Tel Aviv's capricious stock market has subjected itself to a wild rollercoaster ride during the past few days, ever since Africa-Israel tycoon Lev Leviev admitted with rare candor that he's struggling to refinance existing debts and reimburse bond-holders. Some of the latter include smalltime ma-and-pa investors involuntarily involved with Africa-Israel via pension, provident and mutual funds. Africa-Israel is one of Israel's largest holding and venture firms, so its fortunes are nothing which should be casually downplayed. Conversely, this is no cause to blow things out of proportion, either, as occurred after Leviev's press conference Sunday. Initially, panic set in and Africa-Israel's stock plummeted by over a third, taking the entire stock- and bond-markets down with it. By Tuesday the sheer drop was halted and Africa-Israel began to climb back steeply, pulling the rest of the market sharply upwards. Yesterday, the stock went south again, but was no longer the driving engine. The entire market began the day on a negative note. On reflection, cooler heads have concluded that, big though it is, Africa-Israel is unlikely to trigger cataclysmic chain reactions. It lacks the financial market gravitas that made the Lehman Brothers collapse so pivotal in Wall Street and it's no mega-employer like GM in the US context. Indeed, Africa-Israel's difficulties don't inordinately impact on Israel's broader economy. Africa-Israel is a classic victim of America's subprime mortgage crisis. Its overleveraged investments were literally and quite lucklessly in the wrong place at the wrong time. Ironically, Eastern European investments, including massive Russian investments, aren't what ails it. But the firm's American investments - including Manhattan's former New York Times building - crucially depreciated in value following the US real estate meltdown. Essentially, Africa-Israel's woes have mostly to do with liquidity problems rather than a basic lack of assets. In his business dealings thus far, Leviev, who controls 75 percent of Africa-Israel's shares, has proven himself honorable and trustworthy. There's no cause to suspect that he won't strive supremely to repay his NIS 8 billion debt (with NIS 2.2b. pending in the next two years). Had Leviev been prescient enough last year, when the bond market sank to unprecedented lows, he'd have repurchased his own bonds at rock-bottom prices. But that's a lost opportunity, observed with the incomparable wisdom of hindsight. If Leviev makes the right decisions from now on, and manages to restructure his debt, he might repay it in full. In the worse case scenario, he'll repay most but not all of it. It's hardly a case of everything down the drain. That should be a vital tempering factor. Precisely because the outlook is not desperately bleak, the Treasury has appropriately made clear that it will not bail Africa-Israel out. Finance Minister Yuval Steinitz was right on the money when he argued that this is no "macroeconomic event that will affect the economy as a wholeâ€¦ There is no risk for the economy, a bank, a financial institution or the pension savings of the public." Indeed, the overall effect on the pension funds may be as minor as 1%. AS A whole, our economy has admirably outperformed most its counterparts worldwide. But the real importance of government nonintervention lies elsewhere. The Israel Securities Authority estimates that about 20% of all companies which floated bond-issues - one in every five - may encounter trouble in paying back debt. 2010 will be a test year, with vast amounts at stake. There is no underestimating the paramount importance of not signaling to any beleaguered enterprise that it need not try too earnestly to make good its obligations because the government will be there with a lifeline. If a bailout isn't a likely option, odds are that most concerns won't wish to lose everything and will find ways to honor their bond commitments. If the Treasury functions as the soft-touch rescue agency, the upshot will be numerous defaults based on the cynical expectation that the taxpayer will pick up the tab. This would be no less than catastrophic. Israel has weathered the global credit crunch as well as it has precisely because it was wise enough not to loosen the public purse strings foolishly, and not to irresponsibly run up debts with which future generations would be lumbered. In this light, it's clear that Africa-Israel isn't just a specific predicament. It is also a generic test case.