Iowa Prosecutor Who Threatened to Treat Girl’s Selfies As Child Porn Backs Down

Yesterday the ACLU of Iowa announced that Marion County Attorney Ed Bull, who last year threatened to prosecute a teenager for producing child pornography by using her phone to take pictures of herself in her underwear, has promised not to bring charges. In exchange, the ACLU has withdrawn the lawsuit it filed on behalf of the girl’s parents in November.

Although Bull lost the fight he picked with a 14-year-old girl, the CBS station in Des Moines reports, he has no regrets:

Bull was unrepentant…

“As county attorney, it is my job to pursue justice. Nothing can or will change that,” he said. “I will put the ACLU’s dismissal papers in my file and go right back to work serving my community.”

If Bull truly believes that threatening a girl with prison and lifelong registration as a sex offender over a couple of risqué selfies has anything to do with justice, he is demonstrably unqualified for his job. According to the ACLU lawsuit, Bull told the girl she could avoid prosecution only if she participated in “a pretrial diversion program wherein she must discuss why her conduct was wrong, sign a statement of admission as to her alleged conduct, listen to how she could potentially have to register as a sex offender for life, and give up her laptop and cell phone for an unspecified period of time.”

The TV station says Bull was trying to teach the girl an important lesson about “the life-altering consequences that could arise from being labeled as a sex offender.” Since he was the one threatening to label her as a sex offender, this exercise was rather like burning down a kid’s house to teach him the danger of playing with matches. If Bull had stayed out of what should have been a family matter, there would have been no need for the girl to worry that an adolescent indiscretion might ruin her life.

“As a policy matter,” says Rita Bettis, the ACLU of Iowa’s legal director, “it’s bewildering that a county attorney would threaten to put a child in jail or prison or place her on the sex offender registry for taking a picture of herself.” The case, which Robby Soave covered here last fall, is also bewildering as a legal matter, since the pictures at issue did not qualify as child pornography under Iowa law.

According to the lawsuit, one photo showed the girl “from the waist up, hair entirely covering her breasts and dressed in boy shorts.” The other picture showed her “standing upright, clad in the same boy shorts and wearing a sports bra.” The statute defining “sexual exploitation of a minor,” the charge that Bull threatened to bring, requires “a prohibited sexual act,” which includes prurient nudity only when it involves exposure of breasts, genitals, or buttocks.

In other words, this was not a case where a prudish prosecutor was applying the letter of the law too strictly. It was a case where a prudish prosecutor was twisting the law to give himself license to meddle in matters that were none of his business. Since the photos were perfectly legal, Bull’s bullying was also a First Amendment violation.

Even if the pictures qualified as child pornography in Iowa, it defies logic to say a teenager can be guilty of sexually exploiting herself. That mind-boggling notion illustrates the unjust, irrational, and unconstitutional consequences of the pedophilia panic that prevents prosecutors like Bull and the legislators who empower them from thinking straight.

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Sellers Ask $150M For 14-Acre Beachside Plot As Hamptons Property Market Crashes

Real-estate prices in the Hamptons – the preferred North American summer retreat for wealthy finance types – have long been viewed as a barometer of the general mood on Wall Street. And with US stocks continuing their ascent to fresh record highs, despite Brainard’s admission that "asset valuations do look a bit stretched" and signs that the rally is being propelled by a concentration of megacap stocks, luxury real-estate agents out east are clearly praying for a blockbuster season after last year's disaster.

Indeed, even as luxury apartment buildings along New York City’s billionaires row struggle with unsustainably high vacancy rates, stoking speculation of a bubble in the ultra-high end of the city’s real-estate market, the owners of a roughly 14-acre beachfront property with multiple houses and two putting greens in Southampton have the temerity to list the parcel for $150 million, making it the most expensive home for sale in the Hamptons right now.

However, the chances of finding a buyer willing to stomach the sticker price despite the generous size of the property – which was initially purchased as four separate parcels of land – are slim, because, as we reported earlier this year, despite the frothy US equity market, the Hamptons real-estate market is in full-on crash mode, with average prices down 29.7% YoY in 4Q16 and volumes down 14.5%.

Meanwhile, the "luxury" market in the Hamptons, which apparently includes homes with an average price tag of ~$7 million, is faring even worse with prices down 42.6% YoY and volumes down 14.5%.

