“Sweep the Leg”

It was barely a week ago that the federal government estimated it would borrow $3.7 trillion this fiscal year due to all the Covid bailouts.

Then, only a few days later, the Treasury Department updated the estimate and announced they would in fact be borrowing $4.5 trillion this fiscal year.

That’s an increase of $800 billion in less than a week!

Not to be outdone, the Federal Reserve has printed more than $2.5 trillion in less than 50 days, expanding its own balance sheet by 62% since the start of the pandemic.

I’ve been really hammering this theme lately, but it’s critical to understand: there is no limit to the amount of money they’ll print, or to the amount of debt they’ll take on.

And this has serious implications for the dollar.

It would be foolish to expect that you can create trillions of dollars in a matter of weeks, and take on trillions of dollars in debt, without any consequences whatsoever.

I’ve already written this a number of times, but I’ll repeat it again: if printing money were the way to achieve prosperity, then Zimbabwe would already be the wealthiest country in the world.

Prosperity requires smart, talented, hardworking people efficiently producing valuable goods and services. You can’t just click a button and create that out of thin air.

But politicians don’t seem to understand this simple point.

It’s far easier for them to print money, go into debt, and bail everyone out. And when that approach doesn’t work, they resort to dismantling capitalism, brick-by-brick.

Housing authorities have ripped up centuries of contract law and told people that it’s OK to not pay their mortgages.

Politicians are attempting to pass laws to retroactively adjust insurance policies and force insurance companies to pay for pandemic-related damages that were NOT part of the contract.

Local governments have suspended property rights and forced homeowners to leave town at the point of a gun, while police agencies raid businesses to seize legally-acquired private property.

Regulators have destroyed any hint of safety and told banks to NOT report non-performing loans, all while asking depositors to keep their savings in the banking system.

There’s a never-ending list of dirty tricks that these people have used to beat the economic system to a pulp.

You can practically hear them say, “sweep the leg,” as they come up with creative new ways to wreck the economy and devalue the currency.

Look, there’s still a tremendous amount of uncertainty about how this pandemic will play out. Will they open the economy? Will anyone show up? How long will the recovery take? How many jobs and businesses will be lost for good?

There are so many unknowns.

But one thing that’s becoming completely obvious is that they don’t give a damn about the value of the currency, and they will keep printing incomprehensible amounts of money to bail everyone out.

Consider that the $2.5 trillion they printed since March is more money than they printed in the first 95 years of the Federal Reserve’s existence. That’s astonishing.

We can keep our fingers crossed and hope this won’t create devastating, long-term consequences.

But as a practical matter it makes sense to at least consider owning some real assets, including precious metals.

History tells us that whenever governments and central banks resort to such extraordinary measures, precious metals tend to be a safe haven asset.

Source

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Supreme Court Can Put a Stop to Rule Compelling Anti-Prostitution Speech From Anti-HIV/AIDS Groups

The U.S. Supreme Court may soon overturn a rule requiring groups that receive government grants for anti-HIV/AIDS work to publicly pledge opposition to prostitution.

Beginning in 2003, Congress said domestic and foreign nonprofits that get federal assistance to help “prevent, treat, or monitor HIV/AIDS” must have “a policy explicitly opposing prostitution and sex trafficking.” The rule was passed as part of the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act, which also stipulated that these groups would be ineligible for any new grants or programs created by the law if they “promote or advocate the legalization of prostitution or sex trafficking.”

Nobody is advocating in favor of making sex trafficking—that is, commercial sex that’s coerced or forced—legal. But prostitution between consenting adults is another matter. And from a public health perspective, criminalizing the latter makes no sense. Keeping consensual prostitution illegal only makes sex work more dangerous for everyone involved and makes practicing safe sex (and fighting sexually transmitted infections like HIV) more difficult.

Back in 2013, the Supreme Court said the pledge requirement was unconstitutional when applied to U.S. nonprofits because it violated these corporations’ First Amendment rights.

But what about foreign affiliates of U.S.-based groups—is the anti-prostitution pledge clause applied to them still a First Amendment violation? That’s what justices are now considering. On May 5, the Court heard oral arguments in United States Agency for International Development v. Alliance for Open Society International, Inc.

