JERUSALEM — Jerusalem bus shelters were recently fitted with an advertisement that is evoking smiles from harried commuters.

The ad shows dozens of teenage students, their faces protected by gas masks, sitting at their desks, tackling an exam. The heading: "Be prepared by the end of January."

While the ad seems to refer to citizens' preparations for war in the event the United States invades Iraq, it's actually about something much more mundane: the Bagrut, Israel's equivalent of the SATs, which strike panic in the hearts of Israeli teens and their parents.

Produced for a company that helps kids prepare for the dreaded exams, the ad cleverly links the existential and "normal" fears facing average Israelis. It's a piquant reminder that in Israel, the two somehow manage to coexist.

Just as journalists have an overflow of work whenever the news is very bad, local humorists and satirists, cartoonists and copywriters have discovered that the worse the situation gets, the richer their material.

Thanks to the upcoming elections on Tuesday, the ongoing intifada, the possible war with Iraq and the deepening recession, there is an abundance of bad news and gallows humor.

"Humor is needed now more than ever," says Ephraim Sidon, one of the country's most well-known satirists, sipping coffee during an interview in a Jerusalem cafe.

Referring to Israel's most beloved comedy group from the early days, Sidon says, "Hagashash Hahiver worked on the premise that the world is funny so we need to laugh. I say that the world is sad so we need to laugh. Macabre humor is the only way to survive what we see in the newspapers and watch on the TV."

Macabre is the operative word to describe the work Sidon, who is famed for his writing for such comedy classics as "Nikkui Rosh" (Brainwashed) and "Harzufim," is preparing for Tel Aviv's Cameri theater.

"It's a satirical cabaret which we've been calling 'Catastrophe: The Musical," Sidon says, his light-blue eyes twinkling mischievously. "It's set in Jewish heaven and it's crowded with people carrying luggage who arrive non-stop after every bombing. The old-timers, Ben-Gurion and Menachem Begin, are there as well and they see everything they've built up nearing collapse. When they ask God — who is female — to intervene, She says she has no budget for miracles."

Meir Ronnen, a veteran cartoonist and editor for The Jerusalem Post and the mass-circulation Hebrew daily Yediot Ahronot, engages in a different type of political satire.

Biting though his cartoons are, Ronnen does not depict terror victims.

"One has to be careful of bad taste. Families' sensibilities have to be taken into consideration," says Ronnen.

Which is not to say that Ronnen, 76, and the country's most senior cartoonist, treads lightly.

"When I started at Yediot I made it clear that I would feel free to express my own opinions," he recalls. "The editor told me, 'You can attack anything except God.' I make fun of Shas people all the time," Ronnen says of the religious Sephardi political party.

These days, politics are providing Ronnen most of his inspiration.

The day he was interviewed, the cartoonist was working on a cartoon about the London-based conference on Palestinian reform organized by British Prime Minister Tony Blair.

"I'm trying to draw someone erasing the spots on a leopard, to show the irreformability of this Palestinian Authority," he explains.

A few days earlier, Ronnen skewered Sharon for refusing to allow Palestinian leaders to attend the above-mentioned conference. Under the heading "Someone has to be punished," the cartoon showed Sharon shooting himself in the foot with Blair looking on.

Some of the more outrageous humor can be found on the back page of the Jerusalem weekly Kol Ha'ir. In one ongoing series of cartoons, suicide bombers keep botching up the job.

In a recent Kol Ha'ir, a husband and wife explore "Safe Sex in the Time of War."

Step 1: Put on your gas mask.

Step 2: Put on your protective suit.

Step 3: Put on protective gloves.

Once the husband is all suited up, he goes to his wife and says, "I'm ready honey."

"But where's your condom?" she asks innocently.

"The most popular Israeli humor is brutal and vulgar," concedes Sidon, "not tender Jewish humor, not Woody Allen or Sholem Aleichem. "There's also sophisticated Isareli humor dealing with the language of the Bible and the Talmud. It's influenced by Yiddish. But you don't find it everywhere."

Ironically, some of the wry Jewish humor Sidon speaks of involves references to the Palestinians.

A Kol Ha'ir cartoon in a recent paper shows an Israeli soldier talking to an Arab named Ahmed whose relative is a terrorist.

"I have some good news for you and some bad news," says the soldier. "The bad news is that we're destroying your home. The good news is that you'll have a great place where you're being exiled."

Ronnen believes that this more sophisticated, gentler humor gives Israelis an ache in the heart, not a stitch in their side.

"When people here laugh it's a bitter laugh. All these laughs are tinged with real bitterness and sadness. It's the nature of the funny, distorted [caricatures] that lightens the cartoon somewhat, not the situation it refers to."

Calev Ben-David, an editor at The Jerusalem Post and its former TV and film critic, says there was a time, decades ago, when Israeli humor was much tamer.

"Ethnic humor was accepted, but there were things people didn't joke about, like the Holocaust or terror attacks. You didn't hear jokes about the real political differences between people here: arguments about the territories and the settlements, religion."

Ben-David dates the turning point to the end of the Lebanon War, in the 1980s, "when a lot of sacred cows started to go. There was a lot of disillusionment over the war and then the intifada started and the young comics started to take on these subjects."

Sidon credits the 1973 Yom Kippur with emboldening local satirists.

"Suddenly, we Israelis realized Israel wasn't the center of the world and that we weren't the kings of the world. It opened up a lot of possibilities."

Says Sidon: "For those of us who were born here it's natural to critique the government, to critique everything. We don't see any holy cows. We don't kiss the ground as if it were holy."