Once upon a time there was a very prolific star economist named Irving Fisher. Always inordinately confident of his astute clairvoyance, he was among the forerunners of the modern breed of celebrity financial gurus. His most famous prediction - in October 1929 - was that "stock prices have reached what looks like a permanently high plateau." But a mere few days later, alas, reality confoundedly interfered with Fisher's rosy forecast and the stock market uncooperatively crashed. Did that calamitous catalyst of the Great Depression render the oracle of Wall Street a tad contrite? Heck, no. For long months he clung to his optimistic orientation regardless of the misery around him, and assured despairing investors that recovery was just around the corner. Today, when psychologists discuss the cognitive malfunctions and logical fallacies collectively known as wishful thinking, Fisher is almost inevitably cited as a prime example of one whose deductions weren't based on evidence or rationality but on the outcome he desired. Though Fisher wasn't Jewish (despite his name), his particular analytical bias is predominantly pervasive among the descendants of Jacob, who through the millennia sought to convince themselves that things aren't as bad as meets the eye and that "painful concessions" constitute viable antidotes to the evil and mortal dangers which forever beset them. This still is the motivating force behind Israeli liberalism and the alacrity of our more progressive souls to cede strategic assets to ever-implacable enemies, in the hope of thereby mitigating Arab fanatical fervor to obliterate the Jewish state. Sweet delusion allures in whichever direction we look - not just vis-a-vis increasingly ferocious foes outside our insecure state, but also inside it. We refuse to admit that we face enemies from within. The illusory premise that Israeli Arabs are essentially loyal citizens whose only peeve is a variety of socioeconomic grievance assumes that a little appeasement, cash outlays and solicitous ego massages will satisfy them. Indeed, we blame ourselves for their disaffection. THE BLOODY quasi-rebellion instigated in October 2000 in perfect concert with Arafat's intifada didn't pry too many eyes open. Vexingly, the Orr Commission actually reiterated every misconception we labored under. The fact that Galilee Arabs cheered Nasrallah last summer, and that almost no suicide bombing is attempted without the collusion of Israeli Arabs, is downplayed by our opinion-makers. Who remembers the supermarket cashier from Tira whose plot (to target a Ra'anana spaghetti eatery next door to the emporium which employed her) was foiled just a few weeks back? Instead we get sob-sister coverage of Israeli Arab agitation against profiling at Ben-Gurion Airport - as if there aren't highly cogent reasons for it. Recurrently - whenever yet another Arab Knesset member travels to Beirut or Damascus to hobnob with our nastiest antagonists and exhort them to pursue the battle against Israel, whose taxpayers fund and tolerate these subversive excursions - there's a bit of a flap generated by the galling stridency of in-your-face tirades abroad by Israeli Arab parliamentarians, no longer afraid of openly siding with the Jewish state's would-be destroyers. It's such titillation that for a day last week drew attention to the gutter obscenities hurled by Arab Knesset memberK Azmi Bishara at Knesset members Gilad Erdan (Likud) and Matan Vilna'i (Labor). But why the commotion? Bishara hardly misses an opportunity to vent his visceral invective. Peace-activist intellectuals were recently taken aback following the failure of years of Israel Democracy Institute-sponsored dialogue with presumed fellow moderates from the Israeli Arab community. The latter wouldn't agree to the most minimal recognition of the legitimacy of a Jewish state. The just-published protocols of the futile deliberations - entitled Whose Land Is It? - make disheartening, if not chilling, reading. Jewish left-wing participants were disconcerted when their sanctimonious goodwill was ungratefully snubbed, but that's only because they were directly involved. ALL OTHER ominous signals are studiously ignored, as per politically-correct etiquette. Frequent attacks on Jews in mixed cities, from Jaffa to Acre, are disregarded. The media hardly mentioned the pogrom at Acre's Torah Elementary School. On December 3 its pupils found their classrooms ransacked, prayer books ripped to shreds and the walls smeared with swastikas, accompanied by abusive Arabic graffiti. Vandalism and defacement were everywhere. The principal shouted plaintively: "Is this Germany?" Too little resonance was accorded recent position papers by Arab mayors, the Mossawa Advocacy Center for Arab Citizens in Israel and the Higher Arab Monitoring Committee. These demanded a return to villages abandoned in 1948, administrative Arab-sector autonomy, separate representation for Israeli Arabs in international organizations, veto power on major legislative/executive decisions, changing Israel's anthem and flag, and even an immigration policy overhaul. These relatively respectable forums focus not on individual equal rights, but at best aim for a binational state and the eradication of Israel's Jewish character, even of Jewish emblems. Their subtext goal is to end Jewish independence and turn the clock back to pre-1948. These, mind you, are the restrained, judicious and temperate voices. What they didn't proclaim explicitly was spelled out by the head of Israel's Islamic Movement (Northern Branch), Raed Sallah. Opining that Israel won't survive for more than 20 years, he urged a boycott of all Israeli products. The Temple Mount, he hectored, must be liberated from "Zionist occupation," as "the Zionist existence is in itself an act of war against Arabs." Sallah's sedition failed to attract notice. Israelis weren't listening. The "permanently high plateau" is where our enlightened Fisher clones prefer to perch. Fisher did eventually fall from his prosperous upland, but he only lost his personal fortune and academic reputation, though his postmortems of what went wrong exuded hindsight wisdom. The collapse that threatens us, however, is far more horrendously final than insolvency, with no comebacks or meaningful retrospection likely thereafter.