The smart are scared. The others aren’t.

This week has been an unholy mix of totally busy and utterly unproductive. I’ve spent much of it burning through cell phone minutes as pals and acquaintances have been calling in semi-panics over economic stuff. On Saipan as well as the mainland, the middle- or entrenched- classes are still smug at best, and mildly angst-ridden at worst, but a few outliers with sharper insight are getting scared out of their wits when they take a hard look at the economic data.

Maybe I’ll open my own economic therapy hotline.

Over the past few weeks I’ve tried to bring some optimistic themes to my column, but when I recently referred to gloom and doom in the world economy, I was not implying that the gloomy doom isn’t justified. It is justified. And, yes, I’ve pointed out that Saipan holds some economic opportunities, but I also pointed out that the gig is null and void if Uncle Sam can’t afford to cut the checks any longer. And, yes, though Saipan’s economic backyard, Asia, is, in the long run, going to emerge as the world’s economic leader, it’s possible, maybe even very likely, that there are going to be years of painful economic turmoil between now and then.

I hate to be a Johnny-One-Note on this stuff, and I’d rather contemplate other things besides economics every week. Unless I thought this was a huge issue that will have a substantial impact on your life, I wouldn’t bother to address it so often.

Very keen minds over the years have used the terms “mass movements” and “public spectacles” to describe economic situations that have veered into disaster. There is a mass, social element to any economic context, and this is where I really get befuddled: Never before have I seen such a glaring disconnect between public perception of economics (which, again, is now either smug or mildly worried) and the perception that knowledgeable people have (which can be characterized as “totally freaked out.”)

Part of this mass neurosis of denial is the pathological penchant to use raw emotion instead of cold rationality when it comes to economics. Saipan has always done this; wishful thinking is what made La Fiesta into La Fiasco, and what turned a tourism economy into a food stamp economy. But America has joined that doomed outlook, and America, as I keep reminding you, is what increasingly funds Saipan’s action.

So, here or there, people can’t accept data as data, numbers as numbers, or trends as trends; no, if they hear something they don’t like hearing, they’ll deride it as mere “gloom and doom,” thus condemning the messenger and ignoring the message.

Why does this matter? It matters because of the way markets move. When markets are irrational (and, now, I believe that they are), they can get totally unhinged at some point when reality hits home. Which is to say, the slow, incremental, self-adjusting, and self-correcting nature of markets, and the economies built atop them, is gone, replaced with the potential flash points of panic.

Based on the numbers (numbers, I said; not feelings, not faith, not hope, not politics, not self-esteem, not goals, not wants, not wishful thinking, but just plain cold, hard, stark numbers) that are on my desk, the very capital structure that supports the U.S., and, by extension, the CNMI, appears totally, utterly, and maybe irredeemably distorted to the point of breakage. We’re in the “hockey stick” mode of near vertical growth in toxic credit and quasi-credit, and ditto for deficits. It’s out of control.

Saipan’s residents would be well-advised to think for themselves when it comes to economics in these weird times. There’s simply nowhere else to turn.

But lest you think I’m a lone crank, I’ll close with this quote: “What we face now could, in fact, be worse than the Great Depression.” That was written by Prof. Simon Johnson in the May 2009 issue of the Atlantic magazine; he’s a former chief economist with the International Monetary Fund.

E[I]d is a pilot, economist, and writer. He holds a degree in economics from UCLA and is a former U.S. naval officer. His column runs every Friday. Visit Ed at TropicalEd.com and SaipanBlog.com.[/I]