Morning Report – No we are not in another housing bubble 3/26/15

Stocks are lower worldwide as the Saudis bomb Shiite rebels in Yemen and the semiconductor sector gets taken tot the woodshed. Bonds and MBS are down. The bombing in Yemen is putting a bid under oil.

In economic data this morning, initial jobless claims fell to 282,000 last week from 291,000. This is the lowest reading in 5 weeks. The Markit US Composite PMI rose to 58.5 in March, while the US Services PMI rose to 58.6. Bloomberg Consumer Comfort rose to 45.5 last week.

It is looking like the Germanwings crash was a deliberate act. Note that the new security measures designed to keep bad guys out of the cockpit can also keep the good guys out if the bad guy is already inside.

Senator Richard Shelby suggests that GSE reform probably isn’t happening this year. And since the following year is an election year, you can probably forget about anything happening until 2016 at the earliest.

In the “what passes for analysis” category, CNN wonders if we are in another bubble. Why? Because the Homebuilder ETF (XHB) is back at 2007 levels. Setting aside the idea that ETF valuations can somehow predict where real estate prices go, bubbles require a mindset on the part of buyers and bankers that the asset in question is “special” and cannot fall in value. We will never see another housing bubble in the US, but our grandkids may at some point.

Ara Hovnanian weighs in on the housing market and the state of the first time homebuyer.

38 Responses

  1. And just like that–frist!

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  2. Note that the new security measures designed to keep bad guys out of the cockpit can also keep the good guys out if the bad guy is already inside.

    Quis custodiet ipsos custodes?

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    • Interesting take on what makes the angry left angry:

      Outside of theology, the “eschaton” is a stand-in for the final, ideal goal we’re hoping to reach.

      There are three basic views of what this ideal state is: the supernatural, the individual, and the social.

      In its original context, for the traditional American Christian, the “eschaton” is supernatural: it is life in heaven. That means it’s something that will happen regardless of the state of this wicked world, and your place in it is dependent on you and your own inner spiritual state, not on other people. Hence the Christian’s confounded complacency. If I’m not on board with his religious vision, well, that sucks for me when the Rapture comes. Because my religious critic is a nice guy, he’ll pray that eventually I see the light and accept Jesus into my heart. But at the end of the day (or of history), it’s no skin off his soul.

      For someone like me, who is not religious but an individualist, the ultimate end state I am seeking is in my own life. It’s about my family, my work, my home, my own personal interests. The goal I’m seeking is about things I have a lot of control over, much more than it is about other people. Politics is mostly just something that gets in the way of the real business of life. Our ideal end state is that we can reach the point where we’re able to think about our own lives and not have to care about politics any more.

      For the secular leftist, the end state is social and necessarily political. It is all about getting everybody else on board and herding them into his imagined utopia. There are so many “problematic” aspects of life that need to be reengineered, so many vast social systems that need to be overthrown and replaced. But the rest of us are all screwing it up, all the time, through our greed, our denial, our apathy, our refusal to listen to him banging on about his tired socialist ideology.

      For the Christian, the ideal end state is safely in the next world and therefore is never in doubt. For the individualist, it’s in his own life, and it’s mostly under his direct control. For the leftist, however, it is all outside his control. It requires other people, a lot of other people, and those SOBs usually refuse to cooperate. Talk about rage-inducing.

      If the whole focus of your life is on getting everybody else to agree with you on every detail of your politics and adopt your plans for a perfect society, then you’re setting yourself up to be at war with most of the human race most of the time.

      http://thefederalist.com/2015/03/26/why-is-the-angry-left-so-angry/

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  3. Everybody else is dimmer than them and need to be shown that.

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  4. Everybody else is dummer than them and need to be shown that.

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  5. FYI – I saw Ben Bernanke speak last week. Nothing particularly new or original was said for anyone who is familiar with the financial crisis and the resulting government action. Basically the generic “Too Big To Fail” account was given.

    Two things stuck out:

    1. He said that there were no plans to sell off the assets on the Fed balance sheet and the $4 trillion would be wound down by holding them to maturity.

