BOOK REVIEW / NOVELLAS : A PLAGUE OF DREAMERS: Three Novellas <i> by Steve Stern</i> ; Scribner’s; $20, 256 pages : A Desolate Place Touched by Magic

Blending the real and surreal in a tradition as ancient as the cabala, Steve Stern sets his stories in the years between the 1920s and the late ‘60s in the Pinch, an isolated Jewish community of Memphis, Tenn.

Even during periods of general prosperity, this desolate neighborhood is marginal, populated with struggling artisans, failing merchants and their rebellious offspring. The Depression is off to a head start here, and the postwar boom never arrives. The lives within are pinched as well, and it’s no wonder that the adolescent boys seek excitement in outrageous pranks, while their elders continue to exist in a world transported virtually intact from Eastern Europe.

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In “Zelik Rifkin and the Tree of Dreams,” the inhabitants of the Pinch are more wretched than usual. The summer is unbearably hot, even for Memphis, and the populace has taken to wearing ice bags on their heads and sleeping in an empty lot euphemistically called a park, although the only amenity is a huge and ancient oak tree that once served as the center of a thriving slave market.

Now, on these humid summer nights, the tree shelters the entire neighborhood. The people emerge from their stifling apartments each evening, trailing camp chairs and bedding in the hope of finding some relief under the stars.

Although Zelik’s widowed mother has resisted joining this hegira, she finally relents and follows the parade. Derided by his contemporaries as a cowardly mama’s boy, Zelik has spent his childhood dodging his jeering schoolmates. He has no diversions aside from working as a stock boy and accompanying his mother to memorial services for long-gone relations.

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Taunted by the neighborhood gang, trembling with terror, Zelik climbs the giant oak and ends up spending the night in its branches. There, far above the sweltering families, Zelik has fantastic dreams, so far superior to his daily existence that he voluntarily climbs the tree night after night. On the cracked sidewalks and in the dank alleys of the Pinch, he’s a laughingstock, but once in the tree, he’s a superman, transformed and, eventually, transmuted.

“Hyman the Magnificent” explores another miraculous alteration. Like Zelik, Hymie Weiss is also one of the Pinch’s more conspicuous misfits.

A skinny, unprepossessing boy, he’s obsessed with the story of Houdini and determined to become a master magician himself. To achieve this ambition, he devises impossible stunts, which he performs at amateur night at the Idle Hour Cinema.

Because Hymie refuses to rehearse his acts, they end in ludicrous disasters, mishaps that leave him increasingly disabled. Each new debacle only serves to increase his determination, until finally, a mere ghost of his former inept self, he achieves a bizarre and totally unexpected triumph that would be an epiphany if it had happened anywhere but the Pinch and to anyone but Hymie Weiss.

Of the three antic, metaphysical stories in this amazing volume, this particular saga is the most hilarious, the surprisingly upbeat ending absolving the reader from the guilt of laughing at Hymie’s wounds.

The third novella, “The Annals of the Kabakoffs,” covers considerably more ground, beginning in 1964, shifting to the 1920s and ‘30s, jumping to 1968 and including a segment set in 1870 in the Ukraine.

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The central character is Itchy Kabakoff, the “black sheep of the Kabakoff clan” for reasons that become abundantly clear as the chronicle proceeds. Estranged from his moderately prosperous but unappealing family, Itchy travels with a rinky-dink carnival. On the road, he’s the wild man, covered with fake fur, biting the heads off chickens and making himself generally useful when not performing.

From time to time, he reappears in the area to spy on his family, who have moved to a more upscale neighborhood. On this particular visit he rampages through his half-sister’s wedding like a demon comedian, telling scatological jokes and driving his father to suicide.

But because Stern is a magic realist with a distinct preference for the supernatural aspects of the genre, the ensuing events are far from mournful. We’re treated to the remarkable adventures of earlier Kabakoffs, learn Itchy’s true origins, and read with astonishment how the residents of the Pinch continue to exist as specters, apparently inheriting their abilities from generations of dybbuks and golems before them.

Inevitably, inviting comparison to the work of Isaac Bashevis Singer, “A Plague of Dreamers” is a heady blend of nostalgia, humor and mysticism.