When it comes to monetary policy, the Federal Reserve has just two jobs, and it's failing at both of them.

The Fed has a dual mandate to promote maximum employment and to keep prices stable. A slate of troubling new economic data released Thursday morning suggested that central bankers are accomplishing neither -- although, to be fair, the clown show in Congress is making their job much harder than it needs to be.

Weekly unemployment claims jumped to 360,000 last week from 328,000 a week earlier, the Labor Department reported. It's an eye-opening jump, although one week's number doesn't necessarily mean much. The four-week moving average of claims, which smooths out weekly fluctuations, edged up less dramatically.

The moving average of new unemployment claims is nearly back to pre-recession levels, but job growth has not kept up: The economy is still 2.6 million jobs shy of its pre-recession peak and 8.7 million jobs shy of "full employment," by one measure. Meanwhile, unemployment has ground down to 7.5 percent, still well above the 6.5 percent that the Fed says is necessary in order to start finally raising its key interest rate from zero.

And that's not the only bad job-market news on Thursday: The Philadelphia Fed said its monthly measure of factory output in the mid-Atlantic region dropped into negative territory in May, and that its employment index tumbled to its lowest level since September 2009.

So how about that price stability? Bad news there, too -- though there are many silver linings. The Bureau of Labor Statistics said its measure of consumer prices dropped 0.4 percent in April, the biggest monthly decline since December 2008, the depths of the Great Recession. Consumer prices have risen just 1.1 percent in the past year. Even after stripping out volatile food and energy prices, which economists like to do, prices are still up just 1.7 percent from a year ago, the lowest rate of what's called "core" inflation since mid-2011. (Story continues below chart.)

Now, lower prices are obviously good news for consumers. They help ease the sting of a lousy job market and stagnant wages. The trouble starts, though, when prices fall and keep on falling. Eventually you start to get what's known as deflation, and consumers and businesses put off buying stuff because they start to think prices are going to be lower in the future. This slowly drains the life out of an economy. See Japan for the past 20 years or so.

In its desire to avoid deflation, the Fed has an inflation target of sorts of 2 percent annual growth in core prices. The Fed is failing on that count, too, both by the measure of the consumer price index and by the Fed's preferred measure, the price deflator for core personal spending, which has grown by just 1.1 percent in the past year.

This is why the Fed is still desperately pumping cash into the economy, in the form of rock-bottom interest rates and the extraordinary bond-buying program known as "quantitative easing."

It's a risky approach, and yet it may not be enough to help the economy. Fed Chairman Ben Bernanke has openly begged Congress to stop stepping on the economy's tail with its austerity obsession, which has possibly cost the economy more than 2 million jobs. But Congress is still not listening -- and given the ongoing scandal eruption in Washington, the odds of the Fed getting any help are dwindling.

Attorney General Eric Holder wants to clear up something he said months ago: We only thought he said that some U.S. banks are too big to jail. What he meant was the exact opposite of that, he would like us to know.

Holder was testifying at a super-fun House Judiciary Committee hearing on Wednesday about the Justice Department's many ongoing nightmares, from spying on the Associated Press to the Internal Revenue Service hassling the Tea Party. During the hearing, Holder was asked about comments he made at a Senate hearing in March about big banks.

Back then, Holder said: "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large."

To a layperson, that certainly sounds like Holder was publicly confirming what others in his Justice Department had already admitted, to The New York Times and to Frontline documentarians: Charging big banks with crimes might blow up the economy real good-like, so it dare not be done.

On Wednesday, Holder backtracked furiously:

Let me make something real clear right away. I made a statement I guess in a Senate hearing that I think has been misconstrued. I said it was difficult at times to bring cases against large financial institutions because [of] the potential consequences that they would have on the financial system. But let me make it very clear that there is no bank, there's no institution, there's no individual who cannot be investigated and prosecuted by the United States Department of Justice.

And in case that was not clear, Holder added: "Let me be very, very, very clear. Banks are not too big to jail. If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought."

All righty, then. But the record is also very, very, very clear that not a single bank has been charged with any crime arising from the financial crisis. And not a single big bank has been charged with any crime involving money-laundering, though some big banks have copped to letting drug dealers and terrorists move cash through their branches. And only one bank has been charged with a crime so far in the still-unfolding Libor scandal -- UBS's Japanese subsidiary last December pleaded guilty to one charge of fraud, the first such charges against a bank since 1989.

There is no doubt that the Justice Department can prosecute banks and bankers. In fact, Congress wrote laws giving it just that power. So far, however, there is no evidence that the agency will ever actually use that power.

Markets can make people do bad things.

That's the disturbing -- but sadly not all that shocking -- conclusion of a recent experiment by two German economists, who found that people were more willing to let laboratory mice be killed in exchange for small sums of money if they were involved in financial markets where the mice's lives were bought and sold. The more people in the market, the cheaper the lives of the mice were. Markets eroded the morals of the people involved.

The study helps explain how people who might ordinarily be horrified by labor conditions in Bangladesh or environmental devastation in China can end up supporting those things without thinking about it. It's much easier for us to buy that cheap T-shirt made with sweatshop labor if financial markets shield us from the ugly reality of how it got made, or at least help us pass off responsibility for those things onto somebody else in the market. It helps explain how Wall Street traders can ignore the potentially devastating consequences of pumping dangerous bubbles higher.

In the study, by Armin Falk of the University of Bonn and Nora Szech of the University of Bamberg, one group of people was given a simple, stark choice: They would get 10 euros if they agreed to let a mouse be killed. Nearly 46 percent of the people in that group chose the 10 euros, consigning their mice to death. You might call this the "control group," or "mouse murderers."

Then, the experimenters put several more people in trading markets, where rights to trade the lives of the mice were bought and sold. In a simple market, 72 percent of the people involved were willing to trade the lives of mice for money, usually for much less than 10 euros.