    2. The only political figure who gave him and Paulson any public political support at all in 2008 was George W. Bush. He was told by Senators and Members of the House directly in the meetings that they would vote for what he wanted to do because they knew it was necessary, but none of them would publicly support him. He seemed a very high opinion of George W. Bush overall, but that may have mostly been because Bush didn’t challenge him or Paulson on their recommendations but took them at face value and then backed them.

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    • jnc:

      He was told by Senators and Members of the House directly in the meetings that they would vote for what he wanted to do because they knew it was necessary, but none of them would publicly support him.

      Fine testimony to the character of our elected representatives.

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  6. shrink linked to this Bloomberg piece over on PL. What do you think, Brent?

    For most people, buying a home is no cheap venture. That’s especially the case when the growth in U.S. home prices is beating wage increases 13 to 1.

    Wages climbed by 1.3 percent from the second quarter of 2012 to the second quarter of 2014, compared to a 17 percent increase in home prices around that time, according to a new report from RealtyTrac. The real-estate data provider used the Labor Department’s weekly earnings data to measure wage growth, while home prices were derived from sales-deed data in December 2014 and compared to December 2012 on the hypothesis that a change in average wages would take at least six months to affect home prices.

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  7. Well, they are measuring the growth in house prices off the bottom. Relative to wages, housing prices became relatively cheap in early 2012. We are back towards overvaluation, however I think wage inflation is coming and will catch up to real estate prices.

    You can see that housing bottomed in 2Q12 on the attached chart:

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  8. Heh.

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  9. @kevinwillis1 has the quote of the day on PL:

    If I were a baker, I’d want some of that sweet, sweet homosexual moolah.

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    • If I were a baker I’d want some of that sweet, sweet homosexual moolah.

      I’d be interested in the full context.

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  10. @Scottc1: Regarding the Religious Freedom Posturing Act Pence just signed. Just saying any business I owned, anybody with money would be welcome. I like money.

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    • KW:

      Just saying any business I owned, anybody with money would be welcome. I like money.

      Would you marry someone of the same sex as you?

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  11. I thank them for their sacrifice.

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  12. @scottc1: “But the rest of us are all screwing it up, all the time, through our greed, our denial, our apathy, our refusal to listen to him banging on about his tired socialist ideology.”

    That sounds like its about Aletheia on Plum Line.

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  13. Man, I wish I worked at the DEA. It’s a sacrifice I would make to see justice done!

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  14. @scottc1: “If the whole focus of your life is on getting everybody else to agree with you on every detail of your politics and adopt your plans for a perfect society, then you’re setting yourself up to be at war with most of the human race most of the time.”

    There seems to be a contingent on the right that has this same issue. As large? Maybe not, but I certainly see them: they repeat some basic Tea Party style soundbites but the problem is that these other people don’t agree and they are stupid for not agreeing with them! They are frequently the ones who like terms like “Democraps” or “Obozo” (not unlike The Shrub or Rethuglicans) and are prone to pronouncing on the evil of liberalism, as those on the left are prone to articulating on the evils of conservatism. They feel they need to offer us reductive definition of liberalism or conservatism that amounts to the ideology being 100% bad with no redeeming qualities, and the people who espouse lacking intelligence and having evil intentions. Those people, I think, are just angry, period, and pick whatever political bent they have as a way to express it. I think there are people out there who are just angry that everybody doesn’t agree with them, no matter what their political leanings. But it’s an interesting thought.

    Still, certain things seem universal. Whenever the other guy gets elected, there is generally a large contingent that mourns the stupidity or the cupidity of the other side in having elected this/these horrible person/people. Or, while the left will be continually frustrated (and the right will be, too: ultimately, to advance a conservative agenda you have to have politicians who cooperate, and though it doesn’t require the cooperation of all of humanity, and therefore is more achievable, it still doesn’t happen much) because of the need for everybody to get on board with their utopian goals, I think there are just people out there who resent that others disagree with them, and think they are stupid or foolish for disagreeing with them, and are angry or nasty about it.

