[Morgoth the Great]

Saruman was becoming dillusional in his folly. this is the simplest and i think the most acurate description. He simply didnt think that anything could withstand the power of Isengard, and his army was growing. He was making things, whereas Mordor was simply calling "reinforcments" as they are. Saruman had been delaying Sauron for quite a while, as he did know where the Shire was, yet refused to divolge to the Nazgul where it was. He was getting a great army, and the sheer power he now controlled made him dillusional.