As Jonathan Miller of Douglas Elliman told the WSJ early this year, he doesn't expect the carnage in the Hamptons to slow anytime soon as he says there is still "“too much overpriced inventory – and it is rising.”
Here are some more details on the Southampton property, courtesy of WSJ:

On Meadow Lane in Southampton, the property is an assemblage of four parcels and includes several houses, according to listing agent Harald Grant of Sotheby’s International Realty. He declined to name the sellers or specify why they are selling, but said they purchased the parcels over the past few years with the intention of demolishing the existing homes to build a new family compound.

 

The combined properties offer about 700 feet of direct frontage on the ocean, Mr. Grant said. One of them, on 3.5 acres, includes a roughly 12,000-square-foot house, built in the 1990s, with eight bedrooms and an indoor pool.

 

Another parcel, on 3 acres, has two shingle-style houses: one measuring about 2,000 square feet with an outdoor swimming pool, and a roughly 3,000-square-foot home with a tennis court.

 

A third, 5-acre parcel has two putting greens built by a prior owner for practicing golf, plus two “golf cottages” overlooking the ocean.

 

A fourth parcel is a roughly 2.5-acre vacant lot with frontage on Shinnecock Bay, ensuring the property has views of both the ocean and the bay, Mr. Grant said.

According to WSJ, the sellers have been unwilling to reveal their identities. But whomever buys the property (probably at a steep discount to the sticker price once they’ve finished negotiating) “will almost certainly demolish the homes and start over.”

“'As we find in most instances at this price point, people want to hire their own architects and designers and build their dream home,’ Mr. Grant said. ‘You’re not going to spend this kind of money and live in someone else’s house.’"

According to public records, the current sellers bought the properties from entertainment mogul Robert F.X. Sillerman in various transactions in recent years, paying about $114 million in total. Mr. Sillerman’s dance-festival conglomerate, formerly known as SFX Entertainment, filed for bankruptcy in 2016. Beachfront property in the Hamptons is among the most expensive real estate in the country, according to WSJ. Mr. Grant noted that another one of his oceanfront Southampton listings, “La Dune” on Gin Lane, is asking $145 million. While that property is only about 4 acres, its two homes are move-in ready.

With the number of millionaires and billionaires living in the US growing at an unprecedented pace – at least on paper – we're curious to see what the final selling price will be. After all, with that much beachside property bundled together, the final buyer has an opportunity to build a home that could actually make them feel like they're part of the ocean. And that's an experience that can't be quantified in terms of dollars and cents.
 

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Weekend Reading: Yellen Lets Doves Fly

Authored by Lance Roberts via RealInvestment Advice.com,

As I noted in yesterday’s missive, Yellen’s recent testimony on Capitol Hill sent robots frantically chasing asset prices on Thursday even before testimony began. The catalyst was the release of prepared testimony which included this one single sentence:

“Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance.”

And on that statement, doves flew and algorithms kicked into to add risk exposure to portfolios. Why? Because she just said that rates will remain low forever. As my partner, Michael Lebowitz, noted yesterday:

“Per Janet Yellen’s comment, the ‘neutral policy stance’ is another way of saying that the Fed funds rate is appropriate or near appropriate given current and expected future economic conditions. Said differently, Janet Yellen is admitting what we’ve been saying for years – the economy has been stagnant, is stagnating and will continue to stagnate.

 

If we assume that Yellen is referring to a range of 1.25-1.75% as an appropriate Fed Funds rate, based on statistical analysis of data since 1955, we forecast that real GDP growth rate is likely to average somewhere between 2.00-2.50% for the foreseeable future. For perspective, the graph below plots the range of expected GDP growth vs historical secular (3-year average) GDP growth. In years past, such a slow rate of growth (highlighted in yellow) was considered nearly recessionary.”

The problem, of course, is that a 2% economic growth rate is not conducive to a strongly expanding economic environment and does not support current market valuations. The first chart below compares the cumulative growth rate of the real S&P 500 as compared to GDP. The great “bull markets of the 50’s and 60’s, the 80’s, and now the 10’s have all previously ended when the growth of the S&P 500 exceeded the growth of the economy. 

