It was less profitable to be a mortgage banker last week (although profit margins are still very high). Higher rates slowed mortgage production, the strain on industry capacity lessened, and profit margins came in. One look at the spread between mortgage rates to the consumer and mortgage securities yields will tell you. The spread was 1.16% in January. It’s 0.88% now. Bond yields have risen, but rates to the consumer have not risen nearly as much.

It was more profitable to sell guns last week. The stock of gun maker Smith & Wesson is on a tear. You should have bought some. It was up 35% for the week.

All of Ben’s horses and all of Nancy’s men cannot get consumers to borrow and spend, reports Barron’s. And the economic hits just keep on coming. Evidence the jobs report due Friday: another 648,000 jobs gone; unemployment just shy of 8%; and a record number of job seekers on the dole. Like the sign in the Navy SEAL training camp says: “The only easy day was yesterday.”

Are we in a depression? The technical definition of depression is a decline in real GDP of 10% or more. For the record, real GDP declined by 0.5% in 3Q 2008 and by 6.2% (preliminary) in 4Q 2008. So we’ve experienced a 6.7% decline so far. If real GDP declines by 3.3% or more in 1Q 2009, you can call this a depression. It sure feels like one.

With a foot of snow in New York and the Dow below 7,000, March has roared in. And Treasuries aren’t providing much shelter from the storm. Treasuries lost 1.3% last month, reports Merrill Lynch. Year-to-date, the market is off 3.5%. The yield on the 10-year Treasury note is more than 1.00% above its lows, and the two-year T-note is nearly 0.50% above its December low of 0.65%.

Look out because the spread between mortgage and Treasury yields is creeping wider. Maybe you can blame some of it on the looming mortgage cramdown (That’s a crude way of describing Obama’s plan to provide relief to homeowners that can’t make their mortgage payments). Under the new plan, which has yet to make it in to the final budget, judges can order banks to back off from foreclosure if a family is late on its mortgage payments. That payment can be put off indefinitely or lessened to the point so that the mortgage holder can afford not to lose his home. So mortgage investors are not sure what they are buying.

Last week, once again, the political stage was set on fire by a brilliant orator, a man whose charisma even I have to admit can only be rivaled by a giant Brad Pitt made out of puppies. I’m speaking, of course, of Bobby Jindal. – Stephen Colbert

Thanks for your business and have a good week. — Tom Millon