Morning Report: The labor market begins to weaken

Vital Statistics:

 LastChange
S&P futures4,00140.50
Oil (WTI)89.102.51
10 year government bond yield 3.22%
30 year fixed rate mortgage 5.91%

Stocks are higher this morning after the jobs report showed a deterioration in the labor market. Bonds and MBS are up.

The economy added 315,000 jobs in August, according to the BLS. This was a touch above the 293,000 consensus number, but a big decrease from the 526,000 that were reported in July. The unemployment rate ticked up 0.2% to 3.7%. The labor force participation rate increased to 61.4% from 61.1%, so this uptick in unemployment was driven by both an increase in the unemployed and an increase in the labor force. Average hourly earnings rose 5.1% YOY.

Overall, this report shows the Fed is finally getting some traction in slowing down the economy. Bonds took the report with a sigh of relief and stock have rallied as well.

The Fed Funds futures got a little more dovish after the report, with the Sep futures seeing a 62% chance of 75 basis points and a 38% chance of 50. The December futures are now handicapping a 40% chance of an end-of-year rate of 3.5%-3.75% and a 56% chance of 3.75%-4.0%.

It bears repeating that monetary policy acts with about a 6-9 month lag, so the big increases of the past couple of months have yet to impact the economy.

Home Prices rose 7.4% QOQ and 16.7% YOY according to the Clear Capital Home Data Index. The Northeast had the biggest quarterly growth at 11.6%. The Northeast and the Midwest have been laggards since the housing recovery began. The West looks like it is beginning to decelerate after torrid growth.

Note the Clear Capital index is about a month ahead of Case-Shiller and FHFA.

Construction spending fell 0.4% MOM and rose 8.4% YOY, according to Census. Residential construction fell 1.5% MOM and but is still up 14% YOY.

The median mortgage payment is approaching 150% of the typical rent payment, which is the biggest differential since 2009. In early 2020, the payments were roughly equal. This differential is a huge driver of the rent versus buy decision and is one of the reasons why purchase activity is slowing.

That said, it appears that home price appreciation is at least decelerating and the apartment REITs are all reporting mid-teens increases in rents for new tenants. So as rents rise and (hopefully) rates work back downwards that differential should close.

The combination of rising rates and rising prices have simply priced a lot of people out of the market.

70 Responses

  1. FYI, in case anyone is interested, lms has transferred the domain ownership over to me, so I will be maintaining it going forward.

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    • You really don’t have to (I told Lms this as well). We can just use the conservaliberals.Wordpress.com URL. The all things in moderation just stops working.

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      • Yeah, I actually figured that out as I was looking into it. But I don’t want someone who used the other one to end up with a broken link and think we aren’t here anymore. Especially a long lost comrade coming back to visit us.

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  2. This made me laugh.

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  3. Good read.

    “Anthony Fauci Should Have Resigned a Long Time Ago

    By Branko Marcetic

    Today’s polarized politics demand we treat Anthony Fauci like a hero or a villain. But he was something far more banal: a committed public servant who made serious errors of judgment, denting the country’s trust in public health in the process.”

    https://jacobin.com/2022/09/anthony-fauci-covid-19-pandemic-public-health-science-niaid

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  4. Biden, trying to walk things back a little::

    “I do think anyone who calls for the use of violence, fails to condemn violence when it’s used, refuses to acknowledge an election has been won, insists upon changing the way in which the rules and we count votes, that is a threat to democracy,” he said.

    Umm….I believe that would make the Dem party and many of its elected reps “a threat to democracy”.

    Fails to condemn violence when it is used? Biden and the Dems actually supported the “mostly peaceful” BLM/Antifa riots of 2020.

    Refuses to acknowledge an election has been won? Ask Hillary Clinton who won the 2016 election.

    Insists on changing the way in which the rules and we count votes? That is exactly and quite literally what elected Dems, using extra/ilegal means, did across the nation leading into the 2020 election.

    https://www.dailywire.com/news/biden-walks-it-back-president-says-not-all-trump-voters-are-bad-after-all

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    • nobody projects like the left.

