Two years ago today, in a speech to local economists and businesspeople, Gov. Linda Lingle urged her audience not to be discouraged by the growing volume of frightening economic news from the Mainland and around the world.

A month earlier, Wall Street giant Bear Stearns had collapsed, an early casualty of the mushrooming global financial catastrophe. Locally, Aloha Airlines and ATA Airlines had shut down in early April, putting nearly 1,900 people out of work and eliminating 100,000 monthly air seats from the Mainland almost overnight.

The mood at the meeting, the annual conference of the Hawai'i Economic Association, was apprehensive. But Lingle was upbeat, not at all tentative in her assessment of the state's economic condition, which she described as "stable and healthy."

"People locally continue to hear these reports and commentaries about how bad the economy is and how it keeps getting worse," Lingle told the group. "But the fact is that many of these stories simply don't apply to Hawai'i."

Actually, the fact was that every one of those stories applied to Hawai'i. The warning signs were all there even as Lingle blamed "the media's tendency to highlight negative stories and repeat them" for the jitters spreading through the local business community in April 2008.

Before long, massive job losses, skyrocketing home foreclosures, surging bankruptcies and a free-fall in state tax collections had proven that Hawai'i wasn't immune to the worst economic crisis since the Depression.

If Lingle had stayed for the economics association's program that day at the Hilton Hawaiian Village, she would have found that none of the experts shared her optimism. While Lingle had based some of her remarks on previous forecasts that anticipated modest growth in 2008, those assessments were still colored by the afterglow of the spectacular 2007 numbers.

By the time of her speech, and with the Wall Street turmoil and Aloha Airlines shutdowns fresh in their minds, local economists had mostly given up using the "soft landing" to describe what was to come. An hour after Lingle's speech, economist Paul Brewbaker described the loss of air capacity this way: "We're talking about something that's 9/11-ish."

And even the unflappable state economist Pearl Imada Iboshi said: "It is a serious situation going forward."

The point of this trip in the way-back machine isn't to embarrass Lingle, but to point out how ill-prepared Hawai'i's leaders were to deal with the budgetary horrors that were to come.

It's still hard to understand why Lingle, one of the state's most intelligent and analytical executives, shrugged off the loss of 18 percent of the state's air capacity and didn't see that it would deeply wound the tourism industry. That, in turn, helped reduce tax collections by more than $1 billion from 2007 to 2009. (Two years later, the air capacity still hasn't fully returned.)

That lack of foresight has been costly. And Lingle wasn't alone in this. Even as she began across-the-board budget restrictions months later and held on to money appropriated in the budget, legislators were griping that the governor was being too stingy and union leaders carped about hiring freezes and spending cuts.

It's disheartening to think that maybe we could have gotten a jump on this thing two years ago and avoided the reactive, desperate approach that has led to closed schools and gutted state agencies.

If Lingle had summoned legislators, department heads and union leaders to the Capitol to review the sobering facts of the deteriorating economic situation in the spring of 2008, and sincerely asked for their help in developing an action plan, maybe Hawai'i could have ridden out the recession as a model of smart planning, collaboration and shared sacrifice.

Hawai'i's next governor should learn from this experience. As economic projections begin ticking up and confidence swells, the next governor would do well to consider the legacy of George Ariyoshi, who governed like a miser, hoarding pennies and clipping coupons.

Fiscally speaking, he always expected a downpour, even on the sunniest day. Over the past two years, we've seen what happens when you ignore those dark clouds.