In a more complex market, involving more traders, roughly 76 percent killed mice for cash, at even lower prices.

The study used mice known as "surplus" mice, which are routinely killed because they aren't useful for other scientific experiments. (Which is a horrible thing to learn all by itself.) The researchers say that all of the mice in the experiment were going to die anyway, and that the experiment saved many. Those mice that made it through the study without being killed lived out the rest of their natural lives in comfort, with medical care. The rest were killed humanely. There is no word on how everybody slept at night after the experiment was over.

Markets are not inherently evil. They can do a lot of good, as the German researchers allow. But they are not infallible. The study comes at the end of a long stretch of decades in which "free markets" have been elevated to near-sacred status and have infiltrated our lives, not always in good ways. Harvard economist Michael Sandel has warned that America risks becoming a "market society," a place without a soul.

Formerly public institutions have been privatized, including the warehousing of human beings in prisons, as The Huffington Post's Chris Kirkham has documented extensively. People get the names of casinos and porn sites tattooed on their faces. Pension plans have been replaced by market-based 401(k)s, which gradually eat away at retirement security. Some would like to replace social programs like Medicare and Social Security with market-based accounts. Satisfying the god of the free market has led to widening income inequality, with soaring stocks and stagnant wages.

The devastating collapses of the dot-com and housing bubbles in recent years have finally led us to start questioning the value of unfettered markets. This study suggests there is good reason to put limits on just how far we let markets go.

"We as a society have to think about where markets are appropriate," the researchers write, "and where they are not."

Correction: An earlier version of this story incorrectly identified one of the researchers as "Nora Szechone." The correct name is Nora Szech.

You have no idea just how bonkers high-frequency trading is making the stock market until you actually see it in action.

A terrifying new video by the research firm Nanex offers just such an opportunity: It shows one half-second of trading in just one stock, boring old Johnson & Johnson, on May 2. The video slows down the trades so that the milliseconds -- thousandths of a second -- tick slowly by, and so that human eyes can comprehend what's happening.

What you see is trading gone haywire, hopelessly beyond the control of any regulators that might want to make sure all of these trades are legitimate. This flood of trading confuses even other machines, creating mismatches in orders that high-speed traders can exploit, millisecond by millisecond.

"These guys are not stealing dollars, they're stealing pennies," says Nanex founder Eric Hunsader, who presented the video at a recent Wired conference. "It's like paper cuts instead of first-degree murder."

Nanex is the same firm that produced a viral animated GIF last year showing the rise of high-frequency trading robots over the years. This video offers the first clear look at what those robots are doing every day, all day, now that they control more than half of all market volume.

Inside of the one half-second of trading represented by the video, more than 1,200 orders and 215 actual trades occur, Hunsader says. (The colored boxes in the video represent exchanges, and the dots that go flying represent individual orders.)

And this sort of thing happens 100,000 times a day, Hunsader estimates.

Defenders of high-speed trading say it provides "liquidity" to the market, making orders flow more smoothly, which lowers trading costs and makes us all richer. That's debatable, particularly when the research that supposedly backs up these arguments is financed by high-frequency trading firms. And that liquidity can occasionally disappear all at once when things go wrong, leading to scary market glitches like the "Twitter Flash Crash" of earlier this month and the big Flash Crash that happened three years ago.

Regulators are desperately trying to keep up. The European Union last year approved a new rule mandating that all trades must exist for at least a half-second, in order to try to minimize the kind of quote-stuffing that frightens and confuses markets. It turns out that half-second is an eternity.

The Securities and Exchange Commission last year employed a high-frequency trading firm, Tradeworx, to help it keep an eye on high-speed trading, in a project it calls "Midas." So far the only ones turning things into gold are the high-speed traders.

Editor's note: The following editorial was written by Harvard professor and economist Niall Ferguson and was originally published in the Harvard Crimson. It is presented here in partnership with the newspaper. As HuffPost's Mark Gangloff noted, this apology is generating a good deal of its own controversy.

Last week I said something stupid about John Maynard Keynes. Asked to comment on Keynes’ famous observation “In the long run we are all dead,” I suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay. This was doubly stupid. First, it is obvious that people who do not have children also care about future generations. Second, I had forgotten that Keynes’ wife Lydia miscarried.

I was duly attacked for my remarks and offered an immediate and unqualified apology. But this did not suffice for some critics, who insisted that I was guilty not just of stupidity but also of homophobia. I have no doubt that at least some students were influenced by these allegations. Nobody would want to study with a bigot. I therefore owe it to students—former and prospective—to make it unambiguously clear that I am no such thing.

To be accused of prejudice is one of the occupational hazards of public life nowadays. There are a remarkable number of people who appear to make a living from pouncing on any utterance that can be construed as evidence of bigotry. Only last year, though not for the first time, I found myself being accused of racism for venturing to criticize President Obama. This came as a surprise to my wife, who was born in Somalia.

The charge of homophobia is equally easy to refute. If I really were a “gay-basher”, as some headline writers so crassly suggested, why would I have asked Andrew Sullivan, of all people, to be the godfather of one of my sons, or to give one of the readings at my wedding?

Throughout my career as a historian, I have regularly written and spoken about Keynes, who had one of the most brilliant minds of the twentieth century. That, of course, is the most important thing about him. You may disagree with his argument that, in a depressed economy, the government should borrow and spend money to stimulate aggregate demand. But you cannot ignore it.

Not for one moment did I mean to suggest that Keynesian economics as a body of thought was simply a function of Keynes’ sexuality. But nor can it be true—as some of my critics apparently believe—that his sexuality is totally irrelevant to our historical understanding of the man. My very first book dealt with the German hyperinflation of 1923, a historical calamity in which Keynes played a minor but important role. In that particular context, Keynes’ sexual orientation did have historical significance. The strong attraction he felt for the German banker Carl Melchior undoubtedly played a part in shaping Keynes’ views on the Treaty of Versailles and its aftermath.