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    • Well, the Democrats haven’t denied the outcome of a presidential election for almost 6 years now. So okay, sure. Glad you’re on board. But this: “insists upon changing the way in which the rules and we count votes” they just did that all over the place in 2020 and just tried to push legislation through that was entirely about changing how voting works to be more favorable to Democrats (in theory) … that’s just gaslighting.

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  5. The lie that gives the game away.

    Liked by 1 person

  6. So Ace posted this story last night under “wholesome content”:

    My neighbours are too low income to afford a wifi connection, and too proud to use mine. So I renamed mine Free Council Wifi and told them I had read about it and what the password was. My neighbour is now halfway through an online college qualification and I’m so proud of her.

    Maybe I am screwed up, but I think this demonstrates what a completely perverted moral outlook our culture has created. So this person was “too proud” to accept the willing assistance of a neighbor, but perfectly willing to exploit the exact same assistance from nameless, faceless strangers who were forced by government through taxation to provide it.

    Most people have literally no concept of what government actually is.

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    • I don’t think this is crazy, or represents a “perverted moral outlook”. Keep in mind, it’s also a story out of the UK (hence “Free Council Wi-Fi”).

      From the perspective of the person using the Wi-Fi, rather than impose a burden on a specific neighbor, they are making use of something that they believe that the government is already doing anyway.

      “Most people have literally no concept of what government actually is.”

      I’d change this to “don’t care what the government actually is”. They are completely estranged from it and feel that they have no influence on it anyway. And they aren’t wrong.

      Charles Pierce put it well, from the opposite side of the political spectrum:

      “It always depended on the notion that we were all together in the creative process of self-government. The fact is, most of us aren’t. Most of us have checked out. At the encouragement of two generations of ambitious politicians, we have accepted the notion that “government” is something alien, and therefore that it is something we cannot influence.”

      https://www.esquire.com/news-politics/politics/a21779/president-obamas-illusions-040913/

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      • jnc:

        Keep in mind, it’s also a story out of the UK (hence “Free Council Wi-Fi”).

        Good catch…I hadn’t picked up on that.

        From the perspective of the person using the Wi-Fi, rather than impose a burden on a specific neighbor, they are making use of something that they believe that the government is already doing anyway.

        It isn’t a “burden” on a specific neighbor. It is something the neighbor is also already doing anyway. Quite literally the only difference between using the neighbor’s wi-fi and using the government’s wi-fi is 1) who is paying for it and 2) who grants you permission to use it.

        And I think that if you are “too proud” to use a service offered by the person who paid for it, but you are perfectly happy to use the exact same service offered by someone who is forcing complete strangers to pay for it, you have a screwed up moral code.

        I’d change this to “don’t care what the government actually is”.

        I wouldn’t change it to that…I would simply add that. People are both ignorant and apathetic. They don’t know, and they don’t care.

        Charles Pierce put it well, from the opposite side of the political spectrum:

        I don’t disagree with Pierce, but as a moral matter his point his more relevant with regard to taxpayers being forced to provide freebies to people than it is to the people benefitting from the freebies. For example, I for one don’t give a shit if people who are getting their student loans forgiven don’t have any influence over government, but I care a lot that those of us who have to pay for it don’t.

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        • “Quite literally the only difference between using the neighbor’s wi-fi and using the government’s wi-fi is 1) who is paying for it and 2) who grants you permission to use it.”

          Correct, and if I’m not mistaken, in the UK VAT funds a fair amount so these people could well view themselves as having already paid for it.

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        • jnc:

          if I’m not mistaken, in the UK VAT funds a fair amount so these people could well view themselves as having already paid for it.

          Most essential goods – food, clothing – are 0% VAT. Plus, strictly speaking, VAT is paid by the producer, not the consumer. (I know, I know.)

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        • VAT taxes diverge from your original point, which I think is that people generally begin to emotionally feel if it comes from the government it’s “free” but if it comes from their neighbor they are then putting some burden on their neighbor.

          Which speaks of the erosion of local community as a source of support by those closest to you, and thus with a vested interest in actually helping you, rather than reliance on the nanny state which is in the wealth redistribution business more than the “actually help my neighbor” business.