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    • KW:

      I think there are people out there who are just angry that everybody doesn’t agree with them, no matter what their political leanings.

      Perhaps, but I think there is a fundamental and recognizable difference between someone who pushes a little old lady in front of an oncoming bus and someone who pushes a little old lady out of the way of an oncoming bus. I don’t think it makes much sense to equate them as simply people who like to push little old ladies around.

      Likewise I think there is a fundamental and recognizable difference between people who get angry at others who use government to tell them what to do, and people who get angry at others who don’t want the government telling them what to do. It doesn’t make a lot of sense to me to equate them as simply people who get angry with others who disagree with them about what government should do.

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  15. @brentnyitray: Congrats on the Badgers win!

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  16. Hi all, daughter #1 and her fiance close escrow on their house in early April, assuming all goes according to plan. They had trouble finding a home they could afford in their first choice area but easily found one in their second choice area. She’s the only one left in CA and I’m happy they were able to get into the market now.

    Son and daughter #2, both in CO, are still looking and finagling finances…………….LOL

    It looks like we’ve decided to finally sell the rental property once our current tenant moves out or in the next two years, whichever comes first. We will retire a little more fully by then.

    My birthday is coming up, 65 on Easter Sunday of all things. 🙂 More importantly, I paid my last $900 insurance payment on March 1. Yay for Medicare and supplemental insurance.

    Our youngest daughter is receiving a really big award from an oil and gas professional group she belongs to. Top young professional for the western 11 states. They’re taking over the Denver Zoo one night in May for all the festivities and award presentations.

    I’m still swimming and weight lifting. Mark, my leg press is now at 490 lbs and I’m dead lifting 155, a bit more than I weigh. My new trainer since last Sept is a former Marine and he really keeps me on my toes. I even did a mini triathlon, but even though I placed third in my age group, I didn’t really enjoy the training that much as I really don’t enjoy running……LOL

    Hope you’re all doing well…………our health is great and we’re enjoying life to the fullest here right now.

    I’m sure some of you are looking forward to Spring and better weather. It’s been beautiful here and we’ve had rain down here but unfortunately the northern part of the state and the snow levels didn’t fare so well……..so drought it is still.

    I like to check on all of you periodically but I’m pretty far removed from politics lately. Never let it be said that I didn’t know when to hang up my political hat………..unlike some women we know, one in particular who is apparently running for President. Yikes!

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  17. The real reason?

    Hi Lms!

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  18. Thanks, Michi

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  19. @Scottc1: “Likewise I think there is a fundamental and recognizable difference between people who get angry at others who use government to tell them what to do, and people who get angry at others who don’t want the government telling them what to do.”

    Well, certainly, there is a difference between being angry about being unable to constrain you, and you being angry at me for trying to constrain you. But I stick with the point: there are people who are just angry, and for whom ideology is not the cause of that anger or frustration, just something else they tackle with anger and frustration, because they are angry for reasons largely unrelated to the political reality.

    Put another way, I think we as humans are built to see correlations where they do not exist and make way too much of correlations where they do exist. I’ve met many liberals who are very philosophical about the fact that conservatives exist and that the world is never going to pull together to get us to utopia. As a rule, these liberals do not spend much time posting in the comments sections of websites about their politics, or write lengthy diatribes for AlterNet or DailyKos.

    I would also add that the anger generally seems to be less about why won’t you do what I tell you, or why are you trying to make me do this, than: why don’t you *get* it? I think the offense ultimately boils down to: why don’t you think like me? I know I’m right, I’ve shared my wisdom, why don’t you understand that I’m correct about this?

    But, I am merely human, and may be overthinking or under thinking the issue, depending.

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    • KW:

      Put another way, I think we as humans are built to see correlations where they do not exist and make way too much of correlations where they do exist.