The historian, unlike the economist, is concerned with biography as well as with statistics. Keynes’ first biographer, Roy Harrod, drew a veil over Keynes’ complex private life. But the author of the more recent and definitive three-volume life, Robert Skidelsky, felt no such inhibition. Anyone who reads that great work will find the question of Keynes’ homosexuality treated sensitively and intelligently and related, where appropriate, to his work. Keynes’ fellow members of the Bloomsbury Group would have approved, had they lived to read Skidelsky’s book, for they had no doubt at all that sexual orientation had a significance beyond the narrow confines of the bedroom, and that intellectual life and emotional life were intertwined.

As a historian, I have often had to contend with the question of how far to take the Bloomsbury approach. Keynes is very far from the only homosexual or bisexual I have written about. In The Pity of War, for example, I discussed the case of T.E. Lawrence, whose real or imagined rape by his Turkish captors was central to his experience of World War I. In The House of Rothschild, I identified at least three members of that illustrious financial dynasty as gay. In Empire, I sketched the lives of both repressed and unrepressed homosexuals who played important roles in the Victorian British Empire.

Yet no one who reads these books could seriously accuse me of harboring a prejudice against gay men (or women). It would be as absurd to accuse me of anti-Semitism for alluding to the fact that the Rothschilds or Warburgs were Jews.

In The War of the World, I sought to explain how warped, pseudo-scientific racial and “eugenic” theories provided a justification for some of the most horrific acts of organized violence in all human history. I could not have been more explicit in condemning such theories. You will find a similar condemnation in Civilization: The West and the Rest. Incidentally, one of the heroes of that book is Frederick the Great of Prussia, who was almost certainly gay.

There is still, regrettably, a great deal of prejudice in the world, racial as well as sexual. There are two strategies we may adopt. One is repression—the old Victorian practice of simply not talking about such things. The other is education. In my writing and teaching, I have labored long and hard to expose precisely what was wrong about the theories that condemned homosexuals, Jews and others to discrimination and death. I have also tried to explain what made those theories so lethally appealing.

The War of the World concludes: “We shall avoid another century of conflict only if we understand the forces that caused the last one—the dark forces that conjure up ethnic conflict and imperial rivalry out of economic crisis, and in doing so negate our common humanity.”

I doubt very much that any of my vituperative online critics have made a comparable effort to understand the nature and dire consequences of prejudice. For the self-appointed inquisitors of internet, it is always easier to accuse than seriously to inquire.

In the long run we are all indeed dead, at least as individuals. Perhaps Keynes was lucky to pre-decease the bloggers because, for all his brilliance, was also prone to moments of what we would now call political incorrectness. In his Economic Consequences of the Peace, for example, he wrote: “Unless her great neighbours are prosperous and orderly, Poland is an economic impossibility with no industry but Jew-baiting.” Even at the time, that was an outrageous thing to say about a country that had suffered grave hardships since its partition in the eighteenth century. But does anyone today seriously argue that we should not read Keynes because he was a Polonophobe?

Ironically, Keynes was even more averse to Americans than to Poles. As he told a friend in 1941: “I always regard a visit [to the US] as in the nature of a serious illness to be followed by convalescence.” To his eyes, Washington was dominated by lawyers, all speaking incomprehensible legalese—or, as Keynes put it, “Cherokee”.

Shock, horror: Even the mighty Keynes occasionally said stupid things. Most professors do. And—let's face it—so do most students.

What the self-appointed speech police of the blogosphere forget is that to err occasionally is an integral part of the learning process. And one of the things I learnt from my stupidity last week is that those who seek to demonize error, rather than forgive it, are among the most insidious enemies of academic freedom.

Niall Ferguson is the Laurence A. Tisch Professor of History at Harvard.

If you're angry that Enron's ex-CEO might get out of jail early, keep this in mind: At least he went to jail.

The decade-old Enron scandal returned to the headlines on Wednesday with the news that federal prosecutors and former Enron CEO Jeffrey Skilling had struck a deal that could let him out of prison as early as 2017, instead of 2028. It could be seen as yet another craven move by a weak-willed Justice Department, letting one of history's most corrupt corporate leaders walk in order to end years of legal wrangling. But it is also a reminder that, once upon a time, financial misdeeds had real consequences.

Skilling was convicted and sent to prison in 2006 on several counts, including charges that he had lied to investors and regulators about the financial viability of the once high-flying energy company Enron. The deal with prosecutors means Skilling could still spend 11 years in prison, more than any other Enron executive (founder Kenneth Lay died in 2006, just before his sentencing -- OR DID HE?)

The Enron conspirators were quickly charged, convicted and sent to prison for years for their crimes. So were the perpetrators of other financial frauds of the era, including WorldCom's Bernie Ebbers, Tyco's Dennis Kozlowski and many other former titans of industry. Congress moved quickly to enact the Sarbanes-Oxley Act of 2002 to prevent future accounting scandals. The former Big Five accounting firm Arthur Andersen was charged, tried and convicted of a crime, resulting in its destruction as a going concern.

The memory of Arthur Andersen is often cited as one reason why prosecutors have been afraid to charge banks with any crimes in connection with the financial crisis or the Libor market-manipulation scandal: Prosecutors don't want to cost innocent people their jobs by destroying an entire company over the misdeeds of a few. And in the case of the too-big-to-fail banks, the innocent victims of a criminal charge could include entire economies, frets Attorney General Eric Holder.

So instead, banks walk, and so do bankers. No one has been convicted of a crime arising from the financial crisis, and no one likely will, as the infuriating Frontline documentary "The Untouchables" showed recently. Bankers involved in crafting and selling toxic subprime mortgage securities have moved on to new lucrative jobs. A few traders have been charged with crimes in the Libor scandal, but top executives will almost certainly dodge any responsibility.