          There was a time when people were 0too proud” to accept government handouts but not their neighbor’s help. I think that’s a sign of a healthier society.

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        • KW:

          There was a time when people were 0too proud” to accept government handouts but not their neighbor’s help. I think that’s a sign of a healthier society.

          Precisely my point. I think it is a perverse world view that takes the opposite approach.

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        • British Tel is just an arm of the government. It is so regulated it might as well be.

          I remember long delays in getting service restored to an area.

          And paying a fortune for my router (pronounced rooter) from BT

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  7. By all means, send them money and don’t worry, I’m sure every dollar will go to the war effort.

    Enjoy the deep freeze Western Europe.

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    • Some of my progressive/leftist friends on Facebook have started to post about why the US is sending more money to Ukraine when Jackson Mississippi has no running water.

      Trump should take that line and run with it against Biden.

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    • I wasn’t aware that Tong was taking it seriously. I figured CT would have just launched an attack on O’Keefe and called it a day…

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  8. Good piece by Douthat:

    “The ultimate blame for nominating those unfit candidates lies with the G.O.P. electorate, not Democrats. But in the debate about the risks of Republican extremism, the debate the president just joined, it’s still important to judge the leaders of the Democratic Party by their behavior. You may believe that American democracy is threatened as at no point since the Civil War, dear reader, but they do not. They are running a political operation in which the threat to democracy is leverage, used to keep swing voters onside without having to make difficult concessions to the center or the right.”

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    • What does Douhat think is so extreme about Trump’s policies? I’ve never understood that attack on Trump, the policy attack. We can argue over whether his aesthetic is bad but, if LBJ or Wilson’s aesthetic was ok then shut the fuck up already. If it’s policy, what is extreme? If it’s the aesthetic, what is extreme?

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      • He’s not talking about Turmp’s policies. He’s commenting on the current batch of Republican candidates for the mid-term elections, especially the ones who are echoing Trump’s claims that the 2020 election was rigged or otherwise fraudulent and that Trump really won.

        I think the Republicans are going to lose a lot of winnable races due to what McConnell politely calls “candidate quality”.

        Now, if the choice is between losing and electing a RINO, that may not matter to a lot of people, but I’d still prefer gridlock.

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        • I understand and I know that candidate quality is important but I’ve yet to see any that are not of quality, other than the usual shitty incumbents. The Democrats have a lot of money, it’s not a good Senate cycle for Republican’s and their defending 21 seats versus the the Democrats 14. And frankly, I’m pretty sure than none of them are out of the margin of error if you look at Rasmussen, Susquehanna, Trafalger or Big Data polling. McConnell’s criticism was obviously about fealty to him as a measure of quality. What policies pitched by R Senate nominee’s are extreme?

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        • McWing:

          McConnell’s criticism was obviously about fealty to him as a measure of quality.

          That seems to be a pretty widely held view of his comment. Molly talked about exactly that on Federalist Radio Hour a few days ago.

          And in terms of problems with candidate quality, it would be hard to argue that Oz is worse than Fetterman.

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        • Is vs. Fetterman: those poor voters. I wouldn’t want either. Write in Rick Santorum or somebody.

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        • That’s interesting to me because Oz is the very definition of mainstream Republican. I don’t the Oz hate.

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        • I think it’s less his mainstream-ness and more his history as celebrity doctor and shameless shill for quackery … eh, you know, you’re right. Mainstream Republican indeed!

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        • “McConnell’s criticism was obviously about fealty to him as a measure of quality.”

          It wasn’t. It’s about the candidates being behind in the polling in states that they should be able to carry based on past elections and handicapping.

          Walker in GA, the guy in PA, and Maryland come to mind.

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        • Walker/GA is ahead, against an incumbent I
          Might add. Oz is w/in the margin of error and no rational person thought a Republican was going to win in Maryland. If you meant Arizona, I believe Masters is one point out of the MOE and acknowledge ahead of time that Kelly is an incumbent and they don’t lose.

          Or, you’re referring to New Hampshire rather than Maryland and they haven’t even had their primary yet.

          So I ask again, whom among the candidates are low quality?