      Perhaps, but I don’t think the article was postulating a correlation between anger and leftist ideology. I think it was pointing out that secular leftists are prone to anger/frustration for reasons that are distinct to their ideology. That doesn’t mean that all leftists are angry, or that people with other ideologies are not prone to anger/frustration, or that there are not universal reasons that make all people prone to anger/frustration. And so pointing out that not all leftists are angry, or that there are angry people that are not leftists, or that people on the left and right sometimes get angry for the same reasons, are all just non-sequiturs.

      I also think the point of the original article is related to a personal bugaboo of mine, and that is the leftist disdain for federalism in any real sense. For example, given my ideology, I don’t really care if Massachusetts or California want to raise taxes or implement government health care schemes or pass any of the other laws that I think are totally nuts. I am perfectly happy to let those who disagree with me organize their lives and their communities however they want. Those on the left, however, are absolutely not perfectly happy to let others who disagree with them organize their lives and their communities however they want. Which is why the left is routinely pushing contentious issues up to the federal level. They aren’t happy until everyone has to live under rules they approve of, whether those others like it or not. And I don’t think it makes sense to dismiss this tendency as just generic human nature that all people are prone to regardless of ideology. I really think it is a direct function of the nature of leftist ideology, and that remains true even if there happen to be some non-leftists who also want to do the same thing.

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  20. @Scottc1: “Would you marry someone of the same sex as you?”

    As long as we agreed the relationship was going to be platonic. If it were, like, a marriage of convenience . . . like many heterosexual marriages! But I can’t imagine many situations where that would come up as a good solution.

    If I were a baker of cakes, I’d certainly bake them a cake for money!

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    • KW:

      As long as we agreed the relationship was going to be platonic.

      The point I was trying to make is that talking about what you would do if you were them isn’t all that useful in terms of discussing the issue. Or, put another way, in talking about what you would do if you were them you aren’t really stepping into their shoes and telling us what you would do. You are deliberately not adopting the central feature that drives them to do what they do, ie a sincere religious objection to the notion of homosexual marriage. You can casually say that you would gladly take the “moolah” precisely because you don’t have the same objections that they have. My guess is that if you were a baker and were asked to bake a cake for a celebration of something that you really did have a deep objection to, the moolah would cease to be your sole motivation.

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  21. Good to see you Lulu. Glad things are going well.

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  22. Thanks jnc and Hi George.

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  23. @ScottC1: “My guess is that if you were a baker and were asked to bake a cake for a celebration of something that you really did have a deep objection to, the moolah would cease to be your sole motivation.”

    Indeed. But, as a practical matter, I expect I would be called on to bake very few “Death to America!” cakes for suicide-bomber coming out parties or racist cakes for KKK rallies, thus it would be of no economic consequence to me that I didn’t serve folks I found morally repugnant. If that became the foundation of my business, I’d find another business.

    But it was an observation on my part, rather than a rationale for policy. In general, I would prefer the market decide, but I’m also not interested in special carve outs for certain people to make them immune to legal compulsion where others are not; thus, I would prefer there be no legal compulsion, and retailers be allowed to serve only those they wished to serve. And sink or swim based on the rationality of their decisions.

    This is not going to be the case, so we get legislative efforts to make special exemptions to avoid the inevitable consequences of presuming a universal “universal access” principle to anything with a public facing front. Though, ideally, I’d prefer that no additional micromanaging legislation be so drafted. but here it is.

    Ultimately, though, the issue is about the two sides arguing because the other side doesn’t agree with them. There’s no harm in catering a gay wedding to the caterer that isn’t, ultimately, inflicted by themselves upon themselves. Likewise, there is no harm to a gay couple in going to a caterer known to cater gay weddings than to the handful that refuse to based their objections to homosexual marriage. One side doesn’t want to normalize the concept of gay marriage, or participate in that normalization, while the other one wants to force everybody to participate in gay weddings as a way to achieve that normalization. It’s not about any real equal access, because not one case has been cited, that I’m aware of, where there is legitimately no other access to catering services. It’s one of those political arguments that is not really about what it says it’s about.