Meanwhile, in contrast to Sarbanes-Oxley, the Dodd-Frank financial reform law has been lobbied into submission in the years since the financial crisis. Less than half of its rules have been implemented. While Enron and other lawbreaking companies were laid waste after their scandals -- and these were some very big companies, recall -- the banks go on making record profits, helped along by the knowledge that the government will never let them fail. The biggest U.S. bank, JPMorgan Chase, has even been accused by the Federal Energy Regulatory Commission of engaging in Enron-like energy market manipulation, a charge the bank denies.

The frauds of a decade ago were arguably easier to spot and explain to a jury than the frauds of the financial crisis or Libor. Many have argued that bankers committed no crimes at all ahead of the crisis, or in the Libor scandal. The regulatory solutions were probably simpler, too.

Still, the stark contrast between outcomes in the two eras helps explain why so many people are still so angry about the financial crisis and its repercussions. We may also look back to this contrast when we go looking for the causes of the next round of financial scandals.

You would think that a Harvard historian would know about the First Law of Holes: When in a hole, stop digging.

But Harvard historian Niall Ferguson dug his own hole of trouble a bit deeper, in "An Open Letter To The Harvard Community" posted at the Harvard Crimson's website on Tuesday. In the letter, Ferguson apologizes profusely for recent dumb statements he made about the legendary economist John Maynard Keynes. In the process, Ferguson makes several more dumb statements.

In case you missed it, Ferguson last week declared that Keynes' homosexuality had left him childless, making Keynes care nothing about the future and leading him to suggest that governments should spend their way out of economic downturns, which is why he is history's greatest monster. Suck it, logic! At last conservatives had a Unified Theory Of Gay to explain all that has gone wrong with the world for the past 80 years or so.

Of course, most oxygen-breathing creatures immediately recoiled at the 100 or so varieties of stupid in Ferguson's statement and reacted with fury and scorn. Like Ron Burgundy after he jumped into the Kodiak bear pit to save Veronica Corningstone, Ferguson immediately regretted his decision. In a statement on his website on Saturday, he offered an "Unqualified Apology," admitting his comments were "doubly stupid" -- not only do childless people care about the future, but Keynes's wife had suffered a miscarriage, he pointed out. I would add that gay people can also have children, which makes Ferguson's comments at least trebly stupid. But anyway, Ferguson's apology was indeed appropriately unqualified. "It is simply false to suggest, as I did, that his approach to economic policy was inspired by any aspect of his personal life," Ferguson wrote.

But he just couldn't shut up about it. He seems to have been baited into commenting further after Berkeley economist Brad DeLong and others noted that Ferguson had previously commented on Keynes' sexuality, back in 1995. Ferguson's "Open Letter" now addresses those claims. While purporting to be an apology, it is not unqualified at all. Instead, it turns into an exercise in peevishness and self-defensiveness. And it turns out that Ferguson thinks Keynes's personal life does have bearing on his economics, after all. (Emphasis in the quotes below is mine.)

Ferguson's first line of defense is the old standby, "some of my best friends are gay:"

If I really were a “gay-basher”, as some headline writers so crassly suggested, why would I have asked Andrew Sullivan, of all people, to be the godfather of one of my sons, or to give one of the readings at my wedding?

See, Ferguson let a known gay, "of all people," be around his kids and attend his non-gay wedding. That is just how down he is, you guys.

As for Ferguson's statement in 1995, that Keynes had opposed the Treaty of Versailles purely because he had a big gay crush on a German -- well, he stands by that one:

My very first book dealt with the German hyperinflation of 1923, a historical calamity in which Keynes played a minor but important role. In that particular context, Keynes’ sexual orientation did have historical significance. The strong attraction he felt for the German banker Carl Melchior undoubtedly played a part in shaping Keynes’ views on the Treaty of Versailles and its aftermath.

It could not be possible that Keynes was smart enough to see that the Treaty of Versailles would wreck Germany economically, facilitating the rise of the Nazis; only lust could have driven him, according to Ferguson's analysis.

And it turns out that Ferguson is not just deeply concerned with the sexual preferences of Keynes. Ferguson is concerned with the sexuality of many, many figures in history:

Keynes is very far from the only homosexual or bisexual I have written about. In The Pity of War, for example, I discussed the case of T.E. Lawrence, whose real or imagined rape by his Turkish captors was central to his experience of World War I. In The House of Rothschild, I identified at least three members of that illustrious financial dynasty as gay. In Empire, I sketched the lives of both repressed and unrepressed homosexuals who played important roles in the Victorian British Empire.

Like some people eat potato chips, Ferguson spots gays in history. It's just his thing. In fact, he can't resist pointing out one more: "Frederick the Great of Prussia, who was almost certainly gay." He could do this all day, people. From love.

In case these defenses aren't strong enough, Ferguson suggests Keynes was a bigot, too, pointing out that Keynes said a couple of mildly mean things about Poland and the United States.

Shock, horror: Even the mighty Keynes occasionally said stupid things. Most professors do. And—let's face it—so do most students.

See, to paraphrase Keynes, in the long run, you're all a bunch of idiots, so don't go pointing fingers at Niall Ferguson. He is, after all, the real victim here:

What the self-appointed speech police of the blogosphere forget is that to err occasionally is an integral part of the learning process. And one of the things I learnt from my stupidity last week is that those who seek to demonize error, rather than forgive it, are among the most insidious enemies of academic freedom.

Niall Ferguson hopes you're all ashamed of yourselves.

You might not be aware of this, but the stock market is still smashing records every day. And the reason you might not be aware of it is that it has little actual meaning in your life.

The Dow Jones Industrial Average on Tuesday closed above 15,000 for the first time in its history, at 15,056.20. The broader Standard & Poor's 500 stock index set its own new record at 1625.96.

And yet the resounding cry you hear across the land in response to this epic achievement is, "Who cares?"