“After a little over an hour of argument by telephone, it seemed that the answer [to the First Amendment question] will probably still be yes,” writes Amy Howe at SCOTUSblog. But “the vote may be closer than it was seven years ago.”

Last time around, justices ruled 6-2 that making these groups take an anti-prostitution pledge as a condition of grant funding was unconstitutional (with Justices Clarence Thomas and Antonin Scalia dissenting). Justice Elena Kagan recused herself last time and will do so for the new case, too.

Arguing on behalf of the Alliance for Open Society International in Tuesday’s teleconference session, David Bowker told the Court that U.S. groups suffer reputational damage when foreign affiliates sharing their names and missions appear to support prostitution criminalization. Yet partnerships with these foreign affiliates are often a necessary condition of carrying out work abroad, Bowker said.

Chief Justice John Roberts agreed that “it’s undisputed that to be effective in many of the foreign countries involved here, you have to operate through a foreign entity.”

Howe has more details:

What kind of ties, Chief Justice John Roberts asked, would the government require to attribute the speech of the foreign entity to the domestic one? [Assistant to the U.S. Solicitor General Christopher] Michel responded that when two groups have opted to be separate legal entities, they will have separate legal rights. They have to take “the bitter with the sweet.”

Roberts did not seem entirely convinced. He pushed back, asking whether it is reasonable for the government to insist “on formal legal ties in this context,” particularly if an NGO needs to operate through a foreign entity to be effective overseas. Especially when the domestic and foreign NGOS have “the same logo, the same brand,” Roberts wondered “if it makes sense to think of foreign entity as another channel for domestic entity’s speech.”

Roberts pressed this point again later with Bowker, asking him whether the U.S.-based NGOs can control what their foreign affiliates say on the question of prostitution and sex trafficking.

Bowker responded that, “as a practical matter,” the U.S.-based NGOs can indeed “veto” speech by their foreign affiliates on these issues.

Justice Neil Gorsuch also seemed somewhat unconvinced by the government’s argument. It seems “to rely on legal separation,” said Gorsuch. “But why does the First Amendment care?”

Past Supreme Court cases “seem to suggest” justices “are less concerned with corporate formalities” regarding business structure and more with public perception, suggested Justice Sonia Sotormayor.

Meanwhile, Justice Ruth Bader Ginsburg expressed skepticism that the imposition on anti-HIV/AIDS groups made sense when there was not a similar requirement for other public health groups, like the World Health Organization (which is in favor of decriminalizing prostitution) and Justice Stephen Breyer suggested the same arguments against the pledge that applied in 2013 were valid in this case as well.

Justice Thomas, who dissented from the majority last time, “did not necessarily seem to see much difference between today’s case and that one” either, according to Howe.

And Justices Brett Kavanaugh and Samuel Alito expressed concern that striking down the anti-prostitution pledge would have ripple effects on other government rules. Kavanaugh’s specific hypothetical: “Suppose the U.S. government wants to fund foreign NGOs that support peace in the Middle East but only if the NGOs explicitly recognize Israel as a legitimate state. Are you saying the U.S. can’t impose that kind of speech restriction on foreign NGOs that are affiliated with U.S. organizations?”

Federal lawyer Michel encouraged a broad interpretation, suggesting that ruling in favor of the nonprofits here could somehow invalidate rules against foreign donations to election campaigns. But the anti-prostitution pledge, in this case, is “unique,” responded plaintiffs’ lawyer Bowker. Ruling it a First Amendment violation would be a “very narrow” decision, he told justices.

The Court is expected to issue a decision this summer. You can listen to Tuesday’s oral arguments here.

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Judge Orders Reopening of Gun Sales in Massachusetts

From Reuters (Nate Raymond), reports that U.S. District Judge Douglas Woodlock has held that the closing of gun stores (part of a broader closing of many businesses) was an “improper burden” on Second Amendment rights:

The judge said he would direct the state to allow firearm retailers to re-open by noon on Saturday under a series of restrictions meant to promote cleanliness and social distancing. A lawyer for the state indicated it may appeal.

The story is based on Judge Woodlock’s oral statement from the bench, but I expect there to be a written order shortly; I hope to blog about it then. Thanks to commenter Dr. Ed for the pointer.