The next chart compares the inflation adjusted market capitalization rate of the S&P 500 to GDP. As noted on Tuesday, valuations have everything to do with forward returns on investments over the long-term.

The problem for the Fed remains the rising risk of a monetary policy error against a backdrop of an over valued, over leveraged and overly bullish financial market. Historically such combinations have tended not to turn out well.

While markets may well continue to remain bullish in the short-term, the longer-term outcomes remain heavily weighted against investors currently. Of course, the “chase for return” is always the most prevalent when markets remain illogical longer than investors can remain rational. 

In the meantime, this is what I am reading.


Politics/Fed/Economy


Markets


Research / Interesting Reads


 “Most investors want to do today what they should have done yesterday.” – Larry Summers

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Trump Departs Macron With “Excruciating” 30 Second Handshake While Kissing French President’s Wife

When Donald Trump arrived in Paris for his first official visit to Emmanuel Macron ahead of Bastille Day celebrations, the media was fascinated whether their “sequel” handshake would be another white-knuckle affair of the “not too innocent” kind, as Macron described his famous first handshake with the US president. In retrospect, it was a bit of a letdown, perhaps because since then the two had several opportunities to work on their greetings and appeared both more at ease, although questions did emerge about Trump’s handshake with Brigitte Macron, which among other things, afforded Trump the opportunity to say the first lady was in “great shape.”

But if the introductory handshake was less than remarkable, nobody was ready for the most recent Trump-Macron poignee de mains, which the Independent described as a “strange, shifting, exruciating coming together that appeared to have a life of its own.”

Many who witnessed the handshake, as the men walked down the Champs-Élysées, said it looked bizarre, however it appeared anything but for the US President who was so at ease with his French host and the Bastille Day crowds, that the handshake lasted no less than 30 seconds.

Twelve seconds into the handshake – with both men on the move at this point – Trump put one hand on Macron’s chest and, a few moments later, placed his left arm on the shoulder of Ms Macron, while still holding on her husband with his right. Then Trump briefly takes the French First lady with both hands, while Macron keeps holding onto Mr Trump’s right hand as well. Finally, with the timer on 28 seconds, Mr Trump grips Mr Macron’s hand once more, taps his fingers and finally lets him go. A full half-minute of presidential flesh-pressing has taken place.

Meanwhile, it was difficult to decipher what Melania Trump made of this manual ménage à trois: she stoically watched and smiled a full 30 seconds before her husband and the Macrons appeared to realize she was there. Then they finally held hands with her too. Ultimately, the event was deemed sufficiently dramatic for CNN to create a “second-by-second” analysis of the Trump-Macron handshake.

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U.S. Kills ISIS Leader in Afghanistan, Turkey Arrests More Human Rights Activists, and an Oregon Highway Gets Covered in Eels: P.M. Links

  • Slime EELS!!!! AKA HagfishThe Pentagon announced the death of ISIS’s leader in Afghanistan. A July 11 airstrike in Kunar province reportedly killed Abu Sayed, the emir of ISIS-K. No doubt the war on terror will now come to a quick and conclusive end.
  • Turkey has arrested the country’s local director of Amnesty International, Idil Eser, on suspicion of being part of an “armed terrorist organization.”
  • A truck full of “slime eels” crashed along Highway 101 in Oregon covering both the road and motorists with a healthy coating of slime, and thousands of writhing sea creatures.
  • The woman who was arrested for laughing at Jeff Session’s confirmation hearing has had her conviction thrown out.
  • Trustees report that the Social Security trust fund will be depleted in 17 years ago.

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Dismal Data Sends Stocks To Record Highs As Short Interest Collapses To 2007 Lows

Overheard everywhere today…

 

Stocks (Dow and S&P) hit record intraday highs… (must mean everything is awesome, right?)