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        • What determines quality? Personal opinions and polls. And the polls are notoriously unreliable so the only way to say anything definitive about candidate quality will be after the election.

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        • I kind of think it is, but I believe that to be the universal orientation of career politicians who find themselves with a modicum of power.

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        • “So I ask again, whom among the candidates are low quality?”

          In this environment, they should be doing much better.

          The majority in the House and the Senate is the Republicans to lose and I think there’s a pretty decent chance that they will do so.

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        • But Oz is following McConnell’s and Scott’s directives to the letter so is it him or the message as outlined by McConnell? Mastriano is following the Trump playbook and is polling much better, so is your argument that Oz is not Trumpy enough?

          As for Republicans should be doing better, PA is absolutely a 50/50 state, always has been so I’m not sure where Oz should be overwhelmingly leading.

          Looking at GA, Walker is leading against an incumbent. I actually don’t expect Warnock to lose as my firm belief is that incumbents don’t lose.

          Ditto AZ and Blake Masters. It defies common sense to think that Kelly, who has used the advantage of incumbency to hammer away at his opponents should only be leading by the margin of error. Who would have been better? The twice defeated McSally?

          I know I’m beating a dead horse here so I’ll stop.

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        • McWing:
          But Oz is following McConnell’s and Scott’s directives to the letter…

          Mine?!?

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        • Lol! I don’t think he’s campaigning to end then nanny state and dismantle the Federal government.

          Unfortunately.

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        • I didn’t know you had an in with Dr. Oz. You probably get first dibs on the latest weight loss nutri-cuticals!

          I wonder if Dr. Oz would sponsor some homeopathic remedy legislation.

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        • Yeah, cause no mainstream cat buys into quack cures. That’s why homeopathy and chiropracty are such guaranteed money losers.

          And don’t get me started on vitamins. All obviously losing money.

          Dude’s totally disconnected from real life!

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        • I think the end of my statement kind of makes the point. Ergo, being a shill for quackery is indeed 100% mainstream. For the public.

          I get the impression professional politicians tend to find Oz’s quackery low-class and distasteful. But they don’t like any interlopers.

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        • That’s my point, in the end. Plus, if he wins he’s not beholden to McConnell

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        • You make a good point. The more GOP senators we get not beholden to McConnell the better.

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        • “I actually don’t expect Warnock to lose as my firm belief is that incumbents don’t lose.”

          Normally I’d agree but bellwethers and traditional indicators seem to be less applicable than they have been historically. So he might or might not. I’d say traditionally Herschel Walker is a low-quality candidate, primarily because of the secret bastard children he had but … eh, who knows these days?

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        • Really? That’s what separates high versus low quality? Getting caught? Isn’t the question really, will he do what I want? I’d elect the devil himself to accomplish my goals.

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        • “Getting caught”?

          Well, obviously. High-quality candidates keep their secret families secret!

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        • We have got to stop fetishizing politicians, politics and the so called Democratic process. They are better than the known alternatives but they’re not holy rites either.

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        • I don’t disagree that we should stop fetishizing politicians, but I think that’s kind of hardwired into human nature. We’re just going to do it whether it’s a good idea or not.

          I’m okay with fetishizing democracy but it needs to be actual democracy we’re talking about, not some Calvinball version of it.

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        • jnc:

          The majority in the House and the Senate is the Republicans to lose and I think there’s a pretty decent chance that they will do so.

          You think they will lose the House?

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        • I think this is doubtful. Losing the house I mean. Mostly because of the wide variety of districts. The senate may not flip, maybe even probably won’t, but Republicans are defending -what? 10 more seats than Democrats? Just some baked in logistical problems. It may less be an issue of low-quality candidates (compared to your average senator) than a lack of outstanding candidates that could overcome the challenges. Clearly the Republicans would benefit from better candidates but that’s always true.

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        • “And in terms of problems with candidate quality, it would be hard to argue that Oz is worse than Fetterman.”

          The question is whether Oz is worse than the other Republican candidates that were available.

          This is a winnable race for the Republicans and they may well lose it.

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        • jnc:

          The question is whether Oz is worse than the other Republican candidates that were available.