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Rand Paul: “Reopen The Economy, No More Imaginary Money”

Rand Paul: “Reopen The Economy, No More Imaginary Money”

Authored by Steve Watson via Summit News,

Senator Rand Paul has called for the economy to be reopened, saying that it is the only solution for recovery.

Appearing on Fox News, a bearded Paul said that Americans need to be allowed to go back to work imminently or there will “continue to be economic calamity.”

“To people [who] ask me I remind them that we have no money,” Paul urged.

“We have no rainy day account. We have no savings account. The $3 trillion that we’ve already passed out is imaginary money.” The Senator said, referring to the already staggering national debt.

“It’s being borrowed basically from China. So, the irony is we got the virus from China, and now we are going to be more dependent by borrowing more money from China.” Paul stressed.

“The only thing that recovers our economy is opening the economy.” Paul asserted.

The Senator urged that Americans need to be released from “forcible home arrest” if any recovery is going to stand a chance.

It’s not a lack of money, it’s a lack of commerce. If you let people have commerce, if you let them trade, if you take them out from forcible home arrest, our economy will recover. But if you keep everybody under home arrest and say you cannot practice your business, you cannot sell your goods, there will continue to be economic calamity. … We don’t have any money.” Paul proclaimed.

Paul also slammed Democratic-run states for wanting to keep the economy shut down.

“All these blue state governors who don’t want to open their state, now they’re clamoring for federal money to bail them out because no state revenue is coming in. We don’t have any money.” he urged.

Elsewhere during the interview, the Senator speculated that Barack Obama criticized a GOP-led investigation into Hunter Biden because he was aware of “corruption problems” while in office.

“There’s been rumors for quite a while that people within the Obama administration knew about the corruption problems with Hunter Biden, that they warned the vice president, and maybe even the president about it.” Paul said.

“I think that there could be a smoking gun, that there’s actually a record of some of these complaints that were going on at the time,” he added.


Tyler Durden

Thu, 05/07/2020 – 13:50

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Citadel Moved Its Operations To A Makeshift Trading Floor At The Four Seasons In Palm Beach

Citadel Moved Its Operations To A Makeshift Trading Floor At The Four Seasons In Palm Beach

The next time you question why your order flow slowed down over the last couple of months, remember this story.

Once it became obvious that the pandemic was an issue the nation couldn’t ignore, Ken Griffin’s Citadel sprung into action.

All within the course of a week, the company had moved thousands of servers, dug trenches for fiber optic lines and rented rooms at the Four Seasons in Palm Beach to set up a makeshift trading floor, according to Bloomberg.  The company has “mostly” abandoned its Chicago and New York offices. 

The company was able to handle a 90% jump in electronic treasuries volume in March and traded 3.3 billion U.S. shares per day. In March, U.S. stock volume was more than 15.5 billion shares per day and Citadel’s monthly average was about 65% higher than its busiest day in 2019. 

Griffin said he was able to keep markets working due to Citadel’s “ample cash stockpile” that helped them move the operation to Florida. He also said that electronic trading made things possible and that the same continuity would not have happened in the open outcry powered markets of old. 

He continued: “It’s infinitely easier for us to manage our affairs as a market-making community in a world of distributed computing, the internet and electronic exchanges. At 100,000 feet, our customers’ experience was as close to flawless as you can get across markets. Giving people a fair and transparent price every day is our mission, and we accomplished that.”

Citadel is known for having deployed more automation than many other traders and market makers, a fact makes their competitive advantage “extra worrisome” to Wall Street. Of course, nobody would have imagined that they would be running “multiple trading floors” from a luxury five star hotel that also “boasts yoga classes, poolside cabanas and private surf lessons”. 

For now, even Griffin’s employees that didn’t make the move to Florida are mostly working at home.

“We’ll be looking to Governors Cuomo and Pritzker, health officials and the president for leadership as we frame our decision on when and how to bring people back to work in our large urban environments. Currently, the vast majority of our workforce is working remotely,” he said.

And it may never be more important for Griffin’s operation to be running smoothly: there are more than $50 trillion in global assets linked to the treasury market. Liquidity and ease of trading in the treasury market remain paramount, especially as the U.S. just sold a record $3 trillion in treasuries over the last quarter. 


