Mr. Cohen is in Esfahan, Iran. In “What Iran’s Jews Say” he says the reality of Iranian civility toward Jews tells us more about Iran — its sophistication and culture — than all the inflammatory rhetoric. Mr. Krugman, in “Banking on the Brink,” asks why not just go ahead and nationalize? Remember, the longer we live with zombie banks, the harder it will be to end the economic crisis. Here’s Mr. Cohen:
At Palestine Square, opposite a mosque called Al-Aqsa, is a synagogue where Jews of this ancient city gather at dawn. Over the entrance is a banner saying: “Congratulations on the 30th anniversary of the Islamic Revolution from the Jewish community of Esfahan.”
The Jews of Iran remove their shoes, wind leather straps around their arms to attach phylacteries and take their places. Soon the sinuous murmur of Hebrew prayer courses through the cluttered synagogue with its lovely rugs and unhappy plants. Soleiman Sedighpoor, an antiques dealer with a store full of treasures, leads the service from a podium under a chandelier.
I’d visited the bright-eyed Sedighpoor, 61, the previous day at his dusty little shop. He’d sold me, with some reluctance, a bracelet of mother-of-pearl adorned with Persian miniatures. “The father buys, the son sells,” he muttered, before inviting me to the service.
Accepting, I inquired how he felt about the chants of “Death to Israel” — “Marg bar Esraeel” — that punctuate life in Iran.
“Let them say ‘Death to Israel,’ ” he said. “I’ve been in this store 43 years and never had a problem. I’ve visited my relatives in Israel, but when I see something like the attack on Gaza, I demonstrate, too, as an Iranian.”
The Middle East is an uncomfortable neighborhood for minorities, people whose very existence rebukes warring labels of religious and national identity. Yet perhaps 25,000 Jews live on in Iran, the largest such community, along with Turkey’s, in the Muslim Middle East. There are more than a dozen synagogues in Tehran; here in Esfahan a handful caters to about 1,200 Jews, descendants of an almost 3,000-year-old community.
Over the decades since Israel’s creation in 1948, and the Islamic Revolution of 1979, the number of Iranian Jews has dwindled from about 100,000. But the exodus has been far less complete than from Arab countries, where some 800,000 Jews resided when modern Israel came into being.
In Algeria, Tunisia, Libya, Egypt and Iraq — countries where more than 485,000 Jews lived before 1948 — fewer than 2,000 remain. The Arab Jew has perished. The Persian Jew has fared better.
Of course, Israel’s unfinished cycle of wars has been with Arabs, not Persians, a fact that explains some of the discrepancy.
Still a mystery hovers over Iran’s Jews. It’s important to decide what’s more significant: the annihilationist anti-Israel ranting, the Holocaust denial and other Iranian provocations — or the fact of a Jewish community living, working and worshipping in relative tranquillity.
Perhaps I have a bias toward facts over words, but I say the reality of Iranian civility toward Jews tells us more about Iran — its sophistication and culture — than all the inflammatory rhetoric.
That may be because I’m a Jew and have seldom been treated with such consistent warmth as in Iran. Or perhaps I was impressed that the fury over Gaza, trumpeted on posters and Iranian TV, never spilled over into insults or violence toward Jews. Or perhaps it’s because I’m convinced the “Mad Mullah” caricature of Iran and likening of any compromise with it to Munich 1938 — a position popular in some American Jewish circles — is misleading and dangerous.
I know, if many Jews left Iran, it was for a reason. Hostility exists. The trumped-up charges of spying for Israel against a group of Shiraz Jews in 1999 showed the regime at its worst. Jews elect one representative to Parliament, but can vote for a Muslim if they prefer. A Muslim, however, cannot vote for a Jew.
Among minorities, the Bahai — seven of whom were arrested recently on charges of spying for Israel — have suffered brutally harsh treatment.
I asked Morris Motamed, once the Jewish member of the Majlis, if he felt he was used, an Iranian quisling. “I don’t,” he replied. “In fact I feel deep tolerance here toward Jews.” He said “Death to Israel” chants bother him, but went on to criticize the “double standards” that allow Israel, Pakistan and India to have a nuclear bomb, but not Iran.
Double standards don’t work anymore; the Middle East has become too sophisticated. One way to look at Iran’s scurrilous anti-Israel tirades is as a provocation to focus people on Israel’s bomb, its 41-year occupation of the West Bank, its Hamas denial, its repetitive use of overwhelming force. Iranian language can be vile, but any Middle East peace — and engagement with Tehran — will have to take account of these points.