 

With Nasdaq's best week of 2017…So clearly, unlike The Leftists, Trump Jr's email means absolutely nothing…

 

BUT…

This morning's terrible retail sales and inflation data sent 'hard' data to new post-Trump lows – lowest since May 2015 – as 'soft' data clings to hope once again, sending 'animal spirits' back near record highs…

 

GDP expectations have plunged…

 

And then there is this… Short Interest in the S&P 500 has not been this low since May 2007, right as the market peaked…

 

And as JPM Prime Broker Services shows, this week saw the largest amount of short-covering year-to-date…

*  *  *

Here's today's completely uniform, not at all odd, straight line, 100% correlated price action in stocks…

 

VIX chopped around into the close but it was a one-way street all day to get the S&P to intraday record highs (above 2453.82 on 6/19)…

 

FANG Stocks had their best week in 3 months… (up 5 of the last 6 days)

 

Despite all the exuberance over Bank earnings, financials lagged on the day (but as the green line shows, the dip-buyers were desperate) as Tech led…

 

JPMorgan was the biggest loser at the open, but you 'buy the dip' because it's a no-brainer…

 

The "Most-Shorted" stocks are up 5 of the last 6 days – this week was the biggest 'short squeeze' since Dec 6th…

 

VIX was smashed lower again to its lowest weekly close since 1993… (9.48 close 12/24/93)

 

The stock market is near peak euphoria here (tracked by the ratio of Fwd P/E to VIX)…

Oh and Shiller's P/E crossed above 30 (30.15).

While stocks gained on the week, so did Bonds (though the long-end underperformed)… (while 2s30s steepened for the 3rd week in a row, 2s10s flattened modestly on the week, after two big weeks of steepening)

 

10Y Treasury Futures briefly spiked above their 50DMA at 125'27 on the weak data, but fell back as the equity ramp began…

 

The Dollar Index was hammered this week on Trump Jr and Yellen dovishness (worst week for USD in 4 months)…

 

The Dollar is now at its weakest in 10 months…

 

Cable has spiked above 1.31 – its highest in 10 months…

 

WTI Crude rose for the 5th day in a row… (note how this week's API/DOE moves were a pefect mirror of last week's)

 

Gold and Silver up for the 4th day in the last 5 breaks a 5-week losing streak…best day for gold and silver in 5 weeks…

 

Finally, Bitcoin tumbled again today ending the worst week in 4 months…

 

So to summarize – After months of hawkishness, Yellen drops a slight hint at 'dovishness' on the rate-hike trajectory and stocks soar to record highs, VIX closes at a record weekly low, bonds rally, crude oil rips, and gold has best week in months…oh, and macro data dumps!

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Global Capital Markets Have Added Over $11 Trillion Since Trump’s Election

Since President Trump's election, global equity markets have added more absolute value than at any time in history (around $12 trillion) – surpassing the front-running exuberance that started when Bernanke hinted at QE2 in 2010.

The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3

Of course, some might say this is driven by animal spirits. Still others will proclaim this is all Trump as Obama's suppressive boot on the throat of business is lifted.

However, there is another explanation… a $1.4 trillion addition to global central bank balance sheets seems to have a curiously strong correlation to the gains…

 

And while Trump's election crushed global bond markets initially, they have rallied in the last few months to entirely erase those losses…

So global bond markets have given up the inflation/growth hype post-Trump? But stocks have been a one-way street – hardly a dip to buy.

What will we do when that light blue line in the second chart above starts to drop? The Fed says "it will be like watching paint dry"…

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5 Cities That Won’t Be Hosting the 2024 Olympics, and Why That Makes Them Winners

The International Olympics Committee (IOC) announced this week that the 2024 Summer Olympics would be awarded to either Paris or Los Angeles, the only two cities bidding for the games. The other city would be awarded the 2028 Summer Olympics.

It’s a far cry from the 1990s, when the IOC had six cities to choose from for the 1996 Summer Olympics and five for the 2000 Summer Olympics. City residents, especially in democratic countries, are starting to figure out what a rip-off hosting the Olympics can be.

Every Olympics games since 1960 for which data is available has faced cost over-runs, with the Summer Olympics costing an average of 176 percent more than the original estimates. Additionally, as a 2015 paper in World Economics points out, “short-run costs for venue construction and operations invariably exceed Games-related revenues by billions of dollars and long-term gains are elusive.” The IOC has also squeezed host cities out of other ways to make money off hosting the Olympics. In the 1990s, for example, the IOC took just a 4 percent cut of the revenue from the TV rights, but now it takes more than 70 percent.