Tyler Durden

Thu, 05/07/2020 – 13:35

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Supreme Court Can Put a Stop to Rule Compelling Anti-Prostitution Speech From Anti-HIV/AIDS Groups

The U.S. Supreme Court may soon overturn a rule requiring groups that receive government grants for anti-HIV/AIDS work to publicly pledge opposition to prostitution.

Beginning in 2003, Congress said domestic and foreign nonprofits that get federal assistance to help “prevent, treat, or monitor HIV/AIDS” must have “a policy explicitly opposing prostitution and sex trafficking.” The rule was passed as part of the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act, which also stipulated that these groups would be ineligible for any new grants or programs created by the law if they “promote or advocate the legalization of prostitution or sex trafficking.”

Nobody is advocating in favor of making sex trafficking—that is, commercial sex that’s coerced or forced—legal. But prostitution between consenting adults is another matter. And from a public health perspective, criminalizing the latter makes no sense. Keeping consensual prostitution illegal only makes sex work more dangerous for everyone involved and makes practicing safe sex (and fighting sexually transmitted infections like HIV) more difficult.

Back in 2013, the Supreme Court said the pledge requirement was unconstitutional when applied to U.S. nonprofits because it violated these corporations’ First Amendment rights.

But what about foreign affiliates of U.S.-based groups—is the anti-prostitution pledge clause applied to them still a First Amendment violation? That’s what justices are now considering. On May 5, the Court heard oral arguments in United States Agency for International Development v. Alliance for Open Society International, Inc.

“After a little over an hour of argument by telephone, it seemed that the answer [to the First Amendment question] will probably still be yes,” writes Amy Howe at SCOTUSblog. But “the vote may be closer than it was seven years ago.”

Last time around, justices ruled 6-2 that making these groups take an anti-prostitution pledge as a condition of grant funding was unconstitutional (with Justices Clarence Thomas and Antonin Scalia dissenting). Justice Elena Kagan recused herself last time and will do so for the new case, too.

Arguing on behalf of the Alliance for Open Society International in Tuesday’s teleconference session, David Bowker told the Court that U.S. groups suffer reputational damage when foreign affiliates sharing their names and missions appear to support prostitution criminalization. Yet partnerships with these foreign affiliates are often a necessary condition of carrying out work abroad, Bowker said.

Chief Justice John Roberts agreed that “it’s undisputed that to be effective in many of the foreign countries involved here, you have to operate through a foreign entity.”

Howe has more details:

What kind of ties, Chief Justice John Roberts asked, would the government require to attribute the speech of the foreign entity to the domestic one? [Assistant to the U.S. Solicitor General Christopher] Michel responded that when two groups have opted to be separate legal entities, they will have separate legal rights. They have to take “the bitter with the sweet.”

Roberts did not seem entirely convinced. He pushed back, asking whether it is reasonable for the government to insist “on formal legal ties in this context,” particularly if an NGO needs to operate through a foreign entity to be effective overseas. Especially when the domestic and foreign NGOS have “the same logo, the same brand,” Roberts wondered “if it makes sense to think of foreign entity as another channel for domestic entity’s speech.”

Roberts pressed this point again later with Bowker, asking him whether the U.S.-based NGOs can control what their foreign affiliates say on the question of prostitution and sex trafficking.

Bowker responded that, “as a practical matter,” the U.S.-based NGOs can indeed “veto” speech by their foreign affiliates on these issues.

Justice Neil Gorsuch also seemed somewhat unconvinced by the government’s argument. It seems “to rely on legal separation,” said Gorsuch. “But why does the First Amendment care?”

Past Supreme Court cases “seem to suggest” justices “are less concerned with corporate formalities” regarding business structure and more with public perception, suggested Justice Sonia Sotormayor.

Meanwhile, Justice Ruth Bader Ginsburg expressed skepticism that the imposition on anti-HIV/AIDS groups made sense when there was not a similar requirement for other public health groups, like the World Health Organization (which is in favor of decriminalizing prostitution) and Justice Stephen Breyer suggested the same arguments against the pledge that applied in 2013 were valid in this case as well.

Justice Thomas, who dissented from the majority last time, “did not necessarily seem to see much difference between today’s case and that one” either, according to Howe.

