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Within a few weeks, the Israeli economy will be celebrating the anniversary of the mad race to the dollar that torpedoed the shekel and led us to the brink of financial crisis.

Why "celebrating?" Because if you've been keeping track of the economic debate, you might believe that the Israeli government has reached the appropriate conclusions from the dramatic events of May-June 2002. You might suppose it has taken the required steps to prevent their recurrence. You might figure that all that remains is to celebrate the steps' success.

The capital market has been exulting for the last month: The shekel has strengthened by 5 percent against the dollar; interest rates at which the government raises debt have dropped by up to 2 percentage points; portfolio managers say it's time to buy stocks; analysts whisper that the chiefs of one of the big banks feel optimistic; investment bankers are predicting that the upswing is around the corner.

It is hardly a surprise that the public, which was badly alarmed just three months back, is now sitting back giggling as it watches Finance Minister Benjamin Netanyahu wrestle Histadrut labor federation chief Amir Peretz.

It's quite a show, too. Netanyahu pins Peretz to the mat; then Peretz gets the upper hand; then Bibi delivers a powerful speech; then Peretz rebuts with stinging ads in the papers.

In short, we've reached better times when the economic debate has ebbed from being a vital component troubling every household and has moved to the gossip columns.

But where is all this optimism coming from?

After such a long time in the doldrums, things had to get better, some shrug. The guarantees changed the rules of the game, solving the nation's financing problems overnight, say others. The Americans rolling through Iraq have changed the face of the Middle East, opine yet others. They have reduced the uncertainty and now it's only a matter of time until the peace process resumes.

If only they were right.

If only all these analysts, pundits, star-gazers and smart alecks were right. If only the New Middle East were right around the corner, as Shimon Peres predicted a decade ago.

Until it appears, however, we should remember a few facts of life.

Since June 2002, when the Israeli economy trembled on the edge of the abyss, the budget and the marketplace have barely been changed. Despite all those loudly-touted budget cuts that the former finance minister, Silvan Shalom, announced, the 2003 budget is remarkably like the 2002 one, and the 2002 budget was even bigger than the 2001 one, in absolute terms.

The current government budget (before the planned cut) will result in a deficit of 6 percent of GDP - the kind of deficit run up by nations careening toward bankruptcy. Even if the government slashes back its budget in a couple of months, it probably won't be able to lower its deficit beyond 5 percent of GDP because of the delays in implementing the treasury's economic program.

We don't have the American guarantees yet. In fact, the U.S. government has already clarified that before it signs a thing, it wants to see the economic program in practice.

But even if the guarantees do arrive, their only contribution will be to allow us to finance the mushrooming deficit. Even now, it is crystal clear that unless the deficit is slashed back, the guarantees won't be used for infrastructure, but merely for paying for the government's excess spending.

Before we pop corks to drink to the victory in Iraq, we should recall that Netanyahu's program isn't designed to meet any special Israeli needs due to that war. Its goal is to stop the destructive economic processes that have persisted for almost a decade, or maybe more, during which time the government increased taxes and its share in the marketplace in order to finance its burgeoning expenditure.

In short, this wave of optimism on the eve of Passover 2003 may attest to the grit, the irrepressible optimism and the mental robustness of the People of Israel. But it is sadly reminiscent of the "irrational exuberance" that Fed chairman Alan Greenspan warned about way back when.

Every time Amir Peretz "wins one;" every week the economic program remains bogged down; every month in which the government persists with its profligate spending and drags its feet over structural reforms is further reason for growing concern. One morning we'll wake up, find that the holidays are over, and that we're back to square one - the low point we hit a few months back.