I've never heard of such talks and I highly doubt that there are people who realistically think that a merger of these two very distinctly different parties is worth striving for. We could as well switch to a single-party state in this case.
I agree. While I have heard whispers of such, I believe them to be fibber seeds planted for facetious blossoms.
I would imagine such an abomination would be likely to result in multiple parties, as the far-righties of the Federalist Party and the center-lefties in the Liberal Party reject one another - maybe leaving a centrist party comparable in size to the Liberal Party currently - along with the right seeing the creation of a small, hardline faction. Ideology would be even further blurred, giving certain parties with a less rigid ideological construct (TPP, A-M, maybe even JEP) an advantage in the potential chaos. Or so I speculate.
In the event that the two hosts didn't reject one another, I imagine the rest of Atlasia would be united in defeating such an unholy chimera.