And Justices Brett Kavanaugh and Samuel Alito expressed concern that striking down the anti-prostitution pledge would have ripple effects on other government rules. Kavanaugh’s specific hypothetical: “Suppose the U.S. government wants to fund foreign NGOs that support peace in the Middle East but only if the NGOs explicitly recognize Israel as a legitimate state. Are you saying the U.S. can’t impose that kind of speech restriction on foreign NGOs that are affiliated with U.S. organizations?”

Federal lawyer Michel encouraged a broad interpretation, suggesting that ruling in favor of the nonprofits here could somehow invalidate rules against foreign donations to election campaigns. But the anti-prostitution pledge, in this case, is “unique,” responded plaintiffs’ lawyer Bowker. Ruling it a First Amendment violation would be a “very narrow” decision, he told justices.

The Court is expected to issue a decision this summer. You can listen to Tuesday’s oral arguments here.

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Judge Orders Reopening of Gun Sales in Massachusetts

From Reuters (Nate Raymond), reports that U.S. District Judge Douglas Woodlock has held that the closing of gun stores (part of a broader closing of many businesses) was an “improper burden” on Second Amendment rights:

The judge said he would direct the state to allow firearm retailers to re-open by noon on Saturday under a series of restrictions meant to promote cleanliness and social distancing. A lawyer for the state indicated it may appeal.

The story is based on Judge Woodlock’s oral statement from the bench, but I expect there to be a written order shortly; I hope to blog about it then. Thanks to commenter Dr. Ed for the pointer.

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Coronavirus Cases Pit Constitutional Rights Against Public Health Authority

The First Amendment protects “the free exercise” of religion and “the right of the people peaceably to assemble.” According to a federal judge in California, those constitutional rights do not trump the power of state and local officials to prohibit in-person religious services in the name of combating COVID-19.

On March 4, California Gov. Gavin Newsom (D) issued a statewide “stay at home” order as part of his administration’s efforts to arrest the spread of the coronavirus. Local officials in San Joaquin County soon followed suit with an order of their own, which banned “all non-essential gatherings of any number of individuals.” Both orders effectively prohibited churches from holding in-person religious services.

The San Joaquin-based Cross Culture Christian Center took the matter to the U.S. District Court for the Eastern District of California, asking Judge John Mendez to declare the orders unconstitutional as applied to its religious practices and to enjoin the government from enforcing them. According to the lawyers for the church and its pastor, Jonathan Duncan, if allowed to reopen, they planned to “follow CDC guidelines and San Joaquin County social distancing protocols in the use of their sanctuary for assemblies and their parking lot for drive-in services.”

Judge Mendez ruled against the church this week. “The incidental—albeit uncomfortable—burden the State and County orders place on the exercise of religion simply do not engender the type of religious discrimination the Constitution aims to prevent,” Mendez wrote in Cross Culture Christian Center v. Newsom. “The State and County orders are not unconstitutional. Rather they are permissible exercises of emergency police powers especially given the extraordinary public health emergency facing the State.”

In Mendez’s view, the courts should be extremely wary about second-guessing the wisdom of these sorts of public health orders. In fact, he maintained, the government should get to enjoy broad leeway to operate against the coronavirus. “During public health crises,” Mendez maintained, “government officials must ask whether even fundamental rights must give way to a deeper need to control the spread of infectious disease and protect the lives of society’s most vulnerable. Under these rare conditions, the judiciary must afford more deference to officials’ informed efforts to advance public health—even when those measures encroach on otherwise protected conduct.”

A different vision of the judicial role in the age of coronavirus was offered last month by Judge Justin Walker of the U.S. District Court for the Western District of Kentucky. In On Fire Christian Center v. Fischer, Walker enjoined Louisville Mayor Greg Fischer (D) from enforcing a ban on drive-in Easter services. Yes, the city may take various actions in order to stop the spread of infectious diseases, Walker acknowledged. But “it appears likely that Louisville’s interest in preventing churchgoers from spreading COVID-19 would be achieved by allowing churchgoers to congregate in their cars as On Fire proposes.” In other words, according to Walker, this particular prohibition amounted to an unjustifiable exercise of government power.

Walker also differed from Mendez and his call for judges to show “more deference” to government officials battling the disease. “The COVID-19 pandemic has upended every aspect of our lives,” Walker wrote. Nevertheless, “constitutional rights still exist.”

