Friday morning’s news of zero job growth in February, net of prior-month revisions, has taken low-fee mortgage rates slightly below 5.5 percent for the first time since last June, and that was the last time since 1950-something.

Flat employment in a single month is not a red-hot news item. However, the cumulative failure of payrolls to grow during a year of strong-on-the-surface GDP and profit growth has at last broken through the optimistic, rates-will-rise-any-minute consensus.

Friday morning’s news of zero job growth in February, net of prior-month revisions, has taken low-fee mortgage rates slightly below 5.5 percent for the first time since last June, and that was the last time since 1950-something.

Flat employment in a single month is not a red-hot news item. However, the cumulative failure of payrolls to grow during a year of strong-on-the-surface GDP and profit growth has at last broken through the optimistic, rates-will-rise-any-minute consensus.

Be careful, here: we have cumulative employment failure, but we do not have any sign of a deceleration in the economy. February reports from the purchasing managers’ association were slightly softer than January, but not trend-changers. The Fed’s monthly “beige book” is a highly subjective collection of bedtime stories by and for central bankers, but February’s showed no new weakness.

Mortgage rates could fall farther in another bout of tail-chasing by portfolio and pipeline hedgers, but those moments in the last three years have led to rapid reversals ending with rates higher than they were in the first place. If the economy does begin a deceleration… that’s a completely different matter, and long-term fixed-rate mortgages could easily break 5 percent. Lucrative, but scary.

I have no idea the probabilities of such a deceleration. I have agreed with the dwindling few who have believed that our post-bubble excess capacity will be a long-term problem, one not illuminated by any experience with the economic cycles of the last half-century. I have thought that only a lot of time, maybe the decade that the Bond Gods at PIMCO see ahead, would be required to work us through to more normal economic space; and that in the interval we would be vulnerable to financial accidents here and elsewhere.

In such a time, the most important single protective force, the most essential need of the nation, is good leadership. Great leadership, if we can find it.

Alan Greenspan has partly filled that void for a long time, but the Fed on Friday had very little maneuvering room. Greenspan will soon retire, and in the interim the Fed has been driven to a kind of hollow cheerleading, more than a year into telling us that everything will soon be all right when it transparently is not.

The Bush Administration’s prescription for all economic ills has been tax cuts and efforts to shrink government. The tax cuts turned out to be the right thing to do, but only because the economy sank by surprise. The Bushies have missed every opportunity to set a new standard for corporate and general business behavior and ethics; have refused to develop a sensible energy strategy; and taken every chance to deepen divisions in the politics of economics.

The Democrats’ solution to all economic problems: raise the taxes on all non-Democrats. They have no other plan.

The political wings are always divided when it comes to money, but the magnitude of American division relative to the size of the problem is today the widest I have seen or know of. The consequence is mass self-deception, in which the gap between wings is filled with unsustainable borrowing and unaffordable promises of future benefits to be paid to ourselves.

Of Bush and Kerry, the first to bet the ranch or the ketchup factory on a pitch to shared sacrifice, to group responsibility, to inclusion, to building trust in each other; to the need for ‘Boomers to work longer than they had planned; to look last to government, not first, save those with no other resource; to acknowledge limits to our wealth and power; to appeal to our reservoir of inventiveness and adaptability…

Wins. Big. As would we all.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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