Green Zoneism — the basing of Middle Eastern policy on the construction of imaginary worlds — has led nowhere.
Realism about Iran should take account of Esfehan’s ecumenical Palestine Square. At the synagogue, Benhur Shemian, 22, told me Gaza showed Israel’s government was “criminal,” but still he hoped for peace. At the Al-Aqsa mosque, Monteza Foroughi, 72, pointed to the synagogue and said: “They have their prophet; we have ours. And that’s fine.”
Here’s Mr. Krugman:
Comrade Greenspan wants us to seize the economy’s commanding heights.
O.K., not exactly. What Alan Greenspan, the former Federal Reserve chairman — and a staunch defender of free markets — actually said was, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” I agree.
The case for nationalization rests on three observations.
First, some major banks are dangerously close to the edge — in fact, they would have failed already if investors didn’t expect the government to rescue them if necessary.
Second, banks must be rescued. The collapse of Lehman Brothers almost destroyed the world financial system, and we can’t risk letting much bigger institutions like Citigroup or Bank of America implode.
Third, while banks must be rescued, the U.S. government can’t afford, fiscally or politically, to bestow huge gifts on bank shareholders.
Let’s be concrete here. There’s a reasonable chance — not a certainty — that Citi and BofA, together, will lose hundreds of billions over the next few years. And their capital, the excess of their assets over their liabilities, isn’t remotely large enough to cover those potential losses.
Arguably, the only reason they haven’t already failed is that the government is acting as a backstop, implicitly guaranteeing their obligations. But they’re zombie banks, unable to supply the credit the economy needs.
To end their zombiehood the banks need more capital. But they can’t raise more capital from private investors. So the government has to supply the necessary funds.
But here’s the thing: the funds needed to bring these banks fully back to life would greatly exceed what they’re currently worth. Citi and BofA have a combined market value of less than $30 billion, and even that value is mainly if not entirely based on the hope that stockholders will get a piece of a government handout. And if it’s basically putting up all the money, the government should get ownership in return.
Still, isn’t nationalization un-American? No, it’s as American as apple pie.
Lately the Federal Deposit Insurance Corporation has been seizing banks it deems insolvent at the rate of about two a week. When the F.D.I.C. seizes a bank, it takes over the bank’s bad assets, pays off some of its debt, and resells the cleaned-up institution to private investors. And that’s exactly what advocates of temporary nationalization want to see happen, not just to the small banks the F.D.I.C. has been seizing, but to major banks that are similarly insolvent.
The real question is why the Obama administration keeps coming up with proposals that sound like possible alternatives to nationalization, but turn out to involve huge handouts to bank stockholders.
For example, the administration initially floated the idea of offering banks guarantees against losses on troubled assets. This would have been a great deal for bank stockholders, not so much for the rest of us: heads they win, tails taxpayers lose.
Now the administration is talking about a “public-private partnership” to buy troubled assets from the banks, with the government lending money to private investors for that purpose. This would offer investors a one-way bet: if the assets rise in price, investors win; if they fall substantially, investors walk away and leave the government holding the bag. Again, heads they win, tails we lose.
Why not just go ahead and nationalize? Remember, the longer we live with zombie banks, the harder it will be to end the economic crisis.
How would nationalization take place? All the administration has to do is take its own planned “stress test” for major banks seriously, and not hide the results when a bank fails the test, making a takeover necessary. Yes, the whole thing would have a Claude Rains feel to it, as a government that has been propping up banks for months declares itself shocked, shocked at the miserable state of their balance sheets. But that’s O.K.
And once again, long-term government ownership isn’t the goal: like the small banks seized by the F.D.I.C. every week, major banks would be returned to private control as soon as possible. The finance blog Calculated Risk suggests that instead of calling the process nationalization, we should call it “preprivatization.”
The Obama administration, says Robert Gibbs, the White House spokesman, believes “that a privately held banking system is the correct way to go.” So do we all. But what we have now isn’t private enterprise, it’s lemon socialism: banks get the upside but taxpayers bear the risks. And it’s perpetuating zombie banks, blocking economic recovery.
What we want is a system in which banks own the downs as well as the ups. And the road to that system runs through nationalization.
The howling and screaming from the right wing will begin in 3…2…