"Usually, around a notable market event like Dow 15,000, the punditry is falling over itself trying to be heard," writes my former colleague Paul Vigna at the Wall Street Journal's spanking-new MoneyBeat blog. "Instead, all we are hearing over here at MoneyBeat is crickets."

These indices first crossed into record territory back in March. The Dow went first, followed by the broader S&P 500. After a brief swoon in April, both indices have recently gotten back to setting record highs pretty much every day. The records didn't matter two months ago, and they still don't matter. (Story continues after graphic.)

For one thing, once you adjust for inflation, neither the Dow nor the S&P 500 have reached their records from early 2000. Depending on which inflation measure you use, the Dow's inflation-adjusted high is more than 16,000, and the S&P's inflation-adjusted high is more than 2,000.

Using the consumer price index, we're 7.6 percent away from the Dow's record inflation-adjusted high and nearly 30 percent away from the S&P 500's high, according to Will Geisdorf of the research firm Ned Davis Research.

As for the Dow, it is a bizarre anachronism that tracks only 30 companies. Its components are weighted by price, making it even more useless. The broader S&P 500 is a better measure of the stock market, but it is still a poor reflection of the economy.

That is because, even as stock prices and corporate profits have soared to new records, "human beings" have been left behind. The unemployment rate, at 7.5 percent, is still well above its pre-recession levels. Wages have stagnated, as you can see in the giant graphic above.

Much of the market's gains in the past few years have been due to the Federal Reserve making money cheap and keeping interest rates low, forcing investors into riskier assets like stocks.

Meanwhile, investors are still suffering from post-traumatic stress following two massive bubbles and bursts -- first in stocks, then in housing, in less than two decades. They can be forgiven -- nay, encouraged -- for being slow to break out the party hats and "Dow 15,000" goggles.

There's a risk of being too cynical and dour about the market. New records are far, far preferable to new lows. Haters have hated on this rally ever since it began back in early 2009, and many of them have missed out on big gains as a result. Still, under the circumstances, with so few people actually enjoying the spoils, the sober response makes sense.

If it wasn't clear before, it's clear now: Employers just aren't hiring.

The Bureau of Labor Statistics on Tuesday released its latest Job Openings And Labor Turnover Summary (JOLTS), a less-famous read on the job market than Friday's jobs report. The data are a month older than the jobs report, for one thing, and don't include big, important numbers like the unemployment rate. But they still offer a helpful snapshot of the job market, tracking the millions of people who quit, get hired or get fired every month. Unfortunately, that snapshot is not too pretty.

On the upside, there were 3.8 million job openings in the U.S. in March, according to the data. On the downside, that is exactly the same number of job openings available a year ago, and below the 4.7 million openings in March 2007. And there are nearly 12 million unemployed people looking to fill those jobs.

In another ominous sign, people quit their jobs at a slower rate in March than in February. And about 4.3 million people were hired in March, down from 4.45 million in February and 4.4 million in March 2012. Back in March 2007, 5.35 million people got hired. In other words, hiring is going nowhere fast.

New hires made up just 3.2 percent of the total number of employed people in March, down from 3.3 percent a month earlier and matching the same percentage hired in March 2011. And 2010. In the chart above, you can clearly see the stagnation in hiring that has persisted since the Great Recession ended (recessions are marked by gray bands).

I recently noted that the level of new weekly claims for unemployment benefits has fallen nearly back to pre-recession levels, but unemployment is nowhere close to getting back to normal. The current level of claims is typically associated with a level of unemployment about 4 million workers lower than it currently is, or an unemployment rate of about 5 percent, instead of 7.5 percent.

That suggests that employers aren't firing people any more. But, they're not hiring people, either, according to Tuesday's JOLTS data.

"There are no positive trends here for the job picture," independent economist Robert Brusca wrote in a note.

What accounts for the reluctance to hire? Simply, employers still see demand as too weak to justify ramping up hiring. This actually isn't all that surprising in the aftermath of a financial crisis and recession created by a housing bubble. Consumers have been too busy picking through the wreckage of their finances to spend a lot of money. And the government sector is not helping by slashing its own payrolls in a self-destructive frenzy of austerity, possibly robbing the economy of 2.2 million workers, according to a recent Brookings Institution study.

Would it be too embarrassing to rush out a second edition of a new book before the first edition has even hit the shelves?

That is something Glenn Hubbard, Columbia economist and a former adviser to President George W. Bush and Mitt Romney, might want to consider. His new book Balance, due for release on May 21, approvingly cites the recently discredited research of Harvard economists Carmen Reinhart and Kenneth Rogoff in its opening argument, on page 5.

Hubbard and co-author Tim Kane of the Hudson Institute, a conservative think tank, don't just repeat Reinhart and Rogoff's assertion that economic growth suffers when government debt crosses 90 percent of gross domestic product. They take that claim a step further, fitting it into their broad thesis that America is DOOMED if it can't get government spending under control. A 90 percent debt ratio is associated not only with slightly slower growth, they suggest, but also with just maybe the very collapse of America:

Recent research by Harvard economists Carmen Reinhart and Kenneth Rogoff suggests that countries with a total debt to gross domestic product (GDP) ratio that exceeds 90 percent face a tipping point of decline. (Emphasis added.)

Hubbard and Kane declare this "a consensus" of economists. Except it really hasn't been, not before the revelation that Reinhart and Rogoff's research was built on errors and omissions, and certainly not now.

Even beyond Reinhart and Rogoff, there are problems with Balance, an occasionally fascinating and always affable study of the declines of Great Powers of the past, from Rome to the Ming Dynasty to the state of California. Hubbard and Kane argue that a common theme in these stories is the stagnation of political institutions -- causing economies, and then military might, to rot.