It seems the best way for a city to win on the Olympics is to decline to bid. Here are five cities that will be better off for not hosting an Olympics in the next decade:

Boston

Boston’s bid had the support of local and state government when the U.S. Olympics Committee (USOC) chose it as the American city that would bid to host the 2024 Summer Olympics. The state legislature had set up a “feasibility commission,” members of which were appointed by the state governor, state senate leaders, and the mayor of Boston. The commission concluded that hosting the Olympics was a “monumental” but “feasible” task that the region was better prepared to handle than other parts of the country.

In 2015, the organizers of the Boston bid released the salaries of its executives. The public thus learned that former Gov. Deval Patrick, who had been involved in the feasibility commission, would be paid $7,500 per day of travel on behalf of the bid, and that Boston 2024 would be spending at least $120,000 a month on consulting firms.

Public opinion had already been turning on the Olympics bid, with complaints that there had been no space for public input before the USOC selected Boston as the American bid city.

When the decision was announced in January 2015, polling found support in Boston for hosting the Olympics at 51 percent and opposition at 33 percent. By the end of March, support had plummeted to 33 percent. As Boston.com explains in a detailed timeline, this reflected not just the salary revelations but the heightened sensitivity to government incompetence in the wake of crippling winter snowstorms.

Eventually, Mayor Marty Walsh admitted he hadn’t read the entire bid proposal before pitching it to the USOC. In July, two members of the city council threatened to issue subpoenas to get copies of two redacted chapters of Boston 2024’s bid books. By the end of the month, Walsh had withdrawn his support for the bid, saying he would not sign the host city contract. The USOC in turn withdrew its support and backed Los Angeles instead.

The grassroots campaign No Boston Olympics was also crucial to the bid’s failure. Its activists campaigned against the bid after it became official, and they declared victory when the bid was withdrawn.

“Boston is a world-class city,” a statement from the group read, adopting a phrase frequently used by the bid’s supporters. “We are a city with an important past and a bright future. We got that way by thinking big, but also thinking smart.”

Hamburg

When deciding whether to back Berlin or Hamburg for the 2024 games, the German Olympics Sports Confederation surveyed residents in both cities. It found higher support in Hamburg, but by the time the decision was brought up for a referendum the city’s residents had reconsidered. In the November 2015 vote, 51.6 percent of Hamburg voters rejected the Olympics bid.

Hamburg estimated the cost of hosting the Olympics at $12.6 billion, with taxpayers expected to pay $8.3 billion.

“The result is a bitter pill for us to swallow, but a democratic decision must simply be accepted,” Nikolas Hill, the head of the Hamburg bid, said after the referendum. “The attacks in Paris, the soccer crisis, the refugee situation, the doping scandals—they did not have anything to do with this but it has been irritating and disturbing people.”

But such factors are relevant to an Olympics bid. The security theater demanded at mega-events like the Olympics, the corruption surrounding sports governance, and controversies like doping all make hosting the Olympics even less attractive.

A few months later, activists in Budapest would start their campaign for an Olympics referendum of their own.

Budapest

Political leaders in Hungary have been mulling an Olympics bid for Budapest for years, and the Hungarian Olympic Committee approved the official bid in 2015. By late 2016, Rome and Hamburg had already dropped out of the running, so Budapest was competing only with Paris and Los Angeles for the 2024 Olympics.

In January, youth activists under the Momentum Movement launched a grassroots campaign to force a referendum on whether Budapest’s bid should move forward. They collected 10,000 signatures on the first day alone.

The bid was supported by the government of Viktor Orban, a strongman who has thumbed his nose at the EU while happily taking its money; the bid’s opponents were concerned about corruption around the games, and more broadly about the misprioritization of government spending.

In about a month, the Momentum Movement gathered more than 260,000 signatures for an Olympics referendum, dooming Budapest’s bid. The city withdrew its candidacy, with the IOC complaining the process had been “overtaken by local politics.”

The Momentum Movement parlayed its victory on the Olympics issue to start a new youth-oriented political party aimed at challenging Orban’s dominance in national politics.

Rome

Rome tried to bid for the 2020 Summer Olympics, but Prime Minister Mario Monti announced the day before the application deadline that he would not support the bid. The IOC requires written commitments from government officials, so that was that. Monti argued it was unwise to commit to a project of uncertain but high cost in the midst of a national fiscal crisis.