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    • KW:

      But it was an observation on my part, rather than a rationale for policy.

      I thought that was a possibility, which is why I wondered about the full context originally.

      I would prefer there be no legal compulsion, and retailers be allowed to serve only those they wished to serve.

      I agree wholeheartedly.

      One side doesn’t want to normalize the concept of gay marriage, or participate in that normalization, while the other one wants to force everybody to participate in gay weddings as a way to achieve that normalization.

      Or, to tie this into our other discussion, one side is happy if they are simply left to their own devices, while the other side will only be happy if other people do certain things for them.

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  24. @ScottC1: “I think it was pointing out that secular leftists are prone to anger/frustration for reasons that are distinct to their ideology.”

    I understand the postulate, but I’m not 100% sure I agree, although I think, yes, if you ultimately believe that utopia is right around the corner if only you can have everybody conform to your expectations, you’ve set yourself up for constant frustration and disappointment. But one could also argue that those prone to anger and frustration are more likely to gravitate towards political ideologies that will lead to constant frustration. 😉

    “are all just non-sequiturs”

    i disagree. I tend to think they point towards something universal that’s not incidental but actually of primary importance that gets perpetually glossed over or omitted because it doesn’t fit well into the good guys/bad guys narrative. When I see people routinely argue that “both sides do it, but, you have to admit, Democrats/Republicans do it way, way, way more and much, much, much worse than Republicans/Democrats” there’s some kind of hidden pattern, some other human tendency that transcends ideology. And is just as important as it is mostly invisible.

    The other possibility is it doesn’t exist, or is irrelevant, and I’m just completely off my nut. I grant that is a possibility.

    “And I don’t think it makes sense to dismiss this tendency as just generic human nature that all people are prone to regardless of ideology. I really think it is a direct function of the nature of leftist ideology, and that remains true even if there happen to be some non-leftists who also want to do the same thing.”

    You are shifting from the argument about anger and frustration over politics (due to being frustrated in the achievement of political ends) to the ideologic divide as to who does what. Which is not the same thing; I think there are some very calm, rational, thoughtful liberals pushing for the sorts of policies no conservative is going to push for, such as a mandated living wage or single payer healthcare. I don’t think the anger and vitriol is unique to a given ideology; I don’t think those characteristics are connected at the hip like people, for whom their political beliefs are extremely significant, are prone to do.

    Bernie Latham posted a link to The Long Con recently:

    http://www.thebaffler.com/salvos/the-long-con

    It characterized Mitt Romney’s typical political spin and confabulation as a series of outrageous lies never before seen in the history of the world, which was . . . well, typically selective. But then it goes on to detail all the shills and snake oils conservative publications tend to market to true believers (or, in fairness, the sorts of snake oil salesmen that buy the mailing lists of conservative pubs, or the fundraising arms of certain conservative groups/political action committees/advocacy groups).

    He was not terribly open to my argument that liberal advocacy groups do almost exactly the same thing, and that when I was on the mailing lists of MoveOn.org and AlterNet, I got the same sorts of missives, the same sorts of dire warnings about impending disasters that the GOP was planning, and how the world would end if the Democrats didn’t emerge victorious in the next election, and soliciting donations at every turn, after attempting to scare me that Republicans were just moments away from taking away my right to an abortion or outlawing contraception. Indeed, most of the commentators on the PlumLine tend to advance the theory that a Ted Cruz presidency or a Scott Walker presidency will result in something approaching the end of the world.

    My point is that things like strategy, tactics, emotional predispositions, intelligence levels are ideology independent, for the most part. No doubt it’s more like a Venn Diagram, where there is some overlap, but the correlation is way over-stated, in my opinion.

    You are no doubt aware that science has “proved” that conservatives are more fearful, more set in their ways, more reflexive, and expend less brain power when thinking than liberals. Again, I would argue that this is self-evident nonsense, and common sense (oft vaunted by the left, driven by rationality and science, as they are) should tell anyone that such a result, so stated, is a rich field of red flags that broadcast a warning of a study conducted to arrive at a pre-determined result. And no remotely cogent argument was offered as to how a desire for a large standing army and lower taxes and less regulation was legitimately correlated to less capacity to think and being more driven by emotions, especially fear.