In America's case, they suggest, politicians are afraid of making tough decisions to deal with government spending, namely on Social Security, Medicare and Medicaid. That should be sweet music to the ears of Alan Simpson and Erskine Bowles, who perpetually roam the countryside like Diogenes, in search of a "Grand Bargain" on the deficit that mainly involves gutting the welfare state.

Hubbard argues that the nation drifted onto the path of fiscal doom in the 1970s, with the rise of Medicare and Medicaid. He brushes off or ignores other factors that have contributed to budget deficits and rising debt levels since then:

"What changed?" he asks. "Entitlement spending."

Hubbard produces a chart showing the U.S. government's debt-to-GDP ratio is indeed higher today than in 1970. But rather than a steady rise, the chart shows two big spikes since the 1970s. The first occurred in the 1980s and early 1990s, under the presidencies of Ronald Reagan and George H.W. Bush, partially the result of tax cuts and defense spending. The second began in the presidency of George W. Bush, and is capped by the terrifying spike coinciding with the financial crisis and Great Recession.

Among the most glaring omissions in Hubbard's analysis of our fiscal state are two contributing factors in which he personally had a hand:

The Bush tax cuts of 2001 and 2003, which Hubbard helped design as Bush's first chairman of the Council of Economic Advisers, are not mentioned in the book as a contributor to deficits. These blew a $1.8 trillion hole in the budget. Hubbard has already publicly stated that he didn't think the tax cuts should be made permanent. Mentioning that fact again in his book would have been a low-risk way to help build his case for bipartisan action. He could have set an example with the ceremonial sacrifice of a sacred cow.

The book also fails to mention the budget-wrecking costs of the crisis and recession, both in terms of increased spending and lower economic growth. Hubbard helped enable the crisis, in part, by writing soothing research about the wonders of credit derivatives -- while he was getting paid by the financial-services industry, the reminder of which made him entertainingly furious in the documentary "Inside Job."

Hubbard also does his case no favors by reducing the Global War On Terror and the wars in Afghanistan and Iraq to a parenthetical aside:

The U.S. debt level is alarming today because the pattern of ballooning budget deficits is occurring during peacetime (although two wars are winding down), an unprecedented departure from historical norms.

If War Is Peace, then two (wars) equal peacetime, apparently. Those two (wars) have set U.S. finances back by roughly $2.2 trillion and could ultimately cost up to $6 trillion, according to a recent study by another Harvard professor, Linda Bilmes.

Another thing about Hubbard's "peacetime" statement: This is not actually unprecedented at all. And even Hubbard grudgingly admits that fact on the next page: A similarly huge spike in the government's debt-to-GDP ratio happened during the Great Depression, when America really was at peace.

Hubbard and Kane try to distance themselves from the cottage industry of doom-mongering that helps keep Glenn Beck in krugerrands. They sound notes of optimism, and they certainly don't see another Great Power on the horizon to challenge American hegemony. But they do warn that America is on the path to destruction, and observe that Rome's collapse was followed by a thousand years of darkness. Just saying!

Fortunately, their message of doom is mostly falling on deaf ears: Americans don't want to gut the welfare state, which is not quite as doomed as you might have heard.

Hubbard and Kane cheer the Supreme Court's decision in Citizens United, suggesting that more corporate spending in politics will end partisan bickering and bring about the Grand Bargain they seek. The complete failure of corporate America's Fix The Debt campaign and of Simpson and Bowles to get Americans interested in gutting the welfare state argues otherwise. Though Balance will offer some scholarly ammunition to the doomsayers, it is hard to imagine it being any more effective than Fix The Debt.

And that is indeed reason for optimism.

JPMorgan Chase's many regulatory troubles are once again hurting the bank's stock. At some point you have to ask, when do they hurt management, too?

Shares of JPMorgan, the biggest U.S. bank by assets, fell nearly 2 percent on Friday, even as other bank stocks and the broader market rose sharply on news of better-than-expected job growth. Who ever knows why stock traders do what they do, but they were at least partly reacting to a brutal New York Times report warning that the bank's recent era of bad feelings with its regulators was far from over.

The bank is in deeper trouble with the Federal Energy Regulatory Commission than we previously realized, according to the NYT. The newspaper got a copy of a private FERC report accusing JPMorgan of manipulating energy markets, Enron-like, in California and Michigan. It also accuses a legendary old hand at JPMorgan, Blythe Masters, head of global commodities at the bank, of lying under oath about her knowledge of the manipulation.

Masters, 44, is perhaps best known as the math wizard who came up with the idea of the credit default swap, the derivative that launched a thousand bailouts during the financial crisis.

The bank, in a statement to the NYT, denied that Masters lied to investigators and said it will "vigorously defend" itself against the charges.

But that's only the start of JPMorgan's problems. Its chief regulator, the Office of the Comptroller of the Currency, is considering taking action against the bank over its collection of credit-card debt and allegations that it failed to warn regulators of suspicions about Ponzi-scheme maestro Bernie Madoff, the NYT writes. The OCC has already cut its rating for the bank's management, to "needs improvement."

That rating cut came after the bank's "London Whale" debacle, in which a trader in the supposedly staid chief investment office managed to blow $6 billion on -- wait for it -- those same credit default swaps that Blythe Masters dreamed up 20 years ago.

The OCC rating cut also followed several incidents in which bank officials, including CEO Jamie Dimon, belittled and defied OCC officials, according to a recent Senate report on the London Whale scandal. (The bank has denied being mean to the OCC.)

And this is not to mention the bank's involvement in the Libor scandal, the collapse of the brokerage firm MF Global, lax money-laundering oversight and not-quite-up-to-snuff capital plan. To name just a few internal control issues.

So far all of this has seemed to have little effect on Dimon, who guided the bank through the financial crisis and has ever since been a loud, whiny voice on behalf of the banking sector, warning against the horrors of too much bank regulation. He has offered mea culpas and vowed to get the bank back on the straight and narrow. The bank's stock swooned briefly when the London Whale debacle flared up, but rebounded as the bank posted record profits.