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Paul Tudor Jones Buys Bitcoin As “Hedge Against Central-Bank Money Printing”

Paul Tudor Jones Buys Bitcoin As “Hedge Against Central-Bank Money Printing”

The unprecedented monetary stimulus unleashed by the Federal Reserve to help combat the economy-destroying coronavirus has revived worries about a hyperinflationary future where the dollar is worthless and popular inflation hedges like gold rule the day.

Adding even more clout to this thesis, on Thursday, famed macro investor Paul Tudor Jones said he’s buying Bitcoin as a hedge against the inflation he sees emerging from the Fed’s money-printing, even telling clients that bitcoin reminds him of “the role gold played in the 1970s”.

PTJ is betting on bitcoin because he believes the best profit-maximizing strategy is to “own the fastest horse,” according to Bloomberg, which cited a note to clients recently authored by PTJ, which he titled “The Great Monetary Inflation.”

“If I am forced to forecast, my bet is it will be Bitcoin.”

Jones said his Tudor BVI fund may hold as much as a low single-digit percentage of its assets in Bitcoin futures.

Jones isn’t the only one worried about the long-term ramifications of the Powell Fed’s actions.

Morgan Stanley expects the Fed balance sheet to hit $12 trillion by the end of 2021, nearly 3x its pre-corona peak.

 

Notably, PTJ’s play comes one week before ‘the halving’, an event that typically leads to an appreciation in the price of BTC/USD. Here’s a popular stock-to-flow model that HODLers use to forecast the price jumps typically precipitated by the quadrennial event (find more on that here)

If you are not familiar with the Stock-to-Flow model, we highly recommend reading the original article explaining the background and terminology.

And for those who might be unfamiliar with PTJ’s reference to “gold in the 1970s”, the FT recently published this column exploring how the central banks’ untrammeled money printing could spark an inflationary tidal wave and the return of 1070s-style “stagflation”.


Tyler Durden

Thu, 05/07/2020 – 13:21

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Womens’ Rights Attorney Lisa Bloom: Yes, Biden Is A Rapist But I Endorse Him

Womens’ Rights Attorney Lisa Bloom: Yes, Biden Is A Rapist But I Endorse Him

Authored by Jonathan Turley,

We have been discussing the hypocritical positions of Democratic leaders ranging from Speaker Nancy Pelosi to Gov. Gretchen Whitmer in their response to the allegations of sexual assault by former Vice President Joe Biden. 

Women’s rights attorney Lisa Bloom caused a stir this week however with a position that is at least honest, if chilling.  Bloom stated that she believes that Biden did rape a female staffer but she is still going to endorse him for President of the United States.  She tweeted “I believe you, Tara Reade… sorry.”

Bloom has previously had embarrassing positions with regard to Harvey Weinstein and Kathy Griffin.

Once again, I continue to be baffled as to why this is so difficult.  Biden insists that there is no prior allegation of sexual harassment or assault by anyone. However, he refuses to allow a search for any such allegations in his papers under lock and key at the University of Delaware.  I still believe that Biden has the stronger case in this controversy, so I do not get why he resists total transparency on this or any such allegation.

I can see politicians saying that they believe Biden but also demand total transparency on any and all allegations of sexual harassment or assault.  What is untenable is saying that you believe him but do not want to review the total record held in these different archives.

Bloom however is virtually unique in applying the same Kavanaugh standard of just accepting any allegation raised by victims of sexual assault. However, she then said she would still work to elect someone she believes is a rapist for president even thought it is not too late for the Democratic Party to select someone else.

Bloom tweeted

I believe you, Tara Reade. You have people who remember you told them about this decades ago. We know he is ‘handsy.’ You’re not asking for $. You’ve obviously struggled mightily with this. I still have to fight Trump, so I will still support Joe. But I believe you. And I’m sorry.

So just to unpack this…

Bloom believes Reade who says that Biden raped her when she was a staff member and then lied repeatedly to the public.

However, she still believes he should be the Democratic nominee – not sure if the apology really makes much of a difference.

Bloom noted that Trump also has been accused of assault. However, that does not excuse endorsing someone you believe is a rapist instead of demanding that the party pick a non-rapist as its nominee.


Tyler Durden

Thu, 05/07/2020 – 13:08

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