          Not at this point. Now that the primary is over, the question for McConnell is whether or not the R candidate is better quality than the D candidate. And there is no reason whatsoever that McConnell should be publicly downplaying the quality of any R candidate relative to the D candidate being faced. Well, no reason unless he has personal animosity towards that particular R candidate.

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        • I find your argument irrefutable in this case. There is not another explanation that works, except possibly dementia. Otherwise making such public pronouncements makes no sense.

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        • I think McConnell would rather work with Warnock and Kelly than Walker and Masters. And I sure as hell think he’d rather work with Murkowski than Tshibaka. In fact he’d rather work with Chesbro over Tshibaka. He is what he is and he’d rather badmouth candidates than support primary winners. When his candidate’s the primary winner God help those that don’t support them. When he loses, well, se la vie.

          Finally consider Scott’s funding raising debacle and how he’s managed to blow $180 million and then consider where the R’s are. Was Scott running the Senate re-elect to garner a majority or to collect doner information for his own POTUS RUN?

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      • I can’t think of anything Trump advanced that was as radical as LBJ, Wilson, FDR or Nixon.

        Of course the minute the opposition supports some minor curtailment of radical progressive policies, that’s now the “radical” position. And also “anti-democratic”.

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    • I have always thought that for people that are supposedly on the right side of everything, they sure as hell act like they don’t believe that.

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      • I think they act like they do believe that, and it makes everyone who doesn’t agree a criminal.

        That said, they come to that conclusion by taking every universally shared norm and appropriating it. Then often adopt the same racist or authoritarian position they once held but now claim was the sole provenance of their opponents, rehabilitate it, and say: “oh this is different, this is the GOID kind of totalitarianism!”

        Slave owners fighting abolition also believed they were on the right side of history.

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    • “The ultimate blame for nominating those unfit candidates lies with the G.O.P. electorate, not Democrats”

      While true if it WERE completely up the the Democrats, they’ve made it clear these are the Tepublican candidates they’d want. Since the Dems have supported the most MAGA candidates in the Republican primaries I don’t think they can just wash their hands of any responsibility if they win.

      “the risks of Republican extremism”

      If we’re not going to talk about the risks of Democrat extremism, then the discussion has no real value. Both or neither.

      As for the Democrats using the threat of Civil War as leverage … well, that’s what politicians do.

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  9. A 70,000 attendee protest in a 10 million person population is about .007% of the population. An equivalent protest in the US would be over 2,000,000.

    https://citizenfreepress.com/breaking/massive-protest-in-prague/

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  10. Good read. The Republicans should be doing better with making inroads on this issue:

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    • Can you think of an issue that the GOP is actually leveraging well? From what I’ve seen so far—outside DeSantis—the party isn’t doing much of anything to leverage the embarrassment of riches the Democrats have given them to run on.

      This like a much bigger negative to me in general than the candidate quality. Although presumably quality candidates would make inroads no matter that the national party was doing.

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      • The left is so awful right now, they don’t really have to do much.

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      • What would DeSantis as Governor if he had a state legislature made up like Maryland? It’s easy when you have substantial majorities. It’s not a slam on him but he gets a lot of credit for being in charge with large majorities.

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        • This is a good question. I don’t think you’d get a DeSantis as governor in a state like Maryland. Or it’s unlikely. You’d have to get a RINO, in most cases, if your going to get a Republican at all.

          DeSantis is flawed but he at least makes the case. It’s not just what he gets done but what he does in the process. I realize it’s hard to make the case and win in certain areas but most of the GOP (and I’d very much include McConnel) don’t seem to even be trying.

          Liz Cheney is another example of a pol that doesn’t get it (from my point of view). I find her and Trump very similar right now. She did nothing but make the case for Orange Man Bad for the last two years. Which is not the case Republicans should be making, IMO. Trump has been making the case for how he really won the 2020 election. Which is also not the case Republicans need to be making.

          Probably some of the “low quality” candidates are making solid cases in their areas and I just haven’t heard about it yet. Most of my news exposure comes from a small collection of podcasts these days so I’m sure I miss a lot.

          Like

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