But we could get a measure of shareholder patience, or the lack thereof, in just a few weeks. At the bank's next annual meeting, scheduled for May 21 in Tampa, shareholders will get a chance to vote on a proposal by several big pension funds on whether to strip from Dimon the chairmanship of the bank's board. Once such an idea seemed like a fairly certain "no" vote. Warren Buffett, for one, thinks Dimon should keep both jobs.

The longer these regulatory headaches last, and the more they hurt the stock price, the harder shareholders will think about making Dimon pay.

Under steady attack after their seminal research was found to be riddled with errors, Harvard economists Carmen Reinhart and Kenneth Rogoff are making a show of backing away from the austerity that their research encouraged.

They claim that their views on austerity have never changed, but the record tells a different story. They're still trying to have it both ways -- advocating for government belt-tightening while trying to avoid being seen as political.

For those readers who have spent the past month held prisoner by the Sleestaks from "The Land Of The Lost," let me catch you up: Reinhart and Rogoff wrote a paper back in January 2010, called "Growth In A Time Of Debt," which strongly suggested that government debt of more than 90 percent of gross domestic product caused bad things to happen to economies. In the years since its publication, that paper has been cited by many politicians, from Rep. Paul Ryan (R-Wis.) to George Osborne of the U.K., to justify harsh belt-tightening programs despite deep, widespread economic pain in the U.S., U.K. and Europe.

Two weeks ago, a University of Massachusetts-Amherst grad student, Thomas Herndon, destroyed their paper's credibility by pointing out that it was riddled with errors, including glaring data omissions and a goofy Excel spreadsheet mistake. Suddenly, the Paul Krugmans of the world, who have spent the past few years arguing fruitlessly against austerity, had the upper hand. The austerity movement had been discredited, along with the research from Reinhart and Rogoff that underpinned it.

Of course, Reinhart and Rogoff have repeatedly claimed that their work has not been discredited at all, that the bulk of the data still supports their thesis that debt is a really, really bad thing. And austerity advocates claim, accurately, that they weren't relying only on Reinhart and Rogoff in pushing for austerity. They still believe debt is a really, really bad thing, with or without Reinhart and Rogoff's numbers.

As part of the effort to rehabilitate their image, Reinhart and Rogoff have taken the additional step of trying to distance themselves from austerity altogether by claiming they were never advocates. In a Financial Times piece on Wednesday (subscription required) and in a New York Times op-ed last week, they argued that "austerity is not the only answer" to the oh-so-serious problem of government debt. In fact, a whole toolkit must be used -- a little austerity here, a little financial repression there, maybe a little inflation.

And with Wednesday's FT column, a surprising new tool appears in the kit: More government debt! Although not too much more, and only if it's used for the right things (emphasis added):

To be clear, no one should be arguing to stabilise debt, much less bring it down, until growth is more solidly entrenched....

Nevertheless, given current debt levels, enhanced stimulus should only be taken selectively and with due caution. A higher borrowing trajectory is warranted, given weak demand and low interest rates, where governments can identify high-return infrastructure projects. Borrowing to finance productive infrastructure raises long-run potential growth, ultimately pulling debt ratios lower. We have argued this consistently since the outset of the crisis.

But Reinhart and Rogoff never argued, in many of the high-profile columns they wrote following the release of their paper, that governments should take on more debt for infrastructure spending, or for anything else. In fact, they strongly suggested that governments had better hurry up and start cutting their debt, tout de suite, lest a new financial crisis hit.

This is what they wrote in the FT in January 2010, around the time of the publication of "Growth In A Time Of Debt" (emphasis mine):

Given the likelihood of continued weak consumption growth in the US and Europe, rapid withdrawal of stimulus could easily tilt the economy back into recession. Yet, the sooner politicians reconcile themselves to accepting adjustment, the lower the risks of truly paralysing debt problems down the road. Although most governments still enjoy strong access to financial markets at very low interest rates, market discipline can come without warning. Countries that have not laid the groundwork for adjustment will regret it.

Markets are already adjusting to the financial regulation that must follow in the wake of unprecedented taxpayer largesse. Soon they will also wake up to the fiscal tsunami that is following. Governments who have convinced themselves that they have done things so much better than their predecessors had better wake up first. This time is not different.

In July 2011, they wrote in Bloomberg:

Although we agree that governments must exercise caution in gradually reducing crisis-response spending, we think it would be folly to take comfort in today's low borrowing costs, much less to interpret them as an "all clear" signal for a further explosion of debt.

Rather than suggesting that it might be okay to increase crisis-response spending temporarily, they allow only that spending can be reduced "gradually." Which is austerity by another name. And they warn governments against "a further explosion of debt" to pay for infrastructure or stimulus or anything else, even when interest rates are at record lows and people are suffering.

In June 2012, Rogoff did call "debt-ceiling absolutists" naive in their belief that governments could suddenly just stop taking on debts necessary to pay for stuff like armies and roads. But he also scolded the "simplistic Keynesians" like Krugman who have called for more debt and more government spending: "[E]xpanding today's already large deficits is a risky proposition, not the cost-free strategy that simplistic Keynesians advocate."

A little later, in August 2012, Rogoff claimed that he had "always favoured investment in high-return infrastructure projects that significantly raise long-term growth." But as Slate's Matthew Yglesias noted at the time, this is a stingy sop -- okay, fine, we can spend some money, but only as long as we're sure we're spending it on "high-return" projects. Good luck figuring out what those are.

And for the past three years, as their paper was used as a political weapon by austerity advocates, Reinhart and Rogoff remained mute, never complaining that their paper was being misconstrued or taken too far. In fact, their columns and congressional consultations only fanned austerity's flames. Rogoff in 2011 told Congress that right now was "absolutely" the time to start cutting debt, according to Sen. Tom Coburn (R-Okla.).

