Federal Reserve Bank of New York, declined to comment. The largest European bank holding companies by assets in the U.S. include units of Deutsche Bank AG (DBK), HSBC Holdings Plc. (HSBA) and Banco Bilbao Vizcaya Argentaria S.A., according to Fed data. Duncan King, a spokesman for Frankfurt- based Deutsche Bank, Thaddeus Herrick, a spokesman for Spain- based BBVA and London-based HSBC’s Rob Sherman said they couldn’t comment.
U.S. banks are starting to provide a 4G report and they are being phased in this month, said Karen Shaw Petrou, managing partner of Washington-based Federal Financial Analytics Inc. Some Europeans are asking U.S. counterparts for information on how to prepare the report even though there has been no formal request from the Fed so far, one of the people said. Avoiding a Squeeze
“The report requires rapid and in some cases daily data on a banks’ assets, liabilities and potential claims to measure the degree to which the bank could be caught in the classic borrow- short, lend-long squeeze,” Petrou said. “The 4G is one of the tools to reveal liquidity risk.”
The forms aren’t public, according to Petrou, and the New York Fed declined to provide a copy.
Euro-zone banks and other institutions were more than $350 billion in debt to the Fed’s emergency-lending facilities at one point during the2008-2009 financial crisis, according to data compiled by Bloomberg News. The analysis was based on Fed documents released earlier this year after court orders upheld Freedom of Information Act requests by Bloomberg LP, the parent company of Bloomberg News, and News Corp.’s Fox News Network LLC. Fed lending to these entities totaled more than $100 billion on an average day. Swap Contracts
Regulators lack access to data on foreign institutions operating in the U.S. that would allow them to “make informed judgments about the adequacy of such firms’ capital and liquidity buffers,” William C. Dudley, president of the Federal Reserve Bank of New York, said in a Sept. 23 Washington speech.
U.S. prime money-market funds cut their exposure to euro- zone bank deposits and commercial paper, or short-term IOUs, to $214 billion in August from $391 billion at the end of last year, according to JPMorgan Chase & Co. data. The funds are rationing their credit to European banks because of concerns that financial institutions will take large losses if a euro- zone nation defaults.
Credit-default swaps allow bondholders to buy protection against losses if an issuer doesn’t pay its debts. The contracts can entitle the holder to face value if the borrower defaults. Lawmakers and regulators have blamed misuse of swaps and lack of disclosure for helping to trigger the 2008 financial crisis.
A currency swap is a contract in which one party borrows one currency from another, and simultaneously lends another to the second party. Foreign-exchange swaps are used to raise foreign currencies for financial institutions and their customers, such as exporters and importers as well as investors.
Currencies and their related derivatives are among the most actively traded markets in the world, with average daily turnover reaching $4 trillion as of September 2010, Bank for International Settlements estimates.