    There are overlaps but I think too much is made of them. For a variety of reasons.

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    • KW:

      You are shifting from the argument about anger and frustration over politics (due to being frustrated in the achievement of political ends) to the ideologic divide as to who does what.

      I don’t see how I am doing that. I am simply agreeing with the author’s proposition that a secular leftist’s ideological success depends on the behavior of others in ways that is not true of other ideologies.

      I think there are some very calm, rational, thoughtful liberals pushing for the sorts of policies no conservative is going to push for, such as a mandated living wage or single payer healthcare. I don’t think the anger and vitriol is unique to a given ideology; I don’t think those characteristics are connected at the hip like people, for whom their political beliefs are extremely significant, are prone to do.

      I agree, but none of that has any impact on the proposition the author put forward.

      My point is that things like strategy, tactics, emotional predispositions, intelligence levels are ideology independent, for the most part.

      I agree, but, again, that has no impact on the proposition the author put forward.

      No doubt it’s more like a Venn Diagram, where there is some overlap, but the correlation is way over-stated, in my opinion.

      As I mentioned, I don’t think anyone has proposed any correlation.

      You are no doubt aware that science has “proved” that conservatives are more fearful, more set in their ways, more reflexive, and expend less brain power when thinking than liberals.

      You seem to think the author was proposing that leftists are more angry, or more likely to be angry, than non-leftists. I don’t think that is what he was saying at all. The question he proposed to answer was not “Why are leftists so angry?”, it was “Why is the Angry Left so angry?” The difference may be subtle, but it is significant.

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  25. “Or, to tie this into our other discussion, one side is happy if they are simply left to their own devices, while the other side will only be happy if other people do certain things for them.”

    In the case of this argument, ultimately, yes. There are lot of folks who don’t want to live and let live in the case of gay marriage and simply want there to be no gay marriage, but as with many things (where one side does not want to take a hands-off, live-and-let-live position), there are reasons. There is a sense it’s an effort of a minority to deconstruct traditional marriage, the nuclear family, parents-rearing-children and so on, one brick at a time.

    So, it remains an argument over normalization, and to achieve normalization you ultimately have to force everybody to conform to your model, thus turning the abnormal to normal.

    Alas, political victories don’t make people happy. The goal posts move almost immediately. Normalize gay marriage, mandate every caterer must cater gay weddings by law, and there will be some new injustice that must be redressed by the government. Alas, happiness is not achieved via legislation, although misery often is. 🙂

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    • KW:

      Alas, political victories don’t make people happy. The goal posts move almost immediately. Normalize gay marriage, mandate every caterer must cater gay weddings by law, and there will be some new injustice that must be redressed by the government.

      Certainly if your political ideology is that the government exists to redress all manner of perceived injustices, then yes you are absolutely correct. Which was pretty much the point of the piece you’ve been objecting to.

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      • “Which was pretty much the point of the piece you’ve been objecting to.” Not objecting to it, just pointing out the the angry left is angry because they are angry people, and would still be angry even if they were getting what they wanted.

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  26. @scottc1: “As I mentioned, I don’t think anyone has proposed any correlation.”

    Then I stand presumptuous. However, many people do propose such a correlation. Thus, my confused presumption.

    “Certainly if your political ideology is that the government exists to redress all manner of perceived injustices, then yes you are absolutely correct. Which was pretty much the point of the piece you’ve been objecting to.”

    As you note, I may have read things into it that weren’t there. Not the first time I’ve done that!

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  27. @ScottC1: “Certainly if your political ideology is that the government exists to redress all manner of perceived injustices, then yes you are absolutely correct.”

    Although, generally, any time you pin your happiness on things outside of you, whether it’s the government, a spouse, your friends, your employer, and so on, you will find yourself consistently unhappy.

    Like

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