Now that their thesis has suffered a potentially fatal blow, and the "fiscal tsunami" of soaring interest rates they predicted has still not materialized, Reinhart and Rogoff are re-writing history and appearing to get a little cozier with the idea of debt. Given the damage that austerity has already caused, any apparent abandonment of it is welcome. Still, there's no better proof that the intellectual case for austerity has always been empty.

European policy makers have rushed to the aid of their lifeless economy, cutting interest rates and promising that more help is on the way. Too bad they're only about a year too late.

The European Central Bank on Thursday morning cut its key policy interest rate by a quarter-percentage point, to a record-low 0.5 percent. ECB policy makers also cut the interest rate they charge banks to borrow money directly from them by a half-percentage point, to 1 percent.

At a press conference following the decision, ECB President Mario Draghi said the central bank was open to cutting the interest rate on European commercial bank deposits at the ECB into negative territory. That rate is currently at zero, and a negative rate could force banks to pull money out of the ECB and start moving it around the economy.

Markets reacted little to the rate cuts, which had been widely expected. They did get a little bit of a jolt from Draghi's suggestion of negative rates. The euro took a sudden tumble of about 0.7 percent against the U.S. dollar on the news.

Still, this was just talk -- the ECB did nothing unexpected. And it only acted after Europe's economic situation got way, way out of its control. Before Thursday, the ECB had not cut its target interest rate since last July. The previous cut came in December of 2011. In contrast, the U.S. Federal Reserve has not only cut its own target interest rate to zero, but has embarked on a series of extraordinary rescue measures that involve buying up trillions of dollars in bonds.

The ECB's monetary policy has been "excessively tight," Michael Darda, chief economist at MKM Partners wrote recently, and as a result, the amount of money circulating in Europe has been shrinking over the past two years -- the exact opposite of what one would want to happen to an economy in crisis.

That has contributed to Europe's grinding recession, now in its sixth quarter, with a possible ending still a distant hope. As the ECB met on Thursday, data provider Markit said its measure of eurozone factory output fell to a four-month low in April, with weakness spreading to the core eurozone country of Germany. The OECD slashed its outlook for Italian GDP this year.

European prices have gained just 1.2 percent in the past year, well below the ECB's 2 percent rate target. And eurozone unemployment has soared to a record 12.1 percent.

A large part of the blame for Europe's misery goes to the austerity fanatics who have pushed peripheral European countries to undergo self-destructive budget cuts in exchange for bailout money. But unlike the Fed, which has pushed back against fiscal insanity in Congress and the White House, the ECB has barely lifted a finger to help.

The Fed has caught a lot of grief for its easy-money policy. Europe is a perfect example of what the United States would be suffering right now if the Fed had listened to the critics.

Wednesday could be the day former CIA director David Petraeus joins the long, proud line of our nation's top defenders cashing in on their warrior bona fides for an Abrams tankload of cash.

Petraeus, if reports from Gawker and Bloomberg are correct, could soon go to work for the private equity firm Kohlberg Kravis & Roberts. He and KKR co-founder Henry Kravis are friends, according to Bloomberg, and "talk often."

Petraeus is one of the few former CIA directors and commanders of U.S. Central Command to be a household name, famous for his self-proclaimed ability to temporarily keep Iraq from completely going to hell all at once -- and for his splashy fall from grace involving sexytime with his biographer, Paula Broadwell.

For Petraeus, the upside of joining KKR is obvious: mad stupid loot. But the upside for KKR of taking Petraeus on board might seem less obvious, at first: How could Petraeus's military career have possibly prepared him for the private-equity game of buying and selling companies? You can't just command a corporate board to load up a company with debt in order to pay yourself a fat dividend, sadly.

The one huge thing Petraeus will give KKR is precious access. This man reached the very pinnacle of the defense industry, was once considered seriously as a presidential candidate, and is on speaking terms with legions of very important people, including current and former presidents of the United States. That's more influence than most humans can ever dream of having. And though Petraeus's personal indiscretions might have killed his political career, they won't hurt him with the boys in the boardroom, to whom an affair with a biographer sounds like two or three dreams come true at once.

Petraeus would be just one of many ex-generals and ex-CIA directors -- and ex-secretaries of defense -- to find lucrative jobs in finance or corporate America as soon as possible after they leave public service. This is not your typical, sad government-private sector revolving door, folks: This is a 10-foot-tall, gold-plated revolving door, crafted by Honeywell in black-site government laboratories to create a rift in the space-time continuum, from which metric tons of cash pour ceaselessly.

It is a temptation that has proven irresistible to the likes of:

• Frank Carlucci, defense secretary under Ronald Reagan, aka the Michael Jordan of Cashing In. He chaired one private-equity firm, the Carlyle Group, and co-founded another, the Frontier Group, while also serving on the boards of, or having some interest in, a long string of companies, including General Dynamics and Nortel Networks.
• James Woolsey, CIA director under Bill Clinton, who became an executive at Booz Allen Hamilton, a consulting firm partly owned by the Carlyle Group.
• William Perry, defense secretary under Bill Clinton, who became a managing director at San Francisco investment bank Hambrecht & Quist.
• Stanley McChrystal, former commander of U.S. forces in Afghanistan, who has had his own share of corporate directorships, founded his own consulting firm and is an adviser to an arms dealer with connections to the United Arab Emirates.
• Pretty much all of the U.S. Army Chiefs of Staff over the past 30 years, who have gone on to serve as directors, chairmen or CEOs of many companies, including defense contractors.

There is nothing illegal or necessarily wrong with any of this. We can't expect our public servants to live out the rest of their days as paupers. But it represents the cozy relationship between the government and corporate America at its most powerful, giving new meaning to Dwight Eisenhower's warning more than 50 years ago:

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex," he said. "The potential for the disastrous rise of misplaced power exists, and will persist."