Supporters of a Rome bid tried again for 2024, but the idea didn’t get as far as the prime minister’s office this time. In June, Romans elected Virginia Raggi of the populist Five Star Movement to be mayor. Raggi believes it would be “irresponsible” for Rome to bid for the Olympics, saying there are more important issues, such as trash collection and corruption.

“In ancient times here, Roman emperors offered the thrill of bread and circuses to appease and divert a restless population,” the BBC reported after the decision. “That tactic, it seems, no longer works. These days, Rome is a city which can barely pick up its own rubbish.”

Guadalajara

Before Guadalajara, Mexico, hosted the Pan American Games in 2011, construction costs were estimated at $250 million. They ended up at over $750 million. The city was also expected to host the World Aquatics Championship this year, and in 2014 Mexico mulled an Olympics bid, reportedly focusing on Guadalajara and the infrastructure it would already have.

A study led by the president of the sports commission in the Chamber of Deputies—Felipe Muñoz, a former Olympic-winning swimmer—concluded that the idea wasn’t feasible. The problem, Inside the Games reported, was “the lack of suitable economic or infrastructure conditions.” The next year, the Mexican government withdrew Guadalajara from hosting duties for the 2017 World Aquatics Championships, saying it could not afford the expected $100 million price tag. Those games went to Budapest, where they start today.

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Oregon Town Cracks Down on Pot-Selling Robotic Blonde Mannequins

BarbiesThe new trend in the Pacific Northwest is cracking down on marijuana dispensary mascots. First there was the Washington cannabis bill that banned costumed mascots and inflatable arm-flailing tubemen from advertising for cannabusinesses. Now the town of Wood Village, Oregon, is fining Aaron Michelsen, owner of NW Compassion Medical Center, $2,000 for the two buxom, sign-wielding mannequins he had stationed outside his store.

Michelson was told his blonde mannequins—which wave signs reading “got chronic” when plugged in—ran afoul of Wood Village’s recent sign ordinance, which among other things bans “portable signs.” Michelsen netted another $1,000 fine for a placing a prohibited rooftop sign atop his cupcake store, which is ingeniously located in the same building as his marijuana dispensary.

City Manager Bill Petersen told the Portland Tribune that the fines were not about persecuting pot, insisting that they were a neutral enforcement of a statute that was “being uniformly applied regardless of the business type.” But Wood Village’s ordinance does in fact create different standards for different business types. The portable sign provision that got Michelsen in trouble, for instance, creates exemptions for real estate businesses, political campaigns, and garage sales.

Not only is that not uniform regulation, it’s also likely unconstitutional.

“When you have an ordinance that regulates who can use a type of medium or signage, that is presumably unconstitutional,” says William Mauer, an Institute for Justice attorney who has litigated similar cases in the past.

The Supreme Court took up this issue in 2015, when it heard the case of Reed v. Town of Gilbert. A small Arizona church had sued over a local sign ordinance that allowed it to deploy temporary signs only in the 12 hours prior to any church service. It also required those signs be no larger than six square feet. Meanwhile, temporary political signs could be set up at any time and could be 32 square feet. This, the Court ruled unanimously, was unconstitutional. Justice Clarence Thomas declared the ordinance a “paradigmatic example of content-based discrimination.”

Wood Village’s ordinance seems to have many of the same problems as the Gilbert one, specifying the different sign sizes and number of display days that are allowed for temporary signs, depending on whether they for a construction site, garage sale, political campaign, or real estate.

Part of the point of the First Amendment is to prevent such petty restrictions on expression. The City of Wood Village should recognize this and let Michelsen’s life-sized, drug-pushing barbies do their work unmolested.

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Law Prof Mentions Brazilian Waxing, Gets Punished: New at Reason

Howard University law professor Reginald Robinson is in a sticky situation after the university found him responsible for sexual harassment over an exam question involving a Brazilian wax. Robinson is just the latest professor to find himself accused of harassment on the basis of his germane classroom expression—a disturbing trend that has profound implications for academic freedom and the quality of education at our nation’s institutions of higher education.

But if a law student can’t handle an exam hypothetical that includes the word genitals, writes Samantha Harris, that person should think seriously about whether or not law is the right profession for them—because as a young associate at a law firm, you don’t get to tell a partner that you won’t work on a case for a big client because the facts squick you out